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H0671...........................................................by BUSINESS
BUSINESS CORPORATIONS - Amends, repeals and adds to existing law to revise
the "Idaho Business Corporation Act."
02/12 House intro - 1st rdg - to printing
02/13 Rpt prt - to Bus
02/26 Rpt out - rec d/p - to 2nd rdg
02/27 2nd rdg - to 3rd rdg
03/02 3rd rdg - PASSED - 66-0-4
AYES -- Andersen, Barraclough, Barrett, Bauer, Bayer, Bedke, Bell,
Black, Block, Boe, Bolz, Bradford, Cannon, Clark, Collins, Crow,
Cuddy, Deal, Denney, Douglas, Eberle, Edmunson, Ellsworth, Eskridge,
Field(18), Field(23), Gagner, Garrett, Harwood, Henbest, Jaquet,
Jones, Kellogg, Kulczyk, Lake, Langford, Langhorst, Martinez,
McGeachin, McKague, Meyer, Miller, Mitchell, Naccarato, Nielsen,
Pasley-Stuart, Raybould, Ridinger, Ring, Ringo, Roberts, Robison,
Rydalch, Sali, Sayler, Schaefer, Shepherd, Shirley, Skippen,
Smith(30), Smylie, Snodgrass, Stevenson, Trail(Bennett), Wills, Wood
NAYS -- None
Absent and excused -- Campbell, Moyle, Smith(24), Mr. Speaker
Floor Sponsor - Smylie
Title apvd - to Senate
03/03 Senate intro - 1st rdg - to Com/HuRes
03/10 Rpt out - rec d/p - to 2nd rdg
03/11 2nd rdg - to 3rd rdg
03/19 3rd rdg - PASSED - 35-0-0
AYES -- Andreason, Bailey, Brandt, Bunderson, Burkett(Maxand),
Burtenshaw, Calabretta, Cameron, Compton, Darrington, Davis, Gannon,
Geddes, Goedde, Hill, Ingram, Kennedy, Keough, Little, Lodge,
Malepeai, Marley, McKenzie, McWilliams, Noble, Noh, Pearce,
Richardson, Schroeder, Sorensen, Stegner, Stennett, Sweet, Werk,
Williams
NAYS -- None
Absent and excused -- None
Floor Sponsor - Davis
Title apvd - to House
03/20 To enrol - Rpt enrol - Sp signed - Pres signed
03/22 To Governor
03/24 Governor signed
Session Law Chapter 324
Effective: 07/01/04
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-seventh Legislature Second Regular Session - 2004
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 671
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO CORPORATIONS; AMENDING SECTION 30-1-120, IDAHO CODE, TO REVISE
3 DESCRIPTIVE LANGUAGE AND TO PROVIDE THAT CERTAIN PROVISIONS APPLY WHEN THE
4 TERMS OF A PLAN OR FILED DOCUMENT ARE PERMITTED TO BE DEPENDENT UPON FACTS
5 OBJECTIVELY ASCERTAINABLE OUTSIDE THE PLAN OR FILED DOCUMENT; AMENDING
6 SECTION 30-1-140, IDAHO CODE, TO REVISE DEFINITIONS; AMENDING SECTION
7 30-1-202, IDAHO CODE, TO PROVIDE THAT PROVISIONS OF THE ARTICLES OF INCOR-
8 PORATION MAY BE MADE DEPENDENT UPON FACTS OBJECTIVELY ASCERTAINABLE OUT-
9 SIDE THE ARTICLES OF INCORPORATION; AMENDING SECTION 30-1-601, IDAHO CODE,
10 TO REVISE PROVISIONS APPLICABLE TO AUTHORIZED SHARES; AMENDING SECTION
11 30-1-602, IDAHO CODE, TO PROVIDE THAT THE BOARD OF DIRECTORS MAY TAKE CER-
12 TAIN ACTIONS RELATED TO THE CLASSIFICATION OR RECLASSIFICATION OF SHARES
13 WITHOUT SHAREHOLDER APPROVAL IF PERMITTED BY THE ARTICLES OF INCORPORA-
14 TION, TO REQUIRE THE BOARD TO DETERMINE THE TERMS AS PROVIDED BY STATUTE,
15 TO REMOVE LANGUAGE REQUIRING EACH SERIES TO BE GIVEN A DISTINGUISHING DES-
16 IGNATION, TO REMOVE LANGUAGE PROVIDING THAT ALL SHARES OF A SERIES MUST
17 HAVE CERTAIN TERMS IDENTICAL WITH THOSE OF OTHER SHARES AND OTHER SERIES
18 AND TO REVISE REQUIREMENTS RELATING TO REQUIRED TERMS FOR FILING ARTICLES
19 OF AMENDMENT; AMENDING SECTION 30-1-621, IDAHO CODE, TO PROVIDE THAT THE
20 ISSUANCE OF SHARES AND CERTAIN OTHER SECURITIES REQUIRES SHAREHOLDER
21 APPROVAL IN CERTAIN CIRCUMSTANCES, TO SET FORTH REQUIREMENTS FOR THE VOT-
22 ING POWER OF SHARES AND TO PROVIDE THAT A SERIES OF TRANSACTIONS IS INTE-
23 GRATED UNDER CERTAIN CONDITIONS; AMENDING SECTION 30-1-624, IDAHO CODE, TO
24 REVISE PROVISIONS APPLICABLE TO SHARE OPTIONS; AMENDING SECTION 30-1-631,
25 IDAHO CODE, TO PROVIDE A CODE REFERENCE, TO REMOVE LANGUAGE STATING THAT
26 THE BOARD MAY ADOPT ARTICLES OF AMENDMENT WITHOUT SHAREHOLDER APPROVAL AND
27 TO REMOVE LANGUAGE SETTING FORTH REQUIREMENTS FOR ARTICLES; AMENDING SEC-
28 TION 30-1-640, IDAHO CODE, TO PROVIDE THAT THE SECTION DOES NOT APPLY TO
29 CERTAIN DISTRIBUTIONS IN LIQUIDATION; AMENDING SECTION 30-1-702, IDAHO
30 CODE, TO PROVIDE THAT THE ARTICLES OF INCORPORATION MAY FIX A LOWER OR
31 HIGHER PERCENTAGE OF VOTES RELATED TO SPECIAL MEETINGS OF SHAREHOLDERS AND
32 TO PROVIDE THAT UNLESS OTHERWISE PROVIDED IN THE ARTICLES A WRITTEN DEMAND
33 FOR A SPECIAL MEETING MAY BE REVOKED BY A WRITING; AMENDING SECTION
34 30-1-704, IDAHO CODE, TO REQUIRE THAT WRITTEN CONSENTS BEAR A DATED SIGNA-
35 TURE, TO PROVIDE THAT A WRITTEN CONSENT SHALL NOT BE EFFECTIVE UNLESS
36 WRITTEN CONSENTS SIGNED BY ALL SHAREHOLDERS ENTITLED TO VOTE ARE RECEIVED
37 BY THE CORPORATION WITHIN A STATED TIME PERIOD AND TO PROVIDE THAT A WRIT-
38 TEN CONSENT MAY BE REVOKED BY A WRITING; AMENDING PART 7, CHAPTER 1, TITLE
39 30, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 30-1-708, IDAHO CODE, TO
40 PROVIDE FOR THE CONDUCT OF MEETINGS; AMENDING SECTION 30-1-722, IDAHO
41 CODE, TO REVISE PROVISIONS APPLICABLE TO PROXIES; AMENDING SECTION
42 30-1-724, IDAHO CODE, TO PROVIDE CODE REFERENCES; AMENDING PART 7, CHAPTER
43 1, TITLE 30, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 30-1-729, IDAHO
44 CODE, TO PROVIDE FOR INSPECTORS OF ELECTIONS; AMENDING SECTION 30-1-801,
45 IDAHO CODE, TO PROVIDE CLARIFYING LANGUAGE; AMENDING SECTION 30-1-803,
46 IDAHO CODE, TO PROVIDE THAT THE NUMBER OF DIRECTORS MAY BE INCREASED OR
2
1 DECREASED BY AMENDMENT TO OR AS PROVIDED IN THE ARTICLES OF INCORPORATION
2 OR BYLAWS AND TO REMOVE OTHER LANGUAGE REFERRING TO THE NUMBER OF DIREC-
3 TORS; AMENDING SECTION 30-1-806, IDAHO CODE, TO REMOVE LANGUAGE
4 REFERENCING NINE OR MORE DIRECTORS AND TO PROVIDE THAT THE ARTICLES OF
5 INCORPORATION MAY PROVIDE FOR STAGGERING THE TERMS OF DIRECTORS; AMENDING
6 SECTION 30-1-809, IDAHO CODE, TO REVISE PROVISIONS APPLICABLE TO THE
7 REMOVAL OF DIRECTORS BY JUDICIAL PROCEEDING; AMENDING SECTION 30-1-821,
8 IDAHO CODE, TO REVISE PROVISIONS APPLICABLE TO ACTIONS TAKEN WITHOUT A
9 MEETING OF THE BOARD OF DIRECTORS; AMENDING SECTION 30-1-825, IDAHO CODE,
10 TO REVISE PROVISIONS APPLICABLE TO COMMITTEES CREATED BY THE BOARD OF
11 DIRECTORS; AMENDING SECTION 30-1-830, IDAHO CODE, TO REVISE STANDARDS
12 APPLICABLE TO MEMBERS OF THE BOARD OF DIRECTORS; AMENDING PART 8, CHAPTER
13 1, TITLE 30, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 30-1-831, IDAHO
14 CODE, TO SET FORTH STANDARDS OF LIABILITY FOR DIRECTORS; AMENDING SECTION
15 30-1-833, IDAHO CODE, TO REVISE PROVISIONS APPLICABLE TO THE LIABILITY OF
16 DIRECTORS FOR UNLAWFUL DISTRIBUTIONS; AMENDING SECTION 30-1-840, IDAHO
17 CODE, TO PROVIDE THAT A CORPORATION HAS THE OFFICES DESCRIBED IN THE
18 BYLAWS OR DESIGNATED BY THE BOARD, TO PROVIDE THAT THE BOARD MAY ELECT
19 INDIVIDUALS TO FILL OFFICES OF THE CORPORATION AND TO PROVIDE THAT THE
20 BYLAWS OR BOARD SHALL ASSIGN TO AN OFFICER THE RESPONSIBILITY FOR PREPAR-
21 ING THE MINUTES OF MEETINGS AND MAINTAINING AND AUTHENTICATING THE RECORDS
22 OF THE CORPORATION; AMENDING SECTION 30-1-842, IDAHO CODE, TO REVISE PRO-
23 VISIONS APPLICABLE TO THE STANDARDS OF CONDUCT FOR OFFICERS OF A CORPORA-
24 TION; AMENDING SECTION 30-1-843, IDAHO CODE, TO REVISE TERMINOLOGY, TO
25 PROVIDE THAT THE BOARD OR APPOINTING OFFICER MAY FILL A PENDING VACANCY IN
26 CERTAIN SITUATIONS AND SET FORTH WHO MAY REMOVE AN OFFICER WITH OR WITHOUT
27 CAUSE; AMENDING SECTION 30-1-858, IDAHO CODE, TO PROVIDE A CORRECT CODE
28 REFERENCE; AMENDING CHAPTER 1, TITLE 30, IDAHO CODE, BY THE ADDITION OF A
29 NEW PART 9, CHAPTER 1, TITLE 30, IDAHO CODE, TO PROVIDE FOR EXCLUDED
30 TRANSACTIONS, TO REQUIRE PRIOR APPROVAL FOR CERTAIN TRANSACTIONS, TO PRO-
31 VIDE FOR DOMESTICATION, TO PROVIDE FOR ARTICLES OF DOMESTICATION AND TO
32 PROVIDE FOR THE EFFECT OF DOMESTICATION; AMENDING SECTION 30-1-1001, IDAHO
33 CODE, TO REVISE LANGUAGE APPLICABLE TO THE AUTHORITY OF A CORPORATION TO
34 AMEND ITS ARTICLES OF INCORPORATION; AMENDING SECTION 30-1-1002, IDAHO
35 CODE, TO REDESIGNATE THE SECTION AND TO REVISE PROVISIONS APPLICABLE TO
36 THE AMENDMENT OF ARTICLES OF INCORPORATION BY THE BOARD WITHOUT SHARE-
37 HOLDER APPROVAL; AMENDING SECTION 30-1-1003, IDAHO CODE, TO REVISE PROVI-
38 SIONS APPLICABLE TO THE ADOPTION OF AN AMENDMENT TO THE ARTICLES OF INCOR-
39 PORATION WHERE A CORPORATION HAS ISSUED SHARES; AMENDING SECTION
40 30-1-1004, IDAHO CODE, TO PROVIDE THAT EXCEPT AS OTHERWISE PROVIDED IN THE
41 ARTICLES OF INCORPORATION THE VOTING AND NONVOTING HOLDERS OF THE OUT-
42 STANDING SHARES OF A CLASS ARE ENTITLED TO VOTE AS A SEPARATE VOTING GROUP
43 ON A PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION UNDER CERTAIN
44 CONDITIONS, TO REVISE TERMINOLOGY, TO PROVIDE CLARIFYING LANGUAGE, TO PRO-
45 VIDE THAT UNDER CERTAIN CONDITIONS THE HOLDERS OF SHARES MUST VOTE AS A
46 SINGLE VOTING GROUP UNLESS OTHERWISE PROVIDED IN THE ARTICLES OF INCORPO-
47 RATION OR UNLESS OTHERWISE REQUIRED BY THE BOARD AND TO REMOVE LANGUAGE
48 PROVIDING THAT A CLASS OR SERIES OF SHARES HAS CERTAIN VOTING RIGHTS;
49 AMENDING SECTION 30-1-1005, IDAHO CODE, TO REDESIGNATE THE SECTION AND TO
50 PROVIDE THAT THE BOARD OF DIRECTORS OF A CORPORATION OR ITS INCORPORATORS
51 IF IT HAS NO BOARD MAY ADOPT AMENDMENTS TO THE ARTICLES OF INCORPORATION;
52 AMENDING SECTION 30-1-1006, IDAHO CODE, TO REVISE PROVISIONS APPLICABLE TO
53 ARTICLES OF AMENDMENT; AMENDING SECTION 30-1-1007, IDAHO CODE, TO REVISE
54 PROVISIONS APPLICABLE TO RESTATED ARTICLES OF INCORPORATION; AMENDING SEC-
55 TION 30-1-1008, IDAHO CODE, TO PROVIDE THAT ARTICLES OF INCORPORATION MAY
3
1 BE AMENDED WITHOUT BOARD OR SHAREHOLDER ACTION TO CARRY OUT A PLAN OF
2 REORGANIZATION ORDERED OR DECREED BY A COURT UNDER THE AUTHORITY OF FED-
3 ERAL LAW AND TO REMOVE LANGUAGE PROVIDING THAT SHAREHOLDERS OF A CORPORA-
4 TION UNDERGOING REORGANIZATION DO NOT HAVE DISSENTERS' RIGHTS EXCEPT AS
5 PROVIDED IN THE REORGANIZATION PLAN; AMENDING SECTION 30-1-1009, IDAHO
6 CODE, TO MAKE A GRAMMATICAL CHANGE; AMENDING SECTION 30-1-1020, IDAHO
7 CODE, TO REVISE PROVISIONS APPLICABLE TO AMENDMENT OF BYLAWS BY THE BOARD
8 OF DIRECTORS OR SHAREHOLDERS; REPEALING SECTION 30-1-1021, IDAHO CODE,
9 RELATING TO BYLAWS THAT INCREASE QUORUM OR VOTING REQUIREMENTS; AMENDING
10 SECTION 30-1-1022, IDAHO CODE, TO REDESIGNATE THE SECTION AND TO REVISE
11 PROVISIONS APPLICABLE TO BYLAWS THAT INCREASE QUORUM OR VOTING REQUIRE-
12 MENTS FOR DIRECTORS; AMENDING PART 11, CHAPTER 1, TITLE 30, IDAHO CODE, BY
13 THE ADDITION OF A NEW SECTION 30-1-1101, IDAHO CODE, TO DEFINE TERMS;
14 AMENDING SECTION 30-1-1101, IDAHO CODE, TO REDESIGNATE THE SECTION AND TO
15 REVISE PROVISIONS APPLICABLE TO MERGERS; AMENDING SECTION 30-1-1102, IDAHO
16 CODE, TO REDESIGNATE THE SECTION AND TO REVISE PROVISIONS APPLICABLE TO
17 SHARE EXCHANGES; AMENDING SECTION 30-1-1103, IDAHO CODE, TO REDESIGNATE
18 THE SECTION AND TO REVISE PROVISIONS APPLICABLE TO ACTIONS ON A PLAN,
19 MERGER OR SHARE EXCHANGE; AMENDING SECTION 30-1-1104, IDAHO CODE, TO
20 REDESIGNATE THE SECTION AND TO REVISE PROVISIONS APPLICABLE TO MERGERS
21 BETWEEN PARENTS AND SUBSIDIARIES OR BETWEEN SUBSIDIARIES; AMENDING SECTION
22 30-1-1105, IDAHO CODE, TO REDESIGNATE THE SECTION AND TO REVISE PROVISIONS
23 APPLICABLE TO ARTICLES OF MERGER OR SHARE EXCHANGE; AMENDING SECTION
24 30-1-1106, IDAHO CODE, TO REDESIGNATE THE SECTION AND TO REVISE PROVISIONS
25 APPLICABLE TO THE EFFECT OF A MERGER OR SHARE EXCHANGE; REPEALING SECTION
26 30-1-1107, IDAHO CODE, RELATING TO MERGERS OR SHARE EXCHANGES WITH FOREIGN
27 CORPORATIONS; AMENDING PART 11, CHAPTER 1, TITLE 30, IDAHO CODE, BY THE
28 ADDITION OF A NEW SECTION 30-1-1108, IDAHO CODE, TO PROVIDE FOR THE ABAN-
29 DONMENT OF A MERGER OR SHARE EXCHANGE; AMENDING THE HEADING FOR PART 12,
30 CHAPTER 1, TITLE 30, IDAHO CODE; AMENDING SECTION 30-1-1201, IDAHO CODE,
31 TO PROVIDE FOR THE DISPOSITION OF ASSETS NOT REQUIRING SHAREHOLDER
32 APPROVAL AND TO REMOVE LANGUAGE REFERENCING THE SALE IN THE REGULAR COURSE
33 OF BUSINESS AND MORTGAGE OF ASSETS; AMENDING SECTION 30-1-1202, IDAHO
34 CODE, TO REMOVE LANGUAGE PROVIDING FOR THE SALE OF ASSETS OTHER THAN IN
35 THE REGULAR COURSE OF BUSINESS AND TO PROVIDE FOR SHAREHOLDER APPROVAL OF
36 CERTAIN DISPOSITIONS; AMENDING THE HEADING FOR PART 13, CHAPTER 1, TITLE
37 30, IDAHO CODE; AMENDING SECTION 30-1-1301, IDAHO CODE, TO ADD, REVISE AND
38 REMOVE DEFINITIONS; AMENDING SECTION 30-1-1302, IDAHO CODE, TO REVISE PRO-
39 VISIONS APPLICABLE TO A SHAREHOLDER'S RIGHT TO APPRAISAL; AMENDING SECTION
40 30-1-1303, IDAHO CODE, TO REVISE PROVISIONS APPLICABLE TO THE ASSERTION OF
41 RIGHTS BY NOMINEES AND BENEFICIAL OWNERS; AMENDING SECTION 30-1-1320,
42 IDAHO CODE, TO REVISE PROVISIONS APPLICABLE TO THE NOTICE OF APPRAISAL
43 RIGHTS; AMENDING SECTION 30-1-1321, IDAHO CODE, TO PROVIDE THAT IF A PRO-
44 POSED CORPORATION ACTION REQUIRING APPRAISAL RIGHTS IS SUBMITTED TO A VOTE
45 AT A SHAREHOLDERS' MEETING A SHAREHOLDER WHO WISHES TO ASSERT APPRAISAL
46 RIGHTS WITH RESPECT TO ANY CLASS OR SERIES OF SHARES MUST FOLLOW CERTAIN
47 CONDITIONS AND TO REMOVE LANGUAGE REFERENCING A SHAREHOLDER'S SHARES;
48 AMENDING SECTION 30-1-1322, IDAHO CODE, TO REVISE PROVISIONS APPLICABLE TO
49 APPRAISAL NOTICES AND FORMS; AMENDING SECTION 30-1-1323, IDAHO CODE, TO
50 REMOVE LANGUAGE REFERRING TO THE DUTY TO DEMAND PAYMENT AND TO PROVIDE FOR
51 THE PERFECTION OF RIGHTS AND THE RIGHT TO WITHDRAWAL FROM THE APPRAISAL
52 PROCESS; REPEALING SECTION 30-1-1324, IDAHO CODE, RELATING TO SHARE
53 RESTRICTIONS; AMENDING SECTION 30-1-1325, IDAHO CODE, TO REDESIGNATE THE
54 SECTION AND TO REVISE PROVISIONS APPLICABLE TO PAYMENT; REPEALING SECTION
55 30-1-1326, IDAHO CODE, RELATING TO A CORPORATION'S FAILURE TO TAKE ACTION;
4
1 AMENDING SECTION 30-1-1327, IDAHO CODE, TO REDESIGNATE THE SECTION AND TO
2 REVISE PROVISIONS APPLICABLE TO AFTER-ACQUIRED SHARES; AMENDING SECTION
3 30-1-1328, IDAHO CODE, TO REDESIGNATE THE SECTION AND TO REVISE PROVISIONS
4 APPLICABLE TO PROCEDURES WHERE A SHAREHOLDER IS DISSATISFIED WITH A PAY-
5 MENT OR OFFER; AMENDING SECTION 30-1-1330, IDAHO CODE, TO REVISE PROVI-
6 SIONS APPLICABLE TO COURT ACTIONS FOR UNSETTLED PAYMENTS; AMENDING SECTION
7 30-1-1331, IDAHO CODE, TO REVISE PROVISIONS APPLICABLE TO COURT COSTS AND
8 COUNSEL FEES IN APPRAISAL PROCEEDINGS; AMENDING SECTION 30-1-1402, IDAHO
9 CODE, TO REMOVE A CODE REFERENCE AND TO PROVIDE THAT UNLESS THE ARTICLES
10 OF INCORPORATION OR BOARD OF DIRECTORS REQUIRE A GREATER VOTE, A GREATER
11 NUMBER OF SHARES TO BE PRESENT OR A VOTE BY VOTING GROUPS, ADOPTION OF A
12 PROPOSAL TO DISSOLVE REQUIRES APPROVAL OF SHAREHOLDERS AT A MEETING AT
13 WHICH A QUORUM CONSISTING OF AT LEAST A MAJORITY OF ENTITLED VOTES EXISTS;
14 AMENDING SECTION 30-1-1403, IDAHO CODE, TO REVISE PROVISIONS APPLICABLE TO
15 ARTICLES OF DISSOLUTION; AMENDING SECTION 30-1-1404, IDAHO CODE, TO REMOVE
16 A CODE REFERENCE; AMENDING SECTION 30-1-1406, IDAHO CODE, TO PROVIDE THAT
17 A DISSOLVED CORPORATION MAY DISPOSE OF THE KNOWN CLAIMS AGAINST IT BY
18 NOTIFYING ITS KNOWN CLAIMANTS IN WRITING OF THE DISSOLUTION AT ANY TIME
19 AFTER ITS EFFECTIVE DATE; AMENDING SECTION 30-1-1407, IDAHO CODE, TO
20 REVISE PROVISIONS APPLICABLE TO OTHER CLAIMS AGAINST A DISSOLVED CORPORA-
21 TION; AMENDING PART 14, CHAPTER 1, TITLE 30, IDAHO CODE, BY THE ADDITION
22 OF A NEW SECTION 30-1-1408, IDAHO CODE, TO PROVIDE FOR COURT PROCEEDINGS;
23 AMENDING PART 14, CHAPTER 1, TITLE 30, IDAHO CODE, BY THE ADDITION OF A
24 NEW SECTION 30-1-1409, IDAHO CODE, TO SET FORTH DIRECTOR DUTIES; AMENDING
25 SECTION 30-1-1601, IDAHO CODE, TO REVISE THE RECORDS A CORPORATION MUST
26 KEEP AT ITS PRINCIPAL OFFICE; AMENDING SECTION 30-1-1603, IDAHO CODE, TO
27 MAKE A GRAMMATICAL CHANGE, TO REMOVE A REFERENCE TO PHOTOGRAPHIC COPIES,
28 TO PROVIDE FOR THE RIGHT TO RECEIVE COPIES THROUGH AN ELECTRONIC TRANSMIS-
29 SION IF AVAILABLE AND REQUESTED, TO PROVIDE THAT A CORPORATION MAY COMPLY
30 WITH A SHAREHOLDER'S DEMAND FOR RECORD INSPECTION AT THE CORPORATION'S
31 EXPENSE AND TO PROVIDE A REFERENCE TO THE TRANSMISSION OF RECORDS; AMEND-
32 ING PART 16, CHAPTER 1, TITLE 30, IDAHO CODE, BY THE ADDITION OF A NEW
33 SECTION 30-1-1605, IDAHO CODE, TO PROVIDE FOR THE INSPECTION OF RECORDS BY
34 DIRECTORS; AND AMENDING PART 16, CHAPTER 1, TITLE 30, IDAHO CODE, BY THE
35 ADDITION OF A NEW SECTION 30-1-1606, IDAHO CODE, TO PROVIDE FOR EXCEPTIONS
36 TO THE NOTICE REQUIREMENT.
37 Be It Enacted by the Legislature of the State of Idaho:
38 SECTION 1. That Section 30-1-120, Idaho Code, be, and the same is hereby
39 amended to read as follows:
40 30-1-120. FILING REQUIREMENTS FOR DOCUMENTS -- EXTRINSIC FACTS. (1) A
41 document must satisfy the requirements of this section, and of any other sec-
42 tion that adds to or varies these requirements, to be entitled to filing by
43 the secretary of state.
44 (2) This chapter must require or permit filing the document in the office
45 of the secretary of state.
46 (3) The document must contain the information required by this chapter.
47 It may contain other information as well.
48 (4) The document must be typewritten or printed or, if electronically
49 transmitted, it must be in a format that can be retrieved or reproduced in
50 typewritten or printed form.
51 (5) The document must be in the English language. A corporate name need
52 not be in English if written in English letters or Arabic or Roman numerals,
5
1 and the certificate of existence required of foreign corporations need not be
2 in English if accompanied by a reasonably authenticated English translation.
3 (6) Except as otherwise permitted by section 30-1-1622, Idaho Code, the
4 document must be executed:
5 (a) By the chairman of the board of directors of a domestic or foreign
6 corporation, by its president, or by another of its officers;
7 (b) If directors have not been selected or the corporation has not been
8 formed, by an incorporator; or
9 (c) If the corporation is in the hands of a receiver, trustee or other
10 court-appointed fiduciary, by that fiduciary.
11 (7) The person executing the document shall sign it and state beneath or
12 opposite his signature his name and the capacity in which he signs. The docu-
13 ment may but need not contain a corporate seal, attestation, acknowledgment
14 or verification.
15 (8) If the secretary of state has prescribed a mandatory form for the
16 document under section 30-1-121, Idaho Code, the document must be in or on the
17 prescribed form.
18 (9) The document must be delivered to the office of the secretary of
19 state for filing. Delivery may be made by electronic transmission if and to
20 the extent permitted by the secretary of state. If it is filed in typewritten
21 or printed form and not transmitted electronically, the secretary of state may
22 require one (1) exact or conformed copy to be delivered with the document,
23 except as provided in sections 30-1-503 and 30-1-1509, Idaho Code.
24 (10) When the document is delivered to the office of the secretary of
25 state for filing, the correct filing fee, and any other fee or penalty
26 required to be paid therewith by this chapter or other law must be paid or
27 provision for payment made in a manner permitted by the secretary of state.
28 (11) Whenever a provision of this chapter permits any of the terms of a
29 plan or a filed document to be dependent upon facts objectively ascertainable
30 outside the plan or filed document, the following provisions apply:
31 (a) The manner in which the facts will operate upon the terms of the plan
32 or filed document shall be set forth in the plan or filed document.
33 (b) The facts may include, but are not limited to:
34 (i) Any of the following that are available in a nationally recog-
35 nized news or information medium either in print or electronically:
36 statistical or market indices, market prices of any security or group
37 of securities, interest rates, currency exchange rates, or similar
38 economic or financial data;
39 (ii) A determination or action by any person or body, including the
40 corporation or any other party to a plan or filed document; or
41 (iii) The terms of, or actions taken under, an agreement or document
42 to which the corporation is a party, or any other agreement or docu-
43 ment.
44 (c) As used in this subsection:
45 (i) "Filed document" means a document filed with the secretary of
46 state under any provision of this chapter except part 15 or section
47 30-1-1622, Idaho Code; and
48 (ii) "Plan" means a plan of domestication, merger or share exchange.
49 (d) The following provisions of a plan or filed document may not be made
50 dependent upon facts outside the plan or filed document:
51 (i) The name and address of any person required in a filed docu-
52 ment;
53 (ii) The registered office of any entity required in a filed docu-
54 ment;
55 (iii) The registered agent of any entity required in a filed docu-
6
1 ment;
2 (iv) The number of authorized shares and designation of each class
3 or series of shares;
4 (v) The effective date of a filed document;
5 (vi) Any required statement in a filed document of the date on which
6 the underlying transaction was approved or the manner in which that
7 approval was given.
8 (e) If a provision of a filed document is made dependent upon a fact
9 ascertainable outside of the filed document, and that fact is not ascer-
10 tainable by reference to a source described in subsection (11)(b)(i) of
11 this section or a document that is a matter of public record, or the
12 affected shareholders have not received notice of the fact from the corpo-
13 ration, then the corporation shall file with the secretary of state arti-
14 cles of amendment setting forth the fact promptly after the time when the
15 fact referred to is first ascertainable or thereafter changes. Articles
16 of amendment under this subsection (11)(e) are deemed to be authorized by
17 the authorization of the original filed document or plan to which they
18 relate and may be filed by the corporation without further action by the
19 board of directors or the shareholders.
20 SECTION 2. That Section 30-1-140, Idaho Code, be, and the same is hereby
21 amended to read as follows:
22 30-1-140. CHAPTER DEFINITIONS. In this chapter:
23 (1) "Articles of incorporation" includes amended and restated means the
24 original articles of incorporation, all amendments thereof, and any other doc-
25 uments permitted or required to be filed by a domestic business corporation
26 with the secretary of state under any provision of this chapter except section
27 30-1-1622, Idaho Code. If an amendment of the articles of merger or any docu-
28 ment filed under this chapter restates the articles in their entirety, thence-
29 forth the "articles" shall not include any prior documents.
30 (2) "Authorized shares" means the shares of all classes a domestic or
31 foreign corporation is authorized to issue.
32 (3) "Conspicuous" means so written that a reasonable person against whom
33 the writing is to operate should have noticed it. For example, printing in
34 italics or boldface or contrasting color, or typing in capitals or underlined,
35 is conspicuous.
36 (4) "Corporation," or "domestic corporation" or "domestic business corpo-
37 ration" means a corporation for profit, which is not a foreign corporation,
38 incorporated under or subject to the provisions of this chapter.
39 (5) "Deliver" or "delivery" means any method of delivery used in conven-
40 tional commercial practice, including delivery by hand, mail, commercial
41 delivery and electronic transmission.
42 (6) "Distribution" means a direct or indirect transfer of money or other
43 property, except its own shares, or incurrence of indebtedness by a corpora-
44 tion to or for the benefit of its shareholders in respect of any of its
45 shares. A distribution may be in the form of a declaration or payment of a
46 dividend; a purchase, redemption, or other acquisition of shares; a distribu-
47 tion of indebtedness; or otherwise.
48 (7) "Domestic unincorporated entity" means an unincorporated entity whose
49 internal affairs are governed by the laws of this state.
50 (8) "Effective date of notice" is defined in section 30-1-141, Idaho
51 Code.
52 (89) "Electronic transmission" or "electronically transmitted" means any
53 process of communication not directly involving the physical transfer of paper
7
1 that is suitable for the retention, retrieval and reproduction in written form
2 of information by the recipient.
3 (10) "Eligible entity" means a domestic or foreign unincorporated entity
4 or a domestic or foreign nonprofit corporation.
5 (11) "Eligible interests" means interests or memberships.
6 (912) "Employee" includes an officer but not a director. A director may
7 accept duties that make him also an employee.
8 (103) "Entity" includes domestic and foreign business corporation; domes-
9 tic and foreign nonprofit corporation; not-for-profit corporation; limited
10 liability company; profit and not-for-profit unincorporated association; busi-
11 ness trust, estate;, partnership, trust; and two (2) or more persons having a
12 joint or common economic interest domestic and foreign unincorporated entity;
13 and state, United States and foreign government.
14 (14) The phrase "facts objectively ascertainable outside the plan or
15 filed document" is as set forth in section 30-1-120(11), Idaho Code.
16 (15) "Filing entity" means an unincorporated entity that is of a type
17 that is created by filing a public organic document.
18 (116) "Foreign corporation" means a corporation incorporated under a law
19 other than the law of this state, but does not include "federally chartered
20 corporations" which are incorporated which would be a business corporation if
21 incorporated under the laws of the United States this state.
22 (17) "Foreign nonprofit corporation" means a corporation incorporated
23 under a law other than the law of this state, which would be a nonprofit cor-
24 poration if incorporated under the laws of this state.
25 (18) "Foreign unincorporated entity" means an unincorporated entity whose
26 internal affairs are governed by an organic law of a jurisdiction other than
27 this state.
28 (129) "Governmental subdivision" includes authority, county, district and
29 municipality.
30 (1320) "Includes" denotes a partial definition.
31 (214) "Individual" includes the estate of an incompetent or deceased indi-
32 vidual means a natural person.
33 (22) "Interest" means either or both of the following rights under the
34 organic law of an unincorporated entity:
35 (a) The right to receive distributions from the entity either in the
36 ordinary course or upon liquidation; or
37 (b) The right to receive notice or vote on issues involving its internal
38 affairs, other than as an agent, assignee, proxy or person responsible for
39 managing its business and affairs.
40 (23) "Interest holder" means a person who holds of record an interest.
41 (1524) "Means" denotes an exhaustive definition.
42 (25) "Membership" means the right of a member in a domestic or foreign
43 nonprofit corporation.
44 (26) "Nonfiling entity" means an unincorporated entity that is of a type
45 that is not created by filing a public organic document.
46 (27) "Nonprofit corporation" or "domestic nonprofit corporation" means a
47 corporation incorporated under the laws of this state and subject to the pro-
48 visions of the Idaho nonprofit corporation act.
49 (1628) "Notice" is defined in section 30-1-141, Idaho Code.
50 (29) "Organic document" means a public organic document or a private
51 organic document.
52 (30) "Organic law" means the statute governing the internal affairs of a
53 domestic or foreign business or nonprofit corporation or unincorporated
54 entity.
55 (31) "Owner liability" means personal liability for a debt, obligation or
8
1 liability of a domestic or foreign business or nonprofit corporation or unin-
2 corporated entity that is imposed on a person:
3 (a) Solely by reason of the person's status as a shareholder, member or
4 interest holder; or
5 (b) By the articles of incorporation, bylaws or an organic document under
6 a provision of the organic law of an entity authorizing the articles of
7 incorporation, bylaws or an organic document to make one (1) or more spec-
8 ified shareholders, members or interest holders liable in their capacity
9 as shareholders, members or interest holders for all or specified debts,
10 obligations or liabilities of the entity.
11 (1732) "Person" includes individual and entity.
12 (1833) "Principal office" means the office, in or out of this state, so
13 designated in the annual report where the principal executive offices of a
14 domestic or foreign corporation are located.
15 (34) "Private organic document" means any document, other than the public
16 organic document, if any, that determines the internal governance of an unin-
17 corporated entity. Where a private organic document has been amended or
18 restated, the term means the private organic document as last amended or
19 restated.
20 (1935) "Proceeding" includes civil suit and criminal, administrative and
21 investigatory action.
22 (2036) "Receipt" of a document sent by first class mail, in the absence of
23 evidence of earlier actual receipt by the addressee, means five (5) days after
24 the document is mailed postpaid and correctly addressed "Public organic docu-
25 ment" means the document, if any, that is filed of public record to create an
26 unincorporated entity. Where a public organic document has been amended or
27 restated, the term means the public organic document as last amended or
28 restated.
29 (2137) "Record date" means the date established under part 6 or 7 of this
30 chapter, on which a corporation determines the identity of its shareholders
31 and their shareholdings for purposes of this chapter. The determinations
32 shall be made as of the close of business on the record date unless another
33 time for doing so is specified when the record date is fixed.
34 (2238) "Secretary" means the corporate officer to whom the board of direc-
35 tors has delegated responsibility under section 30-1-840(3), Idaho Code, for
36 custody of the minutes of the meetings of the board of directors and of the
37 shareholders and for authenticating records of the corporation.
38 (239) "Shareholder" means the person in whose name shares are registered
39 in the records of a corporation or the beneficial owner of shares to the
40 extent of the rights granted by a nominee certificate on file with a corpora-
41 tion.
42 (240) "Shares" means the units into which the proprietary interests in a
43 corporation are divided.
44 (2541) "Sign" or "signature" includes any manual, facsimile, conformed or
45 electronic signature.
46 (426) "State," when referring to a part of the United States, includes a
47 state and commonwealth, and their agencies and governmental subdivisions, and
48 a territory and insular possession, and their agencies and governmental subdi-
49 visions, of the United States.
50 (2743) "Subscriber" means a person who subscribes for shares in a corpora-
51 tion, whether before or after incorporation.
52 (2844) "Treasury shares" means shares of a corporation which have been
53 issued, have been subsequently acquired by and belong to the corporation, and
54 have not, either by reason of the acquisition or thereafter, been cancelled or
55 restored to the status of authorized but unissued shares. Treasury shares
9
1 shall be deemed to be "issued" shares, but not "outstanding" shares.
2 (45) "Unincorporated entity" means an organization or artificial legal
3 person that either has a separate legal existence or has the power to acquire
4 an estate in real property in its own name and that is not any of the follow-
5 ing: a domestic or foreign business or nonprofit corporation, an estate, a
6 trust, a state, the United States, or a foreign government. The term includes,
7 without limitation, a general partnership, limited liability company, limited
8 partnership, business trust, joint stock association and incorporated non-
9 profit association.
10 (2946) "United States" includes district, authority, bureau, commission,
11 department and any other agency of the United States.
12 (3047) "Voting group" means all shares of one (1) or more classes or
13 series that under the articles of incorporation or this chapter are entitled
14 to vote and be counted together collectively on a matter at a meeting of
15 shareholders. All shares entitled by the articles of incorporation or this
16 chapter to vote generally on the matter are for that purpose a single voting
17 group.
18 (48) "Voting power" means the current power to vote in the election of
19 directors.
20 SECTION 3. That Section 30-1-202, Idaho Code, be, and the same is hereby
21 amended to read as follows:
22 30-1-202. ARTICLES OF INCORPORATION. (1) The articles of incorporation
23 must set forth:
24 (a) A corporate name for the corporation that satisfies the requirements
25 of section 30-1-401, Idaho Code;
26 (b) The number of shares the corporation is authorized to issue;
27 (c) The street address of the corporation's initial registered office and
28 the name of its initial registered agent at that office; and
29 (d) The name and address of each incorporator.
30 (2) The articles of incorporation may set forth:
31 (a) The names and addresses of the individuals who are to serve as the
32 initial directors;
33 (b) Provisions not inconsistent with law regarding:
34 (i) The purpose or purposes for which the corporation is organized,
35 (ii) Managing the business and regulating the affairs of the corpo-
36 ration,
37 (iii) Defining, limiting and regulating the powers of the corpora-
38 tion, its board of directors, and shareholders,
39 (iv) A par value for authorized shares or classes of shares,
40 (v) The imposition of personal liability on shareholders for the
41 debts of the corporation to a specified extent and upon specified
42 conditions;
43 (c) Any provision that under this chapter is required or permitted to be
44 set forth in the bylaws;
45 (d) A provision eliminating or limiting the liability of a director to
46 the corporation or its shareholders for money damages for any action
47 taken, or any failure to take any action, as a director, except liability
48 for:
49 (i) The amount of a financial benefit received by a director to
50 which he is not entitled,
51 (ii) An intentional infliction of harm on the corporation or the
52 shareholders,
53 (iii) A violation of section 30-1-833, Idaho Code, or
10
1 (iv) An intentional violation of criminal law; and
2 (e) A provision permitting or making obligatory indemnification of a
3 director for liability, as defined in section 30-1-850(5), Idaho Code, to
4 any person for any action taken, or any failure to take any action, as a
5 director, except liability for:
6 (i) Receipt of a financial benefit to which he is not entitled,
7 (ii) An intentional infliction of harm on the corporation or its
8 shareholders,
9 (iii) A violation of section 30-1-833, Idaho Code, or
10 (iv) An intentional violation of criminal law.
11 (3) The articles of incorporation need not set forth any of the corporate
12 powers enumerated in this chapter.
13 (4) Provisions of the articles of incorporation may be made dependent
14 upon facts objectively ascertainable outside the articles of incorporation in
15 accordance with section 31-1-120(11), Idaho Code.
16 SECTION 4. That Section 30-1-601, Idaho Code, be, and the same is hereby
17 amended to read as follows:
18 30-1-601. AUTHORIZED SHARES. (1) The articles of incorporation must pre-
19 scribe the set forth any classes of shares and series of shares within a
20 class, and the number of shares of each class and series, that the corporation
21 is authorized to issue. If more than one (1) class or series of shares is
22 authorized, the articles of incorporation must prescribe a distinguishing des-
23 ignation for each class, or series and must describe, prior to the issuance of
24 shares of a class or series, the terms, including the preferences, rights and
25 limitations and relative rights of that class must be described in the arti-
26 cles of incorporation or series. Except to the extent varied as permitted by
27 this section, aAll shares of a class or series must have terms, including
28 preferences, rights and limitations, and relative rights that are identical
29 with those of other shares of the same class except to the extent otherwise
30 permitted by section 30-1-602, Idaho Code or series.
31 (2) The articles of incorporation must authorize:
32 (a) One (1) or more classes or series of shares that together have unlim-
33 ited voting rights; and
34 (b) One (1) or more classes or series of shares, which may be the same
35 class or classes as those with voting rights, that together are entitled
36 to receive the net assets of the corporation upon dissolution.
37 (3) The articles of incorporation may authorize one (1) or more classes
38 or series of shares that:
39 (a) Have special, conditional or limited voting rights, or no right to
40 vote, except to the extent prohibited otherwise provided by this chapter;
41 (b) Are redeemable or convertible as specified in the articles of incor-
42 poration:
43 (i) At the option of the corporation, the shareholder, or another
44 person or upon the occurrence of a designated specified event;
45 (ii) For cash, indebtedness, securities or other property; and
46 (iii) In a designated amount or in an At prices and in amounts speci-
47 fied, or determined in accordance with a designated formula; or by
48 reference to extrinsic data or events;
49 (c) Entitle the holders to distributions calculated in any manner,
50 including dividends that may be cumulative, noncumulative or partially
51 cumulative; or
52 (d) Have preference over any other class or series of shares with respect
53 to distributions, including dividends and distributions upon the dissolu-
11
1 tion of the corporation.
2 (4) Terms of shares may be made dependent upon facts objectively ascer-
3 tainable outside the articles of incorporation in accordance with section
4 30-1-120(11), Idaho Code.
5 (5) Any of the terms of shares may vary among holders of the same class
6 or series so long as such variations are expressly set forth in the articles
7 of incorporation.
8 (6) The description of the designations, preferences, rights and limita-
9 tions and relative rights of share classes or series of shares in subsection
10 (3) of this section is not exhaustive.
11 SECTION 5. That Section 30-1-602, Idaho Code, be, and the same is hereby
12 amended to read as follows:
13 30-1-602. TERMS OF CLASS OR SERIES DETERMINED BY BOARD OF DIRECTORS. (1)
14 If the articles of incorporation so provide, the board of directors may is
15 authorized, without shareholder approval, to:
16 (a) Classify any unissued shares into one (1) or more classes or into one
17 (1) or more series within a class;
18 (b) Reclassify any unissued shares of any class into one (1) or more
19 classes or into one (1) or more series within one (1) or more classes; or
20 (c) Reclassify any unissued shares of any series of any class into one
21 (1) or more classes or into one (1) or more series within a class.
22 (2) If the board of directors acts pursuant to subsection (1) of this
23 section, it must determine, in whole or part, the terms, including the prefer-
24 ences, rights and limitations, and relative rights, within the limits set
25 forth in section 30-1-601, Idaho Code, to the same extent permitted under sec-
26 tion 30-1-601, Idaho Code, of:
27 (a) Any class of shares before the issuance of any shares of that class;
28 or
29 (b) One (1) or more Any series within a class before the issuance of any
30 shares of that series.
31 (2) Each series of a class must be given a distinguishing designation.
32 (3) All shares of a series must have preferences, limitations and rela-
33 tive rights identical with those of other shares of the same series and,
34 except to the extent otherwise provided in the description of the series, with
35 those of other series of the same class.
36 (4) Before issuing any shares of a class or series created under this
37 section, the corporation must deliver to the secretary of state for filing
38 articles of amendment, which are effective without shareholder action, that
39 set setting forth the terms determined under subsection (1) of this section:
40 (a) The name of the corporation;
41 (b) The text of the amendment determining the terms of the class or
42 series or shares;
43 (c) The date it was adopted; and
44 (d) A statement that the amendment was duly adopted by the board of
45 directors.
46 SECTION 6. That Section 30-1-621, Idaho Code, be, and the same is hereby
47 amended to read as follows:
48 30-1-621. ISSUANCE OF SHARES. (1) The powers granted in this section to
49 the board of directors may be reserved to the shareholders by the articles of
50 incorporation.
51 (2) The board of directors may authorize shares to be issued for consid-
12
1 eration consisting of any tangible or intangible property, including cash,
2 promissory notes, services performed, or other securities of the corporation.
3 (3) Before the corporation issues shares, the board of directors must
4 determine that the consideration received or to be received for shares to be
5 issued is adequate. That determination by the board of directors is conclu-
6 sive insofar as the adequacy of consideration for the issuance of shares
7 relates to whether the shares are validly issued, fully paid and nonassess-
8 able.
9 (4) When the corporation receives the consideration for which the board
10 of directors authorized the issuance of shares, the shares issued therefor are
11 fully paid and nonassessable.
12 (5) The corporation may place in escrow shares issued for a promissory
13 note, or make other arrangements to restrict the transfer of the shares, and
14 may credit distributions in respect of the shares against their purchase
15 price, until the note is paid. If the note is not paid, the shares escrowed
16 or restricted and the distributions credited may be cancelled in whole or
17 part.
18 (6) (a) An issuance of shares or other securities convertible into or
19 rights exercisable for shares, in a transaction or a series of integrated
20 transactions, requires approval of the shareholders, at a meeting at which
21 a quorum consisting of at least a majority of the votes entitled to be
22 cast on the matter exists, if:
23 (i) The shares, other securities, or rights are issued for consid-
24 eration other than cash or cash equivalents; and
25 (ii) The voting power of shares that are issued and issuable as a
26 result of the transaction or series of integrated transactions will
27 comprise more than twenty (20) percent of the voting power of the
28 shares of the corporation that were outstanding immediately before
29 the transaction.
30 (b) In this subsection:
31 (i) For purposes of determining the voting power of shares issued
32 and issuable as a result of a transaction or series of integrated
33 transactions, the voting power of shares shall be the greater of:
34 (A) The voting power of the shares to be issued; or
35 (B) The voting power of the shares that would be outstanding
36 after giving effect to the conversion of convertible shares and
37 other securities and the exercise of rights to be issued.
38 (ii) A series of transactions is integrated if consummation of one
39 (1) transaction is made contingent on consummation of one (1) or more
40 of the other transactions.
41 SECTION 7. That Section 30-1-624, Idaho Code, be, and the same is hereby
42 amended to read as follows:
43 30-1-624. SHARE OPTIONS. (1) A corporation may issue rights, options or
44 warrants for the purchase of shares or other securities of the corporation.
45 The board of directors shall determine:
46 (a) Tthe terms upon which the rights, options or warrants are issued,
47 their form and content,; and
48 (b) The terms, including the consideration for which the shares or other
49 securities are to be issued, unless the power to make such determination
50 is reserved to the shareholders by the articles of incorporation. The
51 authorization by the board of directors for the corporation to issue such
52 rights, options or warrants constitutes authorization of the issuance of
53 the shares or other securities for which the rights, options or warrants
13
1 are exercisable.
2 (2) The terms and conditions of such rights, options or warrants, includ-
3 ing those outstanding on the effective date of this act, may include, without
4 limitation, restrictions or conditions that:
5 (a) Preclude or limit the exercise, transfer or receipt of such rights,
6 options or warrants by any person or persons owning or offering to acquire
7 a specified number or percentage of the outstanding shares or other secu-
8 rities of the corporation or by any transferee or transferees of any such
9 person or persons; or
10 (b) Invalidate or void such rights, options or warrants held by any such
11 person or persons or any such transferee or transferees.
12 SECTION 8. That Section 30-1-631, Idaho Code, be, and the same is hereby
13 amended to read as follows:
14 30-1-631. CORPORATION'S ACQUISITION OF ITS OWN SHARES. (1) A corporation
15 may acquire its own shares. Unless a resolution of the board of directors or
16 the corporation's articles of incorporation provide otherwise, shares so
17 acquired constitute authorized but unissued shares.
18 (2) If the articles of incorporation prohibit the reissue of acquired
19 shares, the number of authorized shares is reduced by the number of shares
20 acquired, effective upon amendment of the articles of incorporation pursuant
21 to section 30-1-1005(6), Idaho Code.
22 (3) The board of directors may adopt articles of amendment under this
23 section without shareholder action and deliver them to the secretary of state
24 for filing. The articles must set forth:
25 (a) The name of the corporation;
26 (b) The reduction in the number of authorized shares, itemized by class
27 and series; and
28 (c) The total number of authorized shares, itemized by class and series,
29 remaining after reduction of the shares.
30 (4) A corporation has authority to use, hold, acquire, cancel and dispose
31 of treasury shares.
32 (54) Unless the board of directors adopts an amendment to the
33 corporation's articles of incorporation to reduce the number of authorized
34 shares, treasury shares of the corporation that are cancelled shall be treated
35 as authorized but unissued shares.
36 SECTION 9. That Section 30-1-640, Idaho Code, be, and the same is hereby
37 amended to read as follows:
38 30-1-640. DISTRIBUTIONS TO SHAREHOLDERS. (1) A board of directors may
39 authorize and the corporation may make distributions to its shareholders sub-
40 ject to restriction by the articles of incorporation and the limitation in
41 subsection (3) of this section.
42 (2) If the board of directors does not fix the record date for determin-
43 ing shareholders entitled to a distribution, other than one involving a pur-
44 chase, redemption or other acquisition of the corporation's shares, it is the
45 date the board of directors authorizes the distribution.
46 (3) No distribution may be made if, after giving it effect:
47 (a) The corporation would not be able to pay its debts as they become due
48 in the usual course of business; or
49 (b) The corporation's total assets would be less than the sum of its
50 total liabilities plus, unless the articles of incorporation permit other-
51 wise, the amount that would be needed, if the corporation were to be dis-
14
1 solved at the time of the distribution, to satisfy the preferential rights
2 upon dissolution of shareholders whose preferential rights are superior to
3 those receiving the distribution.
4 (4) The board of directors may base a determination that a distribution
5 is not prohibited under subsection (3) of this section either on financial
6 statements prepared on the basis of accounting practices and principles that
7 are reasonable in the circumstances or on a fair valuation or other method
8 that is reasonable in the circumstances.
9 (5) Except as provided in subsection (7) of this section, the effect of a
10 distribution under subsection (3) of this section is measured:
11 (a) In the case of distribution by purchase, redemption or other acquisi-
12 tion of the corporation's shares, as of the earlier of:
13 (i) The date money or other property is transferred or debt incur-
14 red by the corporation, or
15 (ii) The date the shareholder ceases to be a shareholder with
16 respect to the acquired shares;
17 (b) In the case of any other distribution of indebtedness, as of the date
18 the indebtedness is distributed; and
19 (c) In all other cases, as of:
20 (i) The date the distribution is authorized if the payment occurs
21 within one hundred twenty (120) days after the date of authorization,
22 or
23 (ii) The date the payment is made if it occurs more than one hundred
24 twenty (120) days after the date of authorization.
25 (6) A corporation's indebtedness to a shareholder incurred by reason of a
26 distribution made in accordance with this section is at parity with the
27 corporation's indebtedness to its general, unsecured creditors except to the
28 extent subordinated by agreement.
29 (7) Indebtedness of a corporation, including indebtedness issued as a
30 distribution, is not considered a liability for purposes of determinations
31 under subsection (3) of this section if its terms provide that payment of
32 principal and interest are made only if and to the extent that payment of a
33 distribution to shareholders could then be made under this section. If the
34 indebtedness is issued as a distribution, each payment of principal or inter-
35 est is treated as a distribution, the effect of which is measured on the date
36 the payment is actually made.
37 (8) This section shall not apply to distributions in liquidation under
38 part 14 of this chapter.
39 SECTION 10. That Section 30-1-702, Idaho Code, be, and the same is hereby
40 amended to read as follows:
41 30-1-702. SPECIAL MEETING. (1) A corporation shall hold a special meeting
42 of shareholders:
43 (a) On call of its board of directors or the person or persons authorized
44 to do so by the articles of incorporation or bylaws; or
45 (b) If the holders of at least twenty percent (20%) of all the votes
46 entitled to be cast on any issue proposed to be considered at the proposed
47 special meeting sign, date and deliver to the corporation's secretary one
48 (1) or more written demands for the meeting describing the purpose or pur-
49 poses for which it is to be held, provided that the articles of incorpora-
50 tion may fix a lower percentage or a higher percentage not exceeding thir-
51 ty-three and one-third percent (33 1/3%) of all the votes entitled to be
52 cast on any issue proposed to be considered. Unless otherwise provided in
53 the articles of incorporation, a written demand for a special meeting may
15
1 be revoked by a writing to that effect received by the corporation prior
2 to the receipt by the corporation of demands sufficient in number to
3 require the holding of a special meeting.
4 (2) If not otherwise fixed under section 30-1-703 or 30-1-707, Idaho
5 Code, the record date for determining shareholders entitled to demand a spe-
6 cial meeting is the date the first shareholder signs the demand.
7 (3) Special shareholders' meetings may be held in or out of this state at
8 the place stated in or fixed in accordance with the bylaws. If no place is
9 stated or fixed in accordance with the bylaws, special meetings shall be held
10 at the corporation's principal office.
11 (4) Only business within the purpose or purposes described in the meeting
12 notice required by section 30-1-705(3), Idaho Code, may be conducted at a spe-
13 cial shareholders' meeting.
14 SECTION 11. That Section 30-1-704, Idaho Code, be, and the same is hereby
15 amended to read as follows:
16 30-1-704. ACTION WITHOUT MEETING. (1) Action required or permitted by
17 this chapter to be taken at a shareholders' meeting may be taken without a
18 meeting if the action is taken by all the shareholders entitled to vote on the
19 action. The action must be evidenced by one (1) or more written consents bear-
20 ing the date of signature and describing the action taken, signed by all the
21 shareholders entitled to vote on the action, and delivered to the corporation
22 for inclusion in the minutes or filing with the corporate records.
23 (2) If not otherwise fixed under section 30-1-703 or 30-1-707, Idaho
24 Code, the record date for determining shareholders entitled to take action
25 without a meeting is the date the first shareholder signs the consent under
26 subsection (1) of this section. No written consent shall be effective to take
27 the corporate action referred to therein unless, within sixty (60) days of the
28 earliest date appearing on a consent delivered to the corporation in the man-
29 ner required by this section, written consents signed by all shareholders
30 entitled to vote on the action are received by the corporation. A written con-
31 sent may be revoked by a writing to that effect received by the corporation
32 prior to the receipt by the corporation of unrevoked written consents suffi-
33 cient in number to take corporate action.
34 (3) A consent signed under this section has the effect of a meeting vote
35 and may be described as such in any document.
36 (4) If this chapter requires that notice of proposed action be given to
37 nonvoting shareholders and the action is to be taken by unanimous consent of
38 the voting shareholders, the corporation must give its nonvoting shareholders
39 written notice of the proposed action at least ten (10) days before the action
40 is taken. The notice must contain or be accompanied by the same material
41 that, under this chapter, would have been required to be sent to nonvoting
42 shareholders in a notice of meeting at which the proposed action would have
43 been submitted to the shareholders for action.
44 SECTION 12. That Part 7, Chapter 1, Title 30, Idaho Code, be, and the
45 same is hereby amended by the addition thereto of a NEW SECTION, to be known
46 and designated as Section 30-1-708, Idaho Code, and to read as follows:
47 30-1-708. CONDUCT OF THE MEETING. (1) At each meeting of shareholders, a
48 chair shall preside. The chair shall be appointed as provided in the bylaws
49 or, in the absence of such provision, by the board.
50 (2) The chair, unless the bylaws provide otherwise, shall determine the
51 order of business and shall establish rules for the conduct of the meeting.
16
1 (3) The rules adopted for, and the conduct of, the meeting shall be fair
2 to shareholders.
3 (4) The chair of the meeting shall announce at the meeting when the polls
4 close for each matter voted upon. If no announcement is made, the polls shall
5 be deemed to have closed upon the final adjournment of the meeting. After the
6 polls close, no ballots, proxies or votes nor any revocations or changes
7 thereto may be accepted.
8 SECTION 13. That Section 30-1-722, Idaho Code, be, and the same is hereby
9 amended to read as follows:
10 30-1-722. PROXIES. (1) A shareholder may vote his shares in person or by
11 proxy. The following shall constitute valid means by which a shareholder may
12 authorize another person to act as proxy:
13 (a) A shareholder may execute a writing authorizing another person or
14 persons to act for such shareholder as proxy. Execution may be accom-
15 plished by the shareholder, or such shareholder's authorized officer,
16 director, employee or agent, signing such writing or causing such person's
17 signature to be affixed to such writing by any reasonable means including,
18 but not limited to, facsimile signature.
19 (b) A shareholder may authorize another person or persons to act for such
20 shareholder as proxy by transmitting or authorizing the transmission of a
21 telegram, cablegram or other means of electronic transmission to the per-
22 son who will be the holder of the proxy or to a proxy solicitation firm,
23 proxy support service organization or similar agent duly authorized by the
24 person who will be the holder of the proxy to receive such transmission,
25 provided that any such telegram, cablegram or other means of electronic
26 transmission must either set forth or be submitted with information from
27 which it can be determined that the telegram, cablegram or other elec-
28 tronic transmission was authorized by the shareholder. If it is determined
29 that such telegram, cablegram or other electronic transmission is valid,
30 the inspectors or, if there are no inspectors, such other persons making
31 that determination, shall specify the information upon which they relied.
32 (c) Any copy, facsimile telecommunication or other reliable reproduction
33 of the writing or transmission created pursuant to paragraph (a) or (b) of
34 this subsection may be substituted or used in lieu of the original writing
35 or transmission for any and all purposes for which the original writing or
36 transmission could be used, provided that such copy, facsimile telecommu-
37 nication or other reproduction shall be a complete reproduction for the
38 entire original writing or transmission.
39 (2) A shareholder or his agent or attorney-in-fact may appoint a proxy to
40 vote or otherwise act for the shareholder by signing an appointment form, or
41 by an electronic transmission. An electronic transmission must contain or be
42 accompanied by information from which one can reasonably verify that the
43 shareholder, the shareholder's agent, or the shareholder's attorney-in-fact
44 authorized the transmission.
45 (3) An appointment of a proxy is effective when a signed appointment form
46 or an electronic transmission of the appointment is received by the secretary
47 inspector of election or other the officer or agent of the corporation autho-
48 rized to tabulate votes. An appointment is valid for eleven (11) months unless
49 a longer period is expressly provided in the writing or transmission executed
50 pursuant to subsection (1) of this section appointment form.
51 (34) An appointment of a proxy is revocable by the shareholder unless the
52 writing or transmission executed pursuant to subsection (1) of this section
53 conspicuously appointment form or electronic transmission states that it is
17
1 irrevocable and the appointment is coupled with an interest. Appointments cou-
2 pled with an interest include the appointment of:
3 (a) A pledgee;
4 (b) A person who purchased or agreed to purchase the shares;
5 (c) A creditor of the corporation who extended it credit under terms
6 requiring the appointment;
7 (d) An employee of the corporation whose employment contract requires the
8 appointment; or
9 (e) A party to a voting agreement created under section 30-1-731, Idaho
10 Code.
11 (45) The death or incapacity of the shareholder appointing a proxy does
12 not affect the right of the corporation to accept the proxy's authority unless
13 notice of the death or incapacity is received by the secretary inspector of
14 election or other the officer or agent of the corporation authorized to tabu-
15 late votes before the proxy exercises his authority under the appointment.
16 (56) An appointment made irrevocable under subsection (34) of this sec-
17 tion is revoked when the interest with which it is coupled is extinguished.
18 (67) A transferee for value of shares subject to an irrevocable appoint-
19 ment may revoke the appointment if he did not know of its existence when he
20 acquired the shares and the existence of the irrevocable appointment was not
21 noted conspicuously on the certificate representing the shares or on the
22 information statement for shares without certificates.
23 (78) Subject to section 30-1-724, Idaho Code, and to any express limita-
24 tion on the proxy's authority appearing on the face of the writing or trans-
25 mission executed pursuant to subsection (1) of this section stated in the
26 appointment form or electronic transmission, a corporation is entitled to
27 accept the proxy's vote or other action as that of the shareholder authorizing
28 the person to act as proxy making the appointment.
29 SECTION 14. That Section 30-1-724, Idaho Code, be, and the same is hereby
30 amended to read as follows:
31 30-1-724. CORPORATION'S ACCEPTANCE OF VOTES. (1) If the name signed on a
32 vote, consent, waiver or proxy appointment corresponds to the name of a share-
33 holder, the corporation if acting in good faith is entitled to accept the
34 vote, consent, waiver or proxy appointment and give it effect as the act of
35 the shareholder.
36 (2) If the name signed on a vote, consent, waiver or proxy appointment
37 does not correspond to the name of its shareholder, the corporation if acting
38 in good faith is nevertheless entitled to accept the vote, consent, waiver or
39 proxy appointment and give it effect as the act of the shareholder if:
40 (a) The shareholder is an entity and the name signed purports to be that
41 of an officer or agent of the entity;
42 (b) The name signed purports to be that of an administrator, executor,
43 guardian or conservator representing the shareholder and, if the corpora-
44 tion requests, evidence of fiduciary status acceptable to the corporation
45 has been presented with respect to the vote, consent, waiver or proxy
46 appointment;
47 (c) The name signed purports to be that of a receiver or trustee in bank-
48 ruptcy of the shareholder and, if the corporation requests, evidence of
49 this status acceptable to the corporation has been presented with respect
50 to the vote, consent, waiver or proxy appointment;
51 (d) The name signed purports to be that of a pledgee, beneficial owner,
52 or attorney-in-fact of the shareholder and, if the corporation requests,
53 evidence acceptable to the corporation of the signatory's authority to
18
1 sign for the shareholder has been presented with respect to the vote, con-
2 sent, waiver or proxy appointment;
3 (e) Two (2) or more persons are the shareholder as cotenants or fiducia-
4 ries and the name signed purports to be the name or at least one (1) of
5 the co-owners and the person signing appears to be acting on behalf of all
6 the co-owners.
7 (3) The corporation is entitled to reject a vote, consent, waiver or
8 proxy appointment if the secretary inspector of election or other the officer
9 or agent of the corporation authorized to tabulate votes, acting in good
10 faith, has reasonable basis for doubt about the validity of the signature on
11 it or about the signatory's authority to sign for the shareholder.
12 (4) The corporation and its officer or agent who accepts or rejects a
13 vote, consent, waiver or proxy appointment in good faith and in accordance
14 with the standards of this section or section 30-1-722(2), Idaho Code, are not
15 liable in damages to the shareholder for the consequences of the acceptance or
16 rejection.
17 (5) Corporate action based on the acceptance or rejection of a vote, con-
18 sent, waiver or proxy appointment under this section or section 30-1-722(2),
19 Idaho Code, is valid unless a court of competent jurisdiction determines
20 otherwise.
21 SECTION 15. That Part 7, Chapter 1, Title 30, Idaho Code, be, and the
22 same is hereby amended by the addition thereto of a NEW SECTION, to be known
23 and designated as Section 30-1-729, Idaho Code, and to read as follows:
24 30-1-729. INSPECTORS OF ELECTION. (1) A corporation having any shares
25 listed on a national securities exchange or regularly traded in a market main-
26 tained by one (1) or more members of a national or affiliated securities asso-
27 ciation shall, and any other corporation may, appoint one (1) or more inspec-
28 tors to act at a meeting of shareholders and make a written report of the
29 inspectors' determinations. Each inspector shall take and sign an oath faith-
30 fully to execute the duties of inspector with strict impartiality and accord-
31 ing to the best of the inspector's ability.
32 (2) The inspectors shall:
33 (a) Ascertain the number of shares outstanding and the voting power of
34 each;
35 (b) Determine the shares represented at a meeting;
36 (c) Determine the validity of proxies and ballots;
37 (d) Count all votes; and
38 (e) Determine the result.
39 (3) An inspector may be an officer or employee of the corporation.
40 SECTION 16. That Section 30-1-801, Idaho Code, be, and the same is hereby
41 amended to read as follows:
42 30-1-801. REQUIREMENT FOR AND DUTIES OF BOARD OF DIRECTORS. (1) Except as
43 provided in section 30-1-732, Idaho Code, each corporation must have a board
44 of directors.
45 (2) All corporate powers shall be exercised by or under the authority of,
46 and the business and affairs of the corporation managed by or under the direc-
47 tion of, its board of directors, subject to any limitation set forth in the
48 articles of incorporation or in an agreement authorized under section
49 30-1-732, Idaho Code.
50 SECTION 17. That Section 30-1-803, Idaho Code, be, and the same is hereby
19
1 amended to read as follows:
2 30-1-803. NUMBER AND ELECTION OF DIRECTORS. (1) A board of directors must
3 consist of one (1) or more individuals, with the number specified in or fixed
4 in accordance with the articles of incorporation or bylaws.
5 (2) If a board of directors has power to fix or change the number of
6 directors, the board may increase or decrease by thirty percent (30%) or less
7 the number of directors last approved by the shareholders, but only the share-
8 holders may increase or decrease by more than thirty percent (30%) the number
9 of directors last approved by the shareholders The number of directors may be
10 increased or decreased from time to time by amendment to, or in the manner
11 provided in, the articles of incorporation or the bylaws.
12 (3) The articles of incorporation or bylaws may establish a variable
13 range for the size of the board of directors by fixing a minimum and maximum
14 number of directors. If a variable range is established, the number of direc-
15 tors may be fixed or changed from time to time, within the minimum and maxi-
16 mum, by the shareholders or the board of directors. After shares are issued,
17 only the shareholders may change the range for the size of the board or change
18 from a fixed to a variable-range size board or vice versa.
19 (4) Directors are elected at the first annual shareholders' meeting and
20 at each annual meeting thereafter unless their terms are staggered under sec-
21 tion 30-1-806, Idaho Code.
22 SECTION 18. That Section 30-1-806, Idaho Code, be, and the same is hereby
23 amended to read as follows:
24 30-1-806. STAGGERED TERMS FOR DIRECTORS. If there are nine (9) or more
25 directors, tThe articles of incorporation may provide for staggering their the
26 terms of directors by dividing the total number of directors into two (2) or
27 three (3) groups, with each group containing one-half (1/2) or one-third (1/3)
28 of the total, as near as may be. In that event, the terms of directors in the
29 first group expire at the first annual shareholders' meeting after their elec-
30 tion, the terms of the second group expire at the second annual shareholders'
31 meeting after their election, and the terms of the third group, if any, expire
32 at the third annual shareholders' meeting after their election. At each
33 annual shareholders' meeting held thereafter, directors shall be chosen for a
34 term of two (2) or three (3) years, as the case may be, to succeed those whose
35 terms expire.
36 SECTION 19. That Section 30-1-809, Idaho Code, be, and the same is hereby
37 amended to read as follows:
38 30-1-809. REMOVAL OF DIRECTORS BY JUDICIAL PROCEEDING. (1) The Idaho dis-
39 trict court of the county where a corporation's principal office, or, if none
40 in this state, its registered office, is located may remove a director of the
41 corporation from office in a proceeding commenced either by or in the right of
42 the corporation or by its shareholders holding at least ten percent (10%) of
43 the outstanding shares of any class if the court finds that:
44 (a) The director engaged in fraudulent or dishonest conduct, or gross
45 abuse of authority or discretion, with respect to the corporation or its
46 shareholders, grossly abused the position of director, or intentionally
47 inflicted harm on the corporation; and
48 (b) Considering the director's course of conduct and the inadequacy of
49 other available remedies, rRemoval is would be in the best interest of the
50 corporation.
20
1 (2) A shareholder proceeding on behalf of the corporation under subsec-
2 tion (1) of this section shall comply with all the requirements of sections
3 30-1-741 through 30-1-747, Idaho Code, except section 30-1-741(1), Idaho Code.
4 (3) The court, that removes a in addition to removing the director, may
5 bar the director from reelection for a period prescribed by the court.
6 (34) If shareholders commence a proceeding under subsection (1) of this
7 section, they shall make the corporation a party defendant Nothing in this
8 section limits the equitable powers of the court to order other relief.
9 SECTION 20. That Section 30-1-821, Idaho Code, be, and the same is hereby
10 amended to read as follows:
11 30-1-821. ACTION WITHOUT MEETING. (1) Unless Except to the extent that
12 the articles of incorporation or bylaws provide otherwise require that action
13 by the board of directors be taken at a meeting, action required or permitted
14 by this act to be taken at a by the board of directors' meeting may be taken
15 without a meeting if the action is taken by all members of the board. The
16 action must be evidenced by one (1) or more written consents each director
17 signs a consent describing the action to be taken, signed by each director,
18 and included in the minutes or filed with the corporate records reflecting the
19 action taken and delivers it to the corporation.
20 (2) Action taken under this section is effective the act of the board of
21 directors when the last director signed the consent, unless the consent speci-
22 fies an earlier or later effective date one (1) or more consents signed by all
23 the directors are delivered to the corporation. The consent may specify the
24 time at which the action taken thereunder is to be effective. A director's
25 consent may be withdrawn by a revocation signed by the director and delivered
26 to the corporation prior to delivery to the corporation of unrevoked written
27 consents signed by all the directors.
28 (3) A consent signed under this section has the effect of a meeting vote
29 action taken at a meeting of the board of directors and may be described as
30 such in any document.
31 SECTION 21. That Section 30-1-825, Idaho Code, be, and the same is hereby
32 amended to read as follows:
33 30-1-825. COMMITTEES. (1) Unless this chapter, the articles of incorpora-
34 tion or the bylaws provide otherwise, a board of directors may create one (1)
35 or more committees and appoint one (1) or more members of the board of direc-
36 tors to serve on them. Each committee must have two (2) or more members, who
37 serve at the pleasure of the board of directors any such committee.
38 (2) Unless this chapter otherwise provides, tThe creation of a committee
39 and appointment of members to it must be approved by the greater of:
40 (a) A majority of all the directors in office when the action is taken;
41 or
42 (b) The number of directors required by the articles of incorporation or
43 bylaws to take action under section 30-1-824, Idaho Code.
44 (3) Sections 30-1-820 through 30-1-824, Idaho Code, which govern meet-
45 ings, action without meetings, notice and waiver of notice, and quorum and
46 voting requirements of the board of directors, apply both to committees of the
47 board and to their members. as well.
48 (4) To the extent specified by the board of directors or in the articles
49 of incorporation or bylaws, each committee may exercise the authority powers
50 of the board of directors under section 30-1-801, Idaho Code.
51 (5) A committee may not, however:
21
1 (a) Authorize or approve distributions, except according to a formula or
2 method, or within limits, prescribed by the board of directors;
3 (b) Approve or propose to shareholders action that this chapter requires
4 be approved by shareholders;
5 (c) Fill vacancies on the board of directors or, subject to subsection
6 (7) of this section, on any of its committees; or
7 (d) Amend articles of incorporation pursuant to section 30-1-1002, Idaho
8 Code;
9 (e) Adopt, amend or repeal bylaws.;
10 (f) Approve a plan of merger not requiring shareholder approval;
11 (g) Authorize or approve reacquisition of shares, except according to a
12 formula or method prescribed by the board of directors; or
13 (h) Authorize or approve the issuance or sale or contract for sale of
14 shares, or determine the designation and relative rights, preferences and
15 limitations of a class or series of shares, except that the board of
16 directors may authorize a committee, or a senior executive officer of the
17 corporation, to do so within limits specifically prescribed by the board
18 of directors.
19 (6) The creation of, delegation of authority to, or action by a committee
20 does not alone constitute compliance by a director with the standards of con-
21 duct described in section 30-1-830, Idaho Code.
22 (7) The board of directors may appoint one (1) or more directors as
23 alternate members of any committee to replace any absent or disqualified mem-
24 ber during the member's absence or disqualification. Unless the articles of
25 incorporation or the bylaws or the resolution creating the committee provide
26 otherwise, in the event of the absence or disqualification of a member of a
27 committee, the member or members present at any meeting and not disqualified
28 from voting, unanimously, may appoint another director to act in place of the
29 absent or disqualified member.
30 SECTION 22. That Section 30-1-830, Idaho Code, be, and the same is hereby
31 amended to read as follows:
32 30-1-830. GENERAL STANDARDS FOR DIRECTORS. (1) A director shall discharge
33 his Each member of the board of directors, when discharging the duties as of a
34 director, including his duties as a member of a committee shall act:
35 (a) In good faith; and
36 (b) With the care an ordinarily prudent person in a like position would
37 exercise under similar circumstances; and
38 (c) In a manner he the director reasonably believes to be in the best
39 interests of the corporation.
40 (2) The members of the board of directors or a committee of the board,
41 when becoming informed in connection with their decision-making function or
42 devoting attention to their oversight function, shall discharge their duties
43 with the care that a person in a like position would reasonably believe appro-
44 priate under similar circumstances.
45 (3) In discharging board or committee duties a director, who does not
46 have knowledge that makes reliance unwarranted, is entitled to rely on the
47 performance by any of the persons specified in subsection (5)(a) or (5)(c) of
48 this section to whom the board may have delegated, formally or informally by
49 course of conduct, the authority or duty to perform one (1) or more of the
50 board's functions that are delegable under applicable law.
51 (4) In discharging his board or committee duties a director, who does not
52 have knowledge that makes reliance unwarranted, is entitled to rely on infor-
53 mation, opinions, reports or statements, including financial statements and
22
1 other financial data, if prepared or presented by any of the persons specified
2 in subsection (5) of this section.
3 (5) A director is entitled to rely, in accordance with subsection (3) or
4 (4) of this section, on:
5 (a) One (1) or more officers or employees of the corporation whom the
6 director reasonably believes to be reliable and competent in the matters
7 presented functions performed or the information, opinion, reports or
8 statements provided;
9 (b) Legal counsel, public accountants, or other persons retained by the
10 corporation as to matters involving skills or expertise the director rea-
11 sonably believes are matters:
12 (i) Wwithin the particular person's professional or expert compe-
13 tence; or
14 (ii) As to which the particular person merits confidence; or
15 (c) A committee of the board of directors of which he the director is not
16 a member if the director reasonably believes the committee merits confi-
17 dence.
18 (3) A director is not acting in good faith if he has knowledge concerning
19 the matter in question that makes reliance otherwise permitted by subsection
20 (2) of this section unwarranted.
21 (4) A director is not liable for any action taken as a director, or any
22 failure to take any action, if he performed the duties of his office in com-
23 pliance with this section.
24 SECTION 23. That Part 8, Chapter 1, Title 30, Idaho Code, be, and the
25 same is hereby amended by the addition thereto of a NEW SECTION, to be known
26 and designated as Section 30-1-831, Idaho Code, and to read as follows:
27 30-1-831. STANDARDS OF LIABILITY FOR DIRECTORS. (1) A director shall not
28 be liable to the corporation or its shareholders for any decision to take or
29 not to take action, or any failure to take any action, as a director, unless
30 the party asserting liability in a proceeding establishes that:
31 (a) Any provision in the articles of incorporation authorized by section
32 30-1-202(2)(d), Idaho Code, or the protection afforded by section
33 30-1-861, Idaho Code, for action taken in compliance with section 30-1-862
34 or 30-1-863, Idaho Code, if interposed as a bar to the proceeding by the
35 director, does not preclude liability; and
36 (b) The challenged conduct consisted or was the result of:
37 (i) Action not in good faith; or
38 (ii) A decision:
39 (A) Which the director did not reasonably believe to be in the
40 best interests of the corporation; or
41 (B) As to which the director was not informed to an extent the
42 director reasonably believed appropriate in the circumstances;
43 or
44 (iii) A lack of objectivity due to the director's familial, finan-
45 cial, or business relationship with, or a lack of independence due to
46 the director's domination or control by, another person having a
47 material interest in the challenged conduct:
48 (A) Which relationship or which domination or control could
49 reasonably be expected to have affected the director's judgment
50 respecting the challenged conduct in a manner adverse to the
51 corporation; and
52 (B) After a reasonable expectation to such effect has been
53 established, the director shall not have established that the
23
1 challenged conduct was reasonably believed by the director to be
2 in the best interests of the corporation; or
3 (iv) A sustained failure of the director to be informed about the
4 business and affairs of the corporation, or other material failure of
5 the director to discharge the oversight function; or
6 (v) Receipt of a financial benefit to which the director was not
7 entitled or any other breach of the director's duties to deal fairly
8 with the corporation and its shareholders that is actionable under
9 applicable law.
10 (2) The party seeking to hold the director liable:
11 (a) For money damages, shall also have the burden of establishing that:
12 (i) Harm to the corporation or its shareholders has been suffered;
13 and
14 (ii) The harm suffered was proximately caused by the director's
15 challenged conduct; or
16 (b) For other money payment under a legal remedy, such as compensation
17 for the unauthorized use of corporate assets, shall also have whatever
18 persuasion burden may be called for to establish that the payment sought
19 is appropriate in the circumstances; or
20 (c) For other money payment under an equitable remedy, such as profit
21 recovery by or disgorgement to the corporation, shall also have whatever
22 persuasion burden may be called for to establish that the equitable remedy
23 sought is appropriate in the circumstances.
24 (3) Nothing contained in this section shall:
25 (a) In any instance where fairness is at issue, such as consideration of
26 the fairness of a transaction to the corporation under section
27 30-1-861(2)(c), Idaho Code, alter the burden of proving the fact or lack
28 of fairness otherwise applicable;
29 (b) Alter the fact or lack of liability of a director under another sec-
30 tion of this chapter, such as the provisions governing the consequences of
31 an unlawful distribution under section 30-1-833, Idaho Code, or a
32 transactional interest under section 30-1-861, Idaho Code; or
33 (c) Affect any rights to which the corporation or a shareholder may be
34 entitled under another statute of this state or the United States.
35 SECTION 24. That Section 30-1-833, Idaho Code, be, and the same is hereby
36 amended to read as follows:
37 30-1-833. DIRECTORS' LIABILITY FOR UNLAWFUL DISTRIBUTIONS. (1) A director
38 who votes for or assents to a distribution made in violation of in excess of
39 what may be authorized and made pursuant to section 30-1-640(1) or
40 30-1-1409(1), Idaho Code, or the articles of incorporation is personally lia-
41 ble to the corporation for the amount of the distribution that exceeds what
42 could have been distributed without violating section 30-1-640(1) or
43 30-1-1409(1), Idaho Code, or the articles of incorporation if it is estab-
44 lished that he did not perform his duties in compliance if the party asserting
45 liability establishes that when taking the action the director did not comply
46 with section 30-1-830, Idaho Code. In any proceeding commenced under this sec-
47 tion, a director has all of the defenses ordinarily available to a director.
48 (2) A director held liable under subsection (1) of this section for an
49 unlawful distribution is entitled to: contribution;
50 (a) Contribution fFrom every other director who could be held liable
51 under subsection (1) of this section for the unlawful distribution; and
52 (b) Recoupment fFrom each shareholder for of the pro rata portion of the
53 amount of the unlawful distribution the shareholder accepted knowing the
24
1 distribution was made in violation of section 30-1-640(1) or 30-1-1409(1),
2 Idaho Code, or the articles of incorporation.
3 (3) A proceeding under this section to enforce:
4 (a) The liability of a director under subsection (1) of this section is
5 barred unless it is commenced within three two (32) years after the date:
6 (i) Oon which the effect of the distribution was measured under
7 section 30-1-640(5) or (7), Idaho Code; or
8 (ii) As of which the violation of section 30-1-640(1), Idaho Code,
9 occurred as the consequence of disregard of a restriction in the
10 articles of incorporation; or
11 (iii) On which the distribution of assets to shareholders under sec-
12 tion 30-1-1409(1), Idaho Code, was made; or
13 (b) Contribution or recoupment under subsection (2) of this section is
14 barred unless it is commenced within one (1) year after the liability of
15 the claimant has been finally adjudicated under subsection (1) of this
16 section.
17 SECTION 25. That Section 30-1-840, Idaho Code, be, and the same is hereby
18 amended to read as follows:
19 30-1-840. REQUIRED OFFICERS OFFICES. (1) A corporation has the officers
20 offices described in its bylaws or appointed designated by the board of direc-
21 tors in accordance with the bylaws.
22 (2) A duly appointed The board of directors may elect individuals to fill
23 one (1) or more offices of the corporation. An officer may appoint one (1) or
24 more officers or assistant officers if authorized by the bylaws or the board
25 of directors.
26 (3) The bylaws or the board of directors shall delegate assign to one (1)
27 of the officers responsibility for preparing the minutes of the directors' and
28 shareholders' meetings and for maintaining and authenticating the records of
29 the corporation required to be kept under sections 30-1-1601(1) and (2), Idaho
30 Code.
31 (4) The same individual may simultaneously hold more than one (1) office
32 in a corporation.
33 SECTION 26. That Section 30-1-842, Idaho Code, be, and the same is hereby
34 amended to read as follows:
35 30-1-842. STANDARDS OF CONDUCT FOR OFFICERS. (1) An officer, with discre-
36 tionary authority shall discharge his duties under that authority when per-
37 forming in such capacity, shall act:
38 (a) In good faith;
39 (b) With the care an ordinarily prudent that a person in a like position
40 would reasonably exercise under similar circumstances; and
41 (c) In a manner he the officer reasonably believes to be in the best
42 interests of the corporation.
43 (2) In discharging his those duties an officer, who does not have knowl-
44 edge that makes reliance unwarranted, is entitled to rely on: information,
45 opinions, reports or statements, including financial statements and other
46 financial data, if prepared or presented by:
47 (a) The performance of properly delegated responsibilities by one (1) or
48 more employees of the corporation whom the officer reasonably believes to
49 be reliable and competent in performing the responsibilities delegated; or
50 (b) Information, opinions, reports or statements, including financial
51 statements and other financial data, prepared or presented by oOne (1) or
25
1 more officers or employees of the corporation whom the officer reasonably
2 believes to be reliable and competent in the matters presented; or by
3 (b) Llegal counsel, public accountants or other persons retained by the
4 corporation as to matters involving skill or expertise the officer reason-
5 ably believes are matters:
6 (i) Wwithin the particular person's professional or expert compe-
7 tence; or
8 (ii) As to which the particular person merits confidence.
9 (3) An officer is not acting in good faith if he has knowledge concerning
10 the matter in question that makes reliance otherwise permitted by subsection
11 (2) of this section unwarranted.
12 (4) An officer is shall not be liable to the corporation or its share-
13 holders for any decision to take or not to take action taken as an officer, or
14 any failure to take any action, as an officer, if he performed the duties of
15 his the office are performed in compliance with this section. Whether an offi-
16 cer who does not comply with this section shall have liability will depend in
17 such instance on applicable law, including those principles of section
18 30-1-831, Idaho Code, that have relevance.
19 SECTION 27. That Section 30-1-843, Idaho Code, be, and the same is hereby
20 amended to read as follows:
21 30-1-843. RESIGNATION AND REMOVAL OF OFFICERS. (1) An officer may resign
22 at any time by delivering notice to the corporation. A resignation is effec-
23 tive when the notice is delivered unless the notice specifies a later effec-
24 tive date time. If a resignation is made effective at a later date time and
25 the corporation board or the appointing officer accepts the future effective
26 date time, its the board of directors or the appointing officer may fill the
27 pending vacancy before the effective date time if the board of directors or
28 the appointing officer provides that the successor does not take office until
29 the effective date time.
30 (2) A board of directors An officer may remove any officer be removed at
31 any time with or without cause by:
32 (a) The board of directors;
33 (b) The officer who appointed such officer, unless the bylaws or the
34 board of directors provide otherwise; or
35 (c) Any other officer if authorized by the bylaws or the board of direc-
36 tors.
37 (3) In this section, "appointing officer" means the officer, including
38 any successor to that officer, who appointed the officer resigning or being
39 removed.
40 SECTION 28. That Section 30-1-858, Idaho Code, be, and the same is hereby
41 amended to read as follows:
42 30-1-858. VARIATION BY CORPORATE ACTION -- APPLICATION OF INDEMNIFICATION
43 PROVISIONS. (1) A corporation may, by a provision in its articles of incorpo-
44 ration or bylaws or in a resolution approved by its board of directors or
45 shareholders, obligate itself in advance of the act or omission giving rise to
46 a proceeding to provide indemnification in accordance with section 30-1-851,
47 Idaho Code, or advance funds to pay for or reimburse expenses in accordance
48 with section 30-1-853, Idaho Code. Any such obligatory provision shall be
49 deemed to satisfy the requirements for authorization referred to in section
50 30-1-853(3), Idaho Code, and in section 30-1-855(3), Idaho Code. Any such pro-
51 vision that obligates the corporation to provide indemnification to the full-
26
1 est extent permitted by law shall be deemed to obligate the corporation to
2 advance funds to pay for or reimburse expenses in accordance with section
3 30-1-853, Idaho Code, to the fullest extent permitted by law, unless the pro-
4 vision specifically provides otherwise.
5 (2) Any provision pursuant to subsection (1) of this section shall not
6 obligate the corporation to indemnify or advance expenses to a director of a
7 predecessor of the corporation, pertaining to conduct with respect to the pre-
8 decessor, unless otherwise specifically provided. Any provision for indemnifi-
9 cation or advance for expenses in the articles of incorporation, bylaws, or a
10 resolution of the board of directors or shareholders of a predecessor of the
11 corporation in a merger or in a contract to which the predecessor is a party,
12 existing at the time the merger takes effect, shall be governed by section
13 30-1-11067(1)(cd), Idaho Code.
14 (3) A corporation may, by a provision in its articles of incorporation,
15 limit any of the rights to indemnification or advance for expenses created by
16 or pursuant to this part, other than the rights to mandatory indemnification
17 under section 30-1-852, Idaho Code, and to court-ordered indemnification and
18 advance for expenses under section 30-1-854, Idaho Code.
19 (4) Sections 30-1-850 through 30-1-859, Idaho Code, do not limit a
20 corporation's power to pay or reimburse expenses incurred by a director or an
21 officer in connection with his appearance as a witness in a proceeding at a
22 time when he is not a party.
23 (5) Sections 30-1-850 through 30-1-859, Idaho Code, do not limit a
24 corporation's power to indemnify, advance expenses to or provide or maintain
25 insurance on behalf of an employee or agent.
26 SECTION 29. That Chapter 1, Title 30, Idaho Code, be, and the same is
27 hereby amended by the addition thereto of a NEW PART, to be known and desig-
28 nated as Part 9, Chapter 1, Title 30, Idaho Code, and to read as follows:
29 PART 9.
30 DOMESTICATION
31 30-1-901. EXCLUDED TRANSACTIONS. This part may not be used to effect a
32 transaction that:
33 (1) Is addressed in chapter 28, title 41, Idaho Code, and purports to
34 convert an insurer company organized on the mutual principle to one organized
35 on a stock-share basis; or
36 (2) Is addressed in chapter 3, title 41, Idaho Code, and purports to
37 change the domicile of an insurance company.
38 30-1-902. REQUIRED APPROVALS. If a foreign business corporation may not
39 be a party to a merger without the approval of the attorney general, the
40 department of finance, the department of insurance, the public utility commis-
41 sion or another governmental agency, the corporation shall not be a party to a
42 transaction under this part without the prior approval of that agency.
43 30-1-903 -- 30-1-919. RESERVED.
44 30-1-920. DOMESTICATION. (1) A foreign business corporation may become a
45 domestic business corporation only if the domestication is permitted by the
46 organic law of the foreign corporation.
47 (2) If any debt security, note or similar evidence of indebtedness for
48 money borrowed, whether secured or unsecured, or a contract of any kind,
49 issued, incurred or executed by a domestic business corporation before the
27
1 effective date of this act contains a provision applying to a merger of the
2 corporation and the document does not refer to a domestication of the corpora-
3 tion, the provision shall be deemed to apply to a domestication of the corpo-
4 ration until such time as the provision is amended subsequent to that date.
5 30-1-921. RESERVED.
6 30-1-922. ARTICLES OF DOMESTICATION. (1) After the domestication of a
7 foreign business corporation has been authorized as required by the laws of
8 the foreign jurisdiction, articles of domestication shall be executed by any
9 officer or other duly authorized representative. The articles shall set forth:
10 (a) The name of the corporation immediately before the filing of the
11 articles of domestication and, if that name is unavailable for use in this
12 state or the corporation desires to change its name in connection with the
13 domestication, a name that satisfies the requirements of section 30-1-401,
14 Idaho Code;
15 (b) The jurisdiction of incorporation of the corporation immediately
16 before the filing of the articles of domestication and the date the corpo-
17 ration was incorporated in that jurisdiction; and
18 (c) A statement that the domestication of the corporation in this state
19 was duly authorized as required by the laws of the jurisdiction in which
20 the corporation was incorporated immediately before its domestication in
21 this state.
22 (2) The articles of domestication shall either contain all of the provi-
23 sions that section 30-1-202(1), Idaho Code, requires to be set forth in arti-
24 cles of incorporation and any other desired provisions that section
25 30-1-202(2), Idaho Code, permits to be included in articles of incorporation,
26 or shall have attached articles of incorporation. In either case, provisions
27 that would not be required to be included in restated articles of incorpora-
28 tion may be omitted.
29 (3) The articles of domestication shall be delivered to the secretary of
30 state for filing, and shall take effect at the effective time provided in sec-
31 tion 30-1-123, Idaho Code.
32 (4) If the foreign corporation is authorized to transact business in this
33 state under part 15 of this chapter, its certificate of authority shall be
34 cancelled automatically on the effective date of its domestication.
35 30-1-923. RESERVED.
36 30-1-924. EFFECT OF DOMESTICATION. (1) When domestication becomes effec-
37 tive:
38 (a) The title to all real and personal property, both tangible and intan-
39 gible, of the corporation remains in the corporation without reversion or
40 impairment;
41 (b) The liabilities of the corporation remain the liabilities of the cor-
42 poration;
43 (c) An action or proceeding pending against the corporation continues
44 against the corporation as if the domestication had not occurred;
45 (d) The articles of domestication, or the articles of incorporation
46 attached to the articles of domestication, constitute the articles of
47 incorporation of a foreign corporation domesticating in this state;
48 (e) The shares of the corporation are reclassified into shares, other
49 securities, obligations, rights to acquire shares or other securities, or
50 into cash or other property in accordance with the terms of the
51 domestication, and the shareholders are entitled only to the rights pro-
28
1 vided by those terms and to any appraisal rights they may have under the
2 organic law of the domesticating corporation; and
3 (f) The corporation is deemed to:
4 (i) Be incorporated under and subject to the organic law of the
5 domesticated corporation for all purposes;
6 (ii) Be the same corporation without interruption as the
7 domesticating corporation; and
8 (iii) Have been incorporated on the date the domesticating corpora-
9 tion was originally incorporated.
10 (2) The owner liability of a shareholder in a foreign corporation that is
11 domesticated in this state shall be as follows:
12 (a) The domestication does not discharge any owner liability under the
13 laws of the foreign jurisdiction to the extent any such owner liability
14 arose before the effective time of the articles of domestication.
15 (b) The shareholder shall not have owner liability under the laws of the
16 foreign jurisdiction for any debt, obligation or liability of the corpora-
17 tion that arises after the effective time of the articles of
18 domestication.
19 (c) The provisions of the laws of the foreign jurisdiction shall continue
20 to apply to the collection or discharge of any owner liability preserved
21 by subsection (2)(a) of this section, as if the domestication had not
22 occurred.
23 (d) The shareholder shall have whatever rights of contribution from other
24 shareholders as are provided by the laws of the foreign jurisdiction with
25 respect to any owner liability preserved by subsection (2)(a) of this sec-
26 tion, as if the domestication had not occurred.
27 (3) A shareholder who becomes subject to owner liability for some or all
28 of the debts, obligations or liabilities of the corporation as a result of its
29 domestication in this state shall have owner liability only for those debts,
30 obligations or liabilities of the corporation that arise after the effective
31 time of the articles of domestication.
32 30-1-925 -- 30-1-956. RESERVED.
33 SECTION 30. That Section 30-1-1001, Idaho Code, be, and the same is
34 hereby amended to read as follows:
35 30-1-1001. AUTHORITY TO AMEND ARTICLES OF INCORPORATION. (1) A corpora-
36 tion may amend its articles of incorporation at any time to add or change a
37 provision that is required or permitted in the articles of incorporation or to
38 delete a provision not required in the articles of incorporation. Whether a
39 provision is required or permitted in the articles of incorporation is deter-
40 mined as of the effective date of the amendment or to delete a provision that
41 is not required to be contained in the articles of incorporation.
42 (2) A shareholder of the corporation does not have a vested property
43 right resulting from any provision in the articles of incorporation, including
44 provisions relating to management, control, capital structure, dividend, enti-
45 tlement, or purpose or duration of the corporation.
46 SECTION 31. That Section 30-1-1002, Idaho Code, be, and the same is
47 hereby amended to read as follows:
48 30-1-10025. AMENDMENT BY BOARD OF DIRECTORS. Unless the articles of
49 incorporation provide otherwise, a corporation's board of directors may adopt
50 one (1) or more amendments to the corporation's articles of incorporation
29
1 without shareholder action approval:
2 (1) To extend the duration of the corporation if it was incorporated at a
3 time when limited duration was required by law;
4 (2) To delete the names and addresses of the initial directors;
5 (3) To delete the name and address of the initial registered agent or
6 registered office, if a statement of change is on file or if an annual report
7 has been filed with the secretary of state;
8 (4) If the corporation has only one (1) class of shares outstanding:
9 (a) To change each issued and unissued authorized share of an outstanding
10 the class into a greater number of whole shares if the corporation has
11 only shares of that class; outstanding; or
12 (b) To increase the number of authorized shares of the class to the
13 extent necessary to permit the issuance of shares as a share dividend;
14 (5) To change the corporate name by substituting the word "corporation,"
15 "incorporated," "company," "limited," or the abbreviation "corp.," "inc.,"
16 "co.," or "ltd.," for a similar word or abbreviation in the name, or by add-
17 ing, deleting or changing a geographical attribution for the name;
18 (6) To reduce the number of reflect a reduction in authorized shares,
19 solely as a result of a cancellation of treasury shares the operation of sec-
20 tion 30-1-631(2), Idaho Code, when the corporation has acquired its own shares
21 and the articles of incorporation prohibit the reissue of the acquired shares;
22 (7) To delete a class of shares from the articles of incorporation, as a
23 result of the operation of section 30-1-631(2), Idaho Code, when there are no
24 remaining shares of the class because the corporation has acquired all shares
25 of the class and the articles of incorporation prohibit the reissue of the
26 acquired shares; or
27 (78) To make any other change expressly permitted by this chapter sec-
28 tion 30-1-602(1) or (2), Idaho Code, to be made without shareholder action
29 approval.
30 SECTION 32. That Section 30-1-1003, Idaho Code, be, and the same is
31 hereby amended to read as follows:
32 30-1-1003. AMENDMENT BY BOARD OF DIRECTORS AND SHAREHOLDERS. If a corpo-
33 ration has issued shares, an amendment to the articles of incorporation shall
34 be adopted in the following manner:
35 (1) A corporation's The proposed amendment must be adopted by the board
36 of directors. may propose one (1) or more amendments to the articles of incor-
37 poration for submission to the shareholders.
38 (2) For the Except as provided in sections 30-1-1005, 30-1-1007 and
39 30-1-1008, Idaho Code, after adopting the proposed amendment: to be adopted:
40 (a) Tthe board of directors must recommend submit the amendment to the
41 shareholders for their approval. The board of directors must also transmit
42 to the shareholders a recommendation that the shareholders approve the
43 amendment, unless the board of directors determines makes a determination
44 that because of conflicts of interest or other special circumstances it
45 should not make no such a recommendation, and communicates in which case
46 the basis for its determination board of directors must transmit to the
47 shareholders with the amendment; and the basis for that determination.
48 (b) The shareholders entitled to vote on the amendment must approve the
49 amendment as provided in subsection (5) of this section.
50 (3) The board of directors may condition its submission of the proposed
51 amendment to the shareholders on any basis.
52 (4) If the amendment is required to be approved by the shareholders, and
53 the approval is to be given at a meeting, tThe corporation shall must notify
30
1 each shareholder, whether or not entitled to vote, of the proposed meeting of
2 shareholders' meeting in accordance with section 30-1-705, Idaho Code at
3 which the amendment is to be submitted for approval. The notice of meeting
4 must also state that the purpose, or one (1) of the purposes, of the meeting
5 is to consider the proposed amendment and must contain or be accompanied by a
6 copy or summary of the amendment.
7 (5) Unless this chapter, the articles of incorporation, or the board of
8 directors, acting pursuant to subsection (3) of this section, requires a
9 greater vote or a vote by voting groups, the amendment to be adopted must be
10 approved by:
11 (a) A greater number of shares to be present, approval of the amendment
12 requires the approval of the shareholders at a meeting at which a quorum
13 consisting of at least a majority of the votes entitled to be cast on the
14 amendment exists, and, if any class or series of shares is entitled to
15 vote as a separate group on the amendment, except as provided in section
16 30-1-1004(3), Idaho Code, the approval of each such separate voting group
17 at a meeting at which a quorum of the voting group consisting of at least
18 a majority of the votes entitled to be cast on the amendment by any voting
19 group with respect to which the amendment would create dissenters' rights;
20 and
21 (b) The votes required by sections 30-1-725 and 30-1-726, Idaho Code, by
22 every other voting group entitled to vote on the amendment that voting
23 group exists.
24 SECTION 33. That Section 30-1-1004, Idaho Code, be, and the same is
25 hereby amended to read as follows:
26 30-1-1004. VOTING ON AMENDMENTS BY VOTING GROUPS. Except as otherwise
27 provided in the articles of incorporation:
28 (1) If a corporation has more than one (1) class of shares outstanding,
29 tThe holders of the outstanding shares of a class, whether voting or nonvoting
30 in whole or in part, are entitled to vote as a separate voting group, if
31 shareholder voting is otherwise required by this chapter, on a proposed amend-
32 ment to the articles of incorporation if the amendment would:
33 (a) Increase or decrease the aggregate number of authorized shares of the
34 class;
35 (b) Effect an exchange or reclassification of all or part of the shares
36 of the class into shares of another class;
37 (c) Effect an exchange or reclassification, or create the right of
38 exchange, of all or part of the shares of another class into shares of the
39 class;
40 (d) Change the designation, rights, preferences or limitations of all or
41 part of the shares of the class;
42 (e) Change the shares of all or part of the class into a different number
43 of shares of the same class;
44 (f) Create a new class of shares having rights or preferences with
45 respect to distributions or to dissolution that are prior, superior or
46 substantially equal to the shares of the class;
47 (g) Increase the rights, preferences or number of authorized shares of
48 any class that, after giving effect to the amendment, have rights or pref-
49 erences with respect to distributions or to dissolution that are prior,
50 superior or substantially equal to the shares of the class;
51 (h) Limit or deny an existing preemptive right of all or part of the
52 shares of the class; or
53 (i) Cancel or otherwise affect rights to distributions or dividends that
31
1 have accumulated but not yet been declared authorized on all or part of
2 the shares of the class.
3 (2) If a proposed amendment would affect a series of a class of shares in
4 one (1) or more of the ways described in subsection (1) of this section, the
5 shares of that series are entitled to vote as a separate voting group on the
6 proposed amendment.
7 (3) If a proposed amendment that entitles the holders of two (2) or more
8 classes or series of shares to vote as separate voting groups under this sec-
9 tion would affect those two (2) or more classes or series in the same or a
10 substantially similar way, the holders of shares of all the classes or series
11 so affected must vote together as a single voting group on the proposed amend-
12 ment, unless otherwise provided in the articles of incorporation or required
13 by the board of directors.
14 (4) A class or series of shares is entitled to the voting rights granted
15 by this section although the articles of incorporation provide that the shares
16 are nonvoting shares.
17 SECTION 34. That Section 30-1-1005, Idaho Code, be, and the same is
18 hereby amended to read as follows:
19 30-1-10052. AMENDMENT BEFORE ISSUANCE OF SHARES. If a corporation has not
20 yet issued shares, its board of directors, or its incorporators or if it has
21 no board of directors, may adopt one (1) or more amendments to the
22 corporation's articles of incorporation.
23 SECTION 35. That Section 30-1-1006, Idaho Code, be, and the same is
24 hereby amended to read as follows:
25 30-1-1006. ARTICLES OF AMENDMENT. A corporation amending its After an
26 amendment to the articles of incorporation has been adopted and approved in
27 the manner required by this chapter and by the articles of incorporation, the
28 corporation shall deliver to the secretary of state for filing articles of
29 amendment, setting which shall set forth:
30 (1) The name of the corporation;
31 (2) The text of each amendment adopted;
32 (3) If an amendment provides for an exchange, reclassification, or can-
33 cellation of issued shares, provisions for implementing the amendment if not
34 contained in the amendment itself;
35 (4) The date of each amendment's adoption; and
36 (5) If an amendment:
37 (a) Wwas adopted by the incorporators or board of directors without
38 shareholder action approval, a statement to that effect that the amendment
39 was duly approved by the incorporators or by the board of directors, as
40 the case may be, and that shareholder action approval was not required;
41 and
42 (6b) If an amendment was approved Required approval by the shareholders:,
43 a statement that the amendment was duly approved by the shareholders in
44 the manner required by this chapter and by the articles of incorporation;
45 or
46 (c) Is being filed pursuant to section 30-1-120(11)(e), Idaho Code, a
47 statement to that effect.
48 (a) The designation, number of outstanding shares, number of votes enti-
49 tled to be cast by each voting group entitled to vote separately on the
50 amendment, and number of votes of each voting group indisputably repre-
51 sented at the meeting; and
32
1 (b) Either the total number of votes cast for and against the amendment
2 by each voting group entitled to vote separately on the amendment or the
3 total number of undisputed votes cast for the amendment by each voting
4 group and a statement that the number cast for the amendment by each vot-
5 ing group was sufficient for approval by that voting group.
6 SECTION 36. That Section 30-1-1007, Idaho Code, be, and the same is
7 hereby amended to read as follows:
8 30-1-1007. RESTATED ARTICLES OF INCORPORATION. (1) A corporation's board
9 of directors may restate its articles of incorporation at anytime any time,
10 with or without shareholder action approval, to consolidate all amendments
11 into a single document.
12 (2) The restatement may If the restated articles include one (1) or more
13 new amendments to the articles. If the restatement includes an amendment
14 requiring that require shareholder approval, it the amendments must be adopted
15 and approved as provided in section 30-1-1003, Idaho Code.
16 (3) If the board of directors submits a restatement for shareholder
17 action, the corporation shall notify each shareholder, whether or not entitled
18 to vote, of the proposed shareholders' meeting in accordance with section
19 30-1-705, Idaho Code. The notice must also state that the purpose, or one (1)
20 of the purposes, of the meeting is to consider the proposed restatement and
21 contain or be accompanied by a copy of the restatement that identifies any
22 amendment or other change it would make in the articles.
23 (4) A corporation restating that restates its articles of incorporation
24 shall deliver to the secretary of state for filing articles of restatement
25 setting forth the name of the corporation and the text of the restated arti-
26 cles of incorporation together with a certificate setting forth:
27 (a) Whether the restatement contains an amendment to the articles requir-
28 ing shareholder approval and, if it does not, that the board of directors
29 adopted the restatement;
30 (b) Or if the restatement contains an amendment to the articles requiring
31 shareholder approval, the information which states that the restated arti-
32 cles consolidate all amendments into a single document and, if a new
33 amendment is included in the restated articles, which also includes the
34 statements required by under section 30-1-1006, Idaho Code.
35 (54) Duly adopted restated articles of incorporation supersede the origi-
36 nal articles of incorporation and all amendments to them thereto.
37 (65) The secretary of state may certify restated articles of incorpora-
38 tion, as the articles of incorporation currently in effect, without including
39 the certificate information required by subsection (43) of this section.
40 SECTION 37. That Section 30-1-1008, Idaho Code, be, and the same is
41 hereby amended to read as follows:
42 30-1-1008. AMENDMENT PURSUANT TO REORGANIZATION. (1) A corporation's
43 articles of incorporation may be amended without action by the board of direc-
44 tors or shareholders to carry out a plan of reorganization ordered or decreed
45 by a court of competent jurisdiction under federal statute if the articles of
46 incorporation after amendment contain only provisions required or permitted
47 by section 30-1-202, Idaho Code the authority of a law of the United States.
48 (2) The individual or individuals designated by the court shall deliver
49 to the secretary of state for filing articles of amendment setting forth:
50 (a) The name of the corporation;
51 (b) The text of each amendment approved by the court;
33
1 (c) The date of the court's order or decree approving the articles of
2 amendment;
3 (d) The title of the reorganization proceeding in which the order or
4 decree was entered; and
5 (e) A statement that the court had jurisdiction of the proceeding under
6 federal statute.
7 (3) Shareholders of a corporation undergoing reorganization do not have
8 dissenters' rights except as and to the extent provided in the reorganization
9 plan.
10 (4) This section does not apply after entry of a final decree in the
11 reorganization proceeding even though the court retains jurisdiction of the
12 proceeding for limited purposes unrelated to consummation of the reorganiza-
13 tion plan.
14 SECTION 38. That Section 30-1-1009, Idaho Code, be, and the same is
15 hereby amended to read as follows:
16 30-1-1009. EFFECT OF AMENDMENT. An amendment to the articles of incorpo-
17 ration does not affect a cause of action existing against or in favor of the
18 corporation, a proceeding to which the corporation is a party, or the existing
19 rights of persons other than shareholders of the corporation. An amendment
20 changing a corporation's name does not abate a proceeding brought by or
21 against the corporation in its former name.
22 SECTION 39. That Section 30-1-1020, Idaho Code, be, and the same is
23 hereby amended to read as follows:
24 30-1-1020. AMENDMENT BY BOARD OF DIRECTORS OR SHAREHOLDERS. (1) A
25 corporation's shareholders may amend or repeal the corporation's bylaws.
26 (2) A corporation's board of directors may amend or repeal the
27 corporation's bylaws unless:
28 (a) The articles of incorporation or this chapter section 30-1-1021,
29 Idaho Code, reserve this that power exclusively to the shareholders in
30 whole or part; or
31 (b) The shareholders in amending, or repealing, a particular or adopting
32 a bylaw provide expressly provide that the board of directors may not
33 amend, or repeal, or reinstate that bylaw.
34 (2) A corporation's shareholders may amend or repeal the corporation's
35 bylaws even though the bylaws may also be amended or repealed by its board of
36 directors.
37 SECTION 40. That Section 30-1-1021, Idaho Code, be, and the same is
38 hereby repealed.
39 SECTION 41. That Section 30-1-1022, Idaho Code, be, and the same is
40 hereby amended to read as follows:
41 30-1-10221. BYLAW INCREASING QUORUM OR VOTING REQUIREMENT FOR DIRECTORS.
42 (1) A bylaw that fixes increases a greater quorum or voting requirement for
43 the board of directors may be amended or repealed:
44 (a) If originally adopted by the shareholders, only by the shareholders
45 unless the bylaws otherwise provide;
46 (b) If originally adopted by the board of directors, either by the share-
47 holders or by the board of directors.
48 (2) A bylaw adopted or amended by the shareholders that fixes increases a
34
1 greater quorum or voting requirement for the board of directors may provide
2 that it may can be amended or repealed only by a specified vote of either the
3 shareholders or the board of directors.
4 (3) Action by the board of directors under subsection (1)(b) of this sec-
5 tion to adopt or amend or repeal a bylaw that changes the quorum or voting
6 requirement for the board of directors must meet the same quorum requirement
7 and be adopted by the same vote required to take action under the quorum and
8 voting requirement then in effect or proposed to be adopted, whichever is
9 greater.
10 SECTION 42. That Part 11, Chapter 1, Title 30, Idaho Code, be, and the
11 same is hereby amended by the addition thereto of a NEW SECTION, to be known
12 and designated as Section 30-1-1101, Idaho Code, and to read as follows:
13 30-1-1101. DEFINITIONS. As used in this part:
14 (1) "Merger" means a business combination pursuant to section 30-1-1102,
15 Idaho Code.
16 (2) "Party to a merger" or "party to a share exchange" means any domestic
17 or foreign corporation or eligible entity that will:
18 (a) Merge under a plan of merger;
19 (b) Acquire shares or eligible interests of another corporation or an
20 eligible entity in a share exchange; or
21 (c) Have all of its shares or eligible interests or all of one (1) or
22 more classes or series of its shares or eligible interests acquired in a
23 share exchange.
24 (3) "Share exchange" means a business combination pursuant to section
25 30-1-1103, Idaho Code.
26 (4) "Survivor" in a merger means the corporation or eligible entity into
27 which one (1) or more other corporations or eligible entities are merged. A
28 survivor of a merger may preexist the merger or be created by the merger.
29 SECTION 43. That Section 30-1-1101, Idaho Code, be, and the same is
30 hereby amended to read as follows:
31 30-1-11012. MERGER. (1) One (1) or more domestic business corporations
32 may merge into another corporation or, subject to any law applicable to lim-
33 ited liability companies, into a limited liabililty company if the board of
34 directors of each corporation adopts and its shareholders, if required by sec-
35 tion 30-1-1103, Idaho Code, approve a plan of merger with one (1) or more
36 domestic or foreign business corporations or eligible entities pursuant to a
37 plan of merger, or two (2) or more foreign business corporations or domestic
38 or foreign eligible entities may merge into a new domestic business corpora-
39 tion to be created in the merger in the manner provided in this part.
40 (2) A foreign business corporation, or a foreign eligible entity, may be
41 a party to a merger with a domestic business corporation, or may be created by
42 the terms of the plan of merger, only if the merger is permitted by the for-
43 eign business corporation or eligible entity. If the organic law of a domestic
44 eligible entity does not provide procedures for the approval of a merger, a
45 plan of merger may be adopted and approved, the merger effectuated, and
46 appraisal rights exercised in accordance with the procedures in this part and
47 part 13 of this chapter. For the purposes of applying this part and part 13 of
48 this chapter:
49 (a) The eligible entity, its members or interest holders, eligible inter-
50 ests and organic documents taken together shall be deemed to be a domestic
51 business corporation, shareholders, shares and articles of incorporation,
35
1 respectively and vice versa as the context may require; and
2 (b) If the business and affairs of the eligible entity are managed by a
3 group of persons that is not identical to the members or interest holders,
4 that group shall be deemed to be the board of directors.
5 (3) The plan of merger must set forth include:
6 (a) The name of each domestic or foreign business corporation or limited
7 liability company planning to eligible entity that will merge and the name
8 of the surviving domestic or foreign business corporation or limited lia-
9 bility company into which each other corporation or limited liability com-
10 pany plans to merge eligible entity that will be the survivor of the
11 merger;
12 (b) The terms and conditions of the merger; and
13 (c) The manner and basis of converting the shares of each merging domes-
14 tic or foreign business corporation or rights or securities of or inter-
15 ests in each limited liability company and eligible interests of each
16 merging domestic or foreign eligible entity into shares, obligations, or
17 other securities, of the surviving or any other corporation, or into
18 rights or securities of or interests in the surviving or any other limited
19 liability company, or into cash or eligible interests, obligations, rights
20 to acquire shares, other securities or eligible interests, cash, other
21 property in whole or part or any combination of the foregoing;
22 (d) The articles of incorporation of any domestic or foreign business or
23 nonprofit corporation, or the organic documents of any domestic or foreign
24 unincorporated entity, to be created by the merger, or if a new domestic
25 or foreign business or nonprofit corporation or unincorporated entity is
26 not to be created by the merger, any amendments to the survivor's articles
27 of incorporation or organic documents; and
28 (e) Any other provisions required by the laws under which any party to
29 the merger is organized or by which it is governed, or by the articles of
30 incorporation or organic document of any such party.
31 (4) Terms of a plan of merger may be made dependent upon facts objec-
32 tively ascertainable outside the plan in accordance with section 30-1-120(11),
33 Idaho Code.
34 (35) The plan of merger may set forth:
35 (a) Amendments to the articles of incorporation of the surviving corpora-
36 tion; and
37 (b) Other provisions relating to the merger also include a provision that
38 the plan may be amended prior to filing articles of merger, but if the
39 shareholders of a domestic corporation that is a party to the merger are
40 required or permitted to vote on the plan, the plan must provide that sub-
41 sequent to approval of the plan by such shareholders the plan may not be
42 amended to change:
43 (a) The amount or kind of shares or other securities, eligible interests,
44 obligations, rights to acquire shares, other securities or eligible inter-
45 ests, cash, or other property to be received under the plan by the share-
46 holders of or owners of eligible interests in any party to the merger;
47 (b) The articles of incorporation of any corporation, or the organic doc-
48 uments of any unincorporated entity, that will survive or be created as a
49 result of the merger, except for changes permitted by section 30-1-1005,
50 Idaho Code, or by comparable provisions of the organic laws of any such
51 foreign corporation or domestic or foreign unincorporated entity; or
52 (c) Any of the other terms or conditions of the plan if the change would
53 adversely affect such shareholders in any material respect.
54 SECTION 44. That Section 30-1-1102, Idaho Code, be, and the same is
36
1 hereby amended to read as follows:
2 30-1-11023. SHARE EXCHANGE. (1) Through a share exchange:
3 (a) A domestic corporation may acquire all of the outstanding shares of
4 one (1) or more classes or series of shares of another domestic or foreign
5 corporation, if the board of directors of each corporation adopts and its
6 shareholders, if required by section 30-1-1103, Idaho Code, approve the
7 exchange or all of the interests of one (1) or more classes or series of
8 interests of a domestic or foreign eligible entity, in exchange for shares
9 or other securities, interests, obligations, rights to acquire shares or
10 other securities, cash, other property, or any combination of the forego-
11 ing, pursuant to a plan of share exchange; or
12 (b) All of the shares of one (1) or more classes or series of shares of a
13 domestic corporation may be acquired by another domestic or foreign corpo-
14 ration or eligible entity, in exchange for shares or other securities,
15 interests, obligations, rights to acquire shares or other securities,
16 cash, other property, or any combination of the foregoing, pursuant to a
17 plan of share exchange.
18 (2) A foreign corporation, or a domestic or foreign eligible entity, may
19 be a party to a share exchange only if the share exchange is permitted by the
20 organic law the corporation or eligible entity is organized under or by which
21 it is governed. If the organic law of a domestic eligible entity does not pro-
22 vide procedures for the approval of a share exchange, a plan of share exchange
23 may be adopted and approved, and the share exchange effectuated, in accordance
24 with the procedures, if any, for a merger. If the organic law of a domestic
25 eligible entity does not provide procedures for the approval of either a share
26 exchange or a merger, a plan of share exchange may be adopted and approved,
27 the share exchange effectuated, and appraisal rights exercised, in accordance
28 with the procedures in this part and part 13 of this chapter. For the purposes
29 of applying this part and part 13:
30 (a) The eligible entity, its interest holders, interests and organic doc-
31 uments taken together shall be deemed to be a domestic business corpora-
32 tion, shareholders, shares and articles of incorporation, respectively and
33 vice versa as the context may require; and
34 (b) If the business and affairs of the eligible entity are managed by a
35 group of persons that is not identical to the interest holders, that group
36 shall be deemed to be the board of directors.
37 (23) The plan of share exchange must set forth include:
38 (a) The name of the each corporation or eligible entity whose shares or
39 interests will be acquired and the name of the acquiring corporation or
40 eligible entity that will acquire those shares or interests;
41 (b) The terms and conditions of the share exchange; and
42 (c) The manner and basis of exchanging the shares to be acquired for
43 shares, obligations, or other securities of the acquiring or any other
44 corporation or for cash or other property in whole or part of a corpora-
45 tion or interests in an eligible entity whose shares or interests will be
46 acquired under the share exchange into shares or other securities, inter-
47 ests, obligations, rights to acquire shares, other securities, or inter-
48 ests, cash, other property, or any combination of the foregoing; and
49 (d) Any other provisions required by the laws under which any party to
50 the share exchange is organized or by the articles of incorporation or
51 organic document of such party.
52 (4) Terms of a plan of share exchange may be made dependent upon facts
53 objectively ascertainable outside the plan in accordance with section
54 30-1-120(11), Idaho Code.
37
1 (35) The plan of exchange may set forth other provisions relating to the
2 exchange also include a provision that the plan may be amended prior to filing
3 articles of share exchange, but if the shareholders of a domestic corporation
4 that is a party to the share exchange are required or permitted to vote on the
5 plan, the plan must provide that subsequent to approval of the plan by such
6 shareholders the plan may not be amended to change:
7 (a) The amount or kind of shares or other securities, interests, obliga-
8 tions, rights to acquire shares, other securities or interests, cash, or
9 other property to be issued by the corporation or to be received under the
10 plan by the shareholders of or owners of interests in any party to the
11 share exchange; or
12 (b) Any of the other terms or conditions of the plan if the change would
13 adversely affect such shareholders in any material respect.
14 (46) This section does not limit the power of a domestic corporation to
15 acquire all or part of the shares of one (1) or more classes or series of
16 another corporation through a voluntary exchange or otherwise or interests in
17 an eligible entity in a transaction other than a share exchange.
18 SECTION 45. That Section 30-1-1103, Idaho Code, be, and the same is
19 hereby amended to read as follows:
20 30-1-11034. ACTION ON A PLAN OF MERGER OR SHARE EXCHANGE. In the case of
21 a domestic corporation that is a party to a merger or share exchange:
22 (1) After adopting a The plan of merger or share exchange, must be
23 adopted by the board of directors. of each corporation party to the merger,
24 and the board of directors of the corporation whose shares will be acquired in
25 the share exchange, shall submit the plan of merger,
26 (2) Eexcept as provided in subsection (7) of this section, or share
27 exchange for approval by its shareholders.
28 (2) For a plan of merger or share exchange to be approved:
29 (a) The board of directors must recommend and in section 30-1-1105, Idaho
30 Code, after adopting the plan of merger or share exchange the board of
31 directors must submit the plan to the shareholders for their approval. The
32 board of directors must also transmit to the shareholders a recommendation
33 that the shareholders approve the plan, unless the board of directors
34 determines makes a determination that because of conflicts of interest or
35 other special circumstances it should not make no such a recommendation,
36 and communicates in which case the basis for its determination board of
37 directors must transmit to the shareholders with the plan; and basis for
38 that determination.
39 (b) The shareholders entitled to vote must approve the plan.
40 (3) The board of directors may condition its submission of the proposed
41 plan of merger or share exchange to the shareholders on any basis.
42 (4) If the plan of merger or share exchange is required to be approved by
43 the shareholders, and if the approval is to be given at a meeting, tThe corpo-
44 ration shall must notify each shareholder, whether or not entitled to vote, of
45 the proposed meeting of shareholders' meeting in accordance with section
46 30-1-705, Idaho Code at which the plan is to be submitted for approval. The
47 notice must also state that the purpose, or one (1) of the purposes, of the
48 meeting is to consider the plan of merger or share exchange and must contain
49 or be accompanied by a copy or summary of the plan. If the corporation is to
50 be merged into an existing corporation or eligible entity, the notice shall
51 also include or be accompanied by a copy or summary of the articles of incor-
52 poration or organizational documents of that corporation or eligible entity.
53 If the corporation is to be merged into a corporation or eligible entity that
38
1 is to be created pursuant to the merger, the notice shall include or be accom-
2 panied by a copy or a summary of the articles of incorporation or organiza-
3 tional documents of the new corporation or eligible entity.
4 (5) Unless this chapter, the articles of incorporation, or the board of
5 directors, acting pursuant to subsection (3) of this section, requires a
6 greater vote or a vote by voting groups, greater number of votes to be pres-
7 ent, approval of the plan of merger or share exchange to be authorized must be
8 approved by each voting group entitled to vote separately on the plan by a
9 majority of all requires the approval of the shareholders at a meeting at
10 which a quorum consisting of at least a majority of the votes entitled to be
11 cast on the plan exists, and, if any class or series of shares is entitled to
12 vote as a separate group on the plan of merger or share exchange, the approval
13 of each such separate voting group at a meeting at which a quorum of the vot-
14 ing group consisting of at least a majority of the votes entitled to be cast
15 on the merger or share exchange by that voting group is present.
16 (6) Separate voting by voting groups is required:
17 (a) On a plan of merger, if the plan contains a provision that, by each
18 class or series of shares that:
19 (i) Are to be converted under the plan of merger into other securi-
20 ties, interests, obligations, rights to acquire shares, other securi-
21 ties or interests, cash, other property, or any combination of the
22 foregoing; or
23 (ii) Would be entitled to vote as a separate group on a provision in
24 the plan that, if contained in a proposed amendment to articles of
25 incorporation, would require action by one (1) or more separate vot-
26 ing groups on the proposed amendment under section 30-1-1004, Idaho
27 Code;
28 (b) On a plan of share exchange by each class or series of shares
29 included in the exchange, with each class or series constituting a sepa-
30 rate voting group; and
31 (c) On a plan of merger or share exchange, if the voting group is enti-
32 tled under the articles of incorporation to vote as a voting group to
33 approve a plan of merger or share exchange.
34 (7) Action Unless the articles of incorporation otherwise provide,
35 approval by the corporation's shareholders of the surviving corporation on a
36 plan of merger or share exchange is not required if:
37 (a) The corporation will survive the merger or is the acquiring corpora-
38 tion in a share exchange;
39 (b) Except for amendments permitted by section 30-1-1005, Idaho Code, its
40 articles of incorporation of the surviving corporation will not differ,
41 except for amendments enumerated in section 30-1-1002, Idaho Code, from
42 articles before the merger be changed;
43 (bc) Each shareholder of the surviving corporation whose shares were out-
44 standing immediately before the effective date of the merger or share
45 exchange will hold the same number of shares, with identical designations,
46 preferences, limitations, and relative rights, immediately after the
47 effective date of change;
48 (c) The number of voting shares outstanding immediately after the merger,
49 plus the number of voting shares issuable as a result of the merger,
50 either by the conversion of securities issued pursuant to the merger or
51 the exercise of rights and warrants issued pursuant to the merger, will
52 not exceed by more than twenty percent (20%) the total number of voting
53 shares of the surviving corporation outstanding immediately before the
54 merger; and
55 (d) The number of participating shares outstanding immediately after the
39
1 merger, plus the number of participating shares issuable as a result of
2 the merger, either by the conversion of securities issued pursuant to the
3 merger or the exercise of rights and warrants issued pursuant to the
4 merger, will not exceed by more than twenty percent (20%) the total num-
5 ber of participating shares outstanding immediately before the merger The
6 issuance in the merger or share exchange of shares or other securities
7 convertible into or rights exercisable for shares does not require a vote
8 under section 30-1-621(6), Idaho Code.
9 (8) As used in subsection (7) of this section:
10 (a) "Participating shares" means shares that entitle their holders to
11 participate without limitation in distributions.
12 (b) "Voting shares" means shares that entitle their holders to vote
13 unconditionally in election of directors.
14 (9) After a merger or share exchange is authorized, and at any time
15 before articles of merger or share exchange are filed, the planned merger or
16 share exchange may be abandoned, subject to any contractual rights, without
17 further shareholder action, in accordance with the procedure set forth in the
18 plan of merger or share exchange or, if none is set forth, in the manner
19 determined by the board of directors If as a result of a merger or share
20 exchange one (1) or more shareholders of a domestic corporation would become
21 subject to owner liability for the debts, obligations or liabilities of any
22 other person or entity, approval of the plan of merger or share exchange shall
23 require the execution, by each such shareholder, of a separate written consent
24 to become subject to such owner liability.
25 SECTION 46. That Section 30-1-1104, Idaho Code, be, and the same is
26 hereby amended to read as follows:
27 30-1-11045. MERGER OF BETWEEN PARENT AND SUBSIDIARY OR BETWEEN SUBSIDIAR-
28 IES. (1) A domestic parent corporation owning that owns shares of a domestic
29 or foreign corporation that carry at least ninety percent (90%) of the voting
30 power of each class and series of the outstanding shares of each class of a
31 the subsidiary corporation that have voting power may merge the subsidiary
32 into itself without approval of the shareholders of the parent or subsidiary.
33 (2) The or into another such subsidiary, without the approval of the
34 board of directors of the parent shall adopt a plan of merger that sets forth:
35 (a) The names of the parent and subsidiary; and
36 (b) The manner and basis of converting the shares or shareholders of the
37 subsidiary into shares, obligations or other securities of the parent or
38 any other corporation or into cash or other property in whole or part.
39 (3) The parent shall mail a copy of the plan of merger to each share-
40 holder of the subsidiary who does not waive the mailing requirement in writ-
41 ing.
42 (4) The parent may not deliver articles of merger to the secretary of
43 state for filing until at least thirty (30) days after the date it mailed a
44 copy of the plan of merger to each shareholder of the subsidiary who did not
45 waive the mailing requirement.
46 (5) Articles of merger under this section may not contain amendments to
47 unless the articles of incorporation of the parent corporation, except for
48 amendments enumerated in section 30-1-1002, Idaho Code any of the corporations
49 otherwise provide, and unless, in the case of a foreign subsidiary, approval
50 by the subsidiary's board of directors or shareholders is required by the laws
51 under which the subsidiary is organized.
52 (2) If under subsection (1) of this section approval of a merger by the
53 subsidiary's shareholders is not required, the parent corporation shall,
40
1 within ten (10) days after the effective date of the merger, notify each of
2 the subsidiary's shareholders that the merger has become effective.
3 (3) Except as provided in subsections (1) and (2) of this section, a
4 merger between a parent and a subsidiary shall be governed by the provisions
5 of part 11 of this chapter applicable to mergers generally.
6 SECTION 47. That Section 30-1-1105, Idaho Code, be, and the same is
7 hereby amended to read as follows:
8 30-1-11056. ARTICLES OF MERGER OR SHARE EXCHANGE. (1) After a plan of
9 merger or share exchange is approved by the shareholders, or adopted by the
10 board of directors if shareholder approval is not required, the surviving or
11 acquiring corporation shall deliver to the secretary of state for filing has
12 been adopted and approved as required by this chapter, articles of merger or
13 share exchange setting shall be executed on behalf of each party to the merger
14 or share exchange by any officer or other duly authorized representative. The
15 articles shall set forth:
16 (a) The names of the parties to the merger or share exchange;
17 (b) If the articles of incorporation of the survivor of a merger are
18 amended, or if a new corporation is created as a result of a merger, the
19 amendments to the survivor's articles of incorporation or the articles of
20 incorporation of the new corporation;
21 (c) If tThe plan of merger or share exchange;
22 (b) If shareholder required approval was not required by the shareholders
23 of a domestic corporation that was a party to the merger or share
24 exchange, a statement that the plan was duly approved by the shareholders
25 and, if voting by any separate voting group was required, by each such
26 separate voting group, in the manner required by this chapter and the
27 articles of incorporation;
28 (d) If the plan of merger or share exchange did not require approval by
29 the shareholders of a domestic corporation that was a party to the merger
30 or share exchange, a statement to that effect; and
31 (ce) If approval of the shareholders of one (1) or more corporations
32 party to the merger or share exchange was required:
33 (i) The designation, number of outstanding shares, and number of
34 votes entitled to be cast by each voting group entitled to vote sepa-
35 rately on the plan as to each corporation; and
36 (ii) Either the total number of votes cast for and against the plan
37 by each voting group entitled to vote separately on the plan or the
38 total number of undisputed votes cast for the plan separately by each
39 voting group and a statement that the number cast for the plan by
40 each voting group was sufficient for approval by that voting group As
41 to each foreign corporation or eligible entity that was a party to
42 the merger or share exchange, a statement that the participation of
43 the foreign corporation or eligible entity was duly authorized as
44 required by the organic law of the corporation or eligible entity.
45 (2) A Articles of merger or share exchange takes effect upon the effec-
46 tive date of the articles of shall be delivered to the secretary of state for
47 filing by the survivor of the merger or the acquiring corporation in a share
48 exchange, and shall take effect at the effective time provided in section
49 30-1-123, Idaho Code. Articles of merger or share exchange filed under this
50 section may be combined with any filing required under the organic law of any
51 domestic eligible entity involved in the transaction if the combined filing
52 satisfies the requirements of both this section and the other organic law.
41
1 SECTION 48. That Section 30-1-1106, Idaho Code, be, and the same is
2 hereby amended to read as follows:
3 30-1-11067. EFFECT OF MERGER OR SHARE EXCHANGE. (1) When a merger takes
4 effect becomes effective:
5 (a) Every other corporation or limited liability company party to the
6 merger merges into the surviving corporation or limited liability company
7 and The corporation or eligible entity that is designated in the plan of
8 merger as the survivor continues or comes into existence, as the case may
9 be;
10 (b) Tthe separate existence of every corporation or limited liability
11 company except the surviving corporation or limited liability company eli-
12 gible entity that is merged into the survivor ceases;
13 (bc) The title to all real estate and other All property owned by, and
14 every contract right possessed by, each corporation or limited liability
15 company party to eligible entity that merges into the merger survivor is
16 vested in the surviving corporation or limited liability company survivor
17 without reversion or impairment;
18 (cd) The surviving corporation or limited liability company has aAll lia-
19 bilities of each corporation or limited liability company party to the
20 merger eligible entity that is merged into the survivor are vested in the
21 survivor;
22 (de) A proceeding pending against any corporation or limited liability
23 company party to the merger may be continued as if the merger did not
24 occur or the surviving corporation or limited liability company may be
25 substituted in the proceeding for the corporation or limited liability
26 company The name of the survivor may, but need not be, substituted in any
27 pending proceeding for the name of any party to the merger whose separate
28 existence ceased in the merger;
29 (ef) The articles of incorporation or organic documents of the surviving
30 corporation survivor are amended to the extent provided in the plan of
31 merger; and
32 (g) The articles of incorporation or organic documents of a survivor that
33 is created by the merger become effective; and
34 (fh) The shares of each corporation or rights or securities of or that is
35 a party to the merger, and the interests in each limited liability company
36 an eligible entity that is a party to the a merger, that are to be con-
37 verted under the plan of merger into shares, eligible interests, obliga-
38 tions, or other rights to acquire securities, of the surviving or any
39 other corporation or into rights or securities, of or interests in any
40 limited liability company or into cash, or other property, or any combina-
41 tion of the foregoing, are converted, and the former holders of the such
42 shares or rights or securities or eligible interests are entitled only to
43 the rights provided to them in the articles plan of merger or to their any
44 rights they may have under part 13 of this chapter or under any law appli-
45 cable to limited liability companies the organic law of the eligible
46 entity.
47 (2) When a share exchange takes effect becomes effective, the shares of
48 each acquired domestic corporation are exchanged as provided in the plan, and
49 the former holders of the shares that are to be exchanged for shares or other
50 securities, interests, obligations, rights to acquire shares or other securi-
51 ties, cash, other property, or any combination of the foregoing, are entitled
52 only to the exchange rights provided to them in the articles plan of share
53 exchange or to their any rights they may have under part 13 of this chapter.
54 (3) A person who becomes subject to owner liability for some or all of
42
1 the debts, obligations or liabilities of any entity as a result of a merger or
2 share exchange shall have owner liability only to the extent provided in the
3 organic law of the entity and only for those debts, obligations and liabili-
4 ties that arise after the effective time of the articles of merger or share
5 exchange.
6 (4) Upon merger becoming effective, a foreign corporation, or a foreign
7 eligible entity, that is the survivor of the merger is deemed to:
8 (a) Appoint the secretary of state as its agent for service of process in
9 a proceeding to enforce the rights of shareholders of each domestic corpo-
10 ration that is party to the merger who exercise appraisal rights; and
11 (b) Agree that it will promptly pay the amount, if any, to which such
12 shareholders are entitled under part 13 of this chapter.
13 (5) The effect of a merger or share exchange on the owner liability of a
14 person who had owner liability for some or all of the debts, obligations or
15 liabilities of a party to the merger or share exchange shall be as follows:
16 (a) The merger or share exchange does not discharge any owner liability
17 under the organic law of the entity in which the person was a shareholder
18 or interest holder to the extent any such owner liability arose before the
19 effective time of the articles of merger or share exchange.
20 (b) The person shall not have owner liability under the organic law of
21 the entity in which the person was a shareholder or interest holder prior
22 to the merger or share exchange for any debt, obligation or liability that
23 arises after the effective time of the articles of merger or share
24 exchange.
25 (c) The provisions of the organic law of any entity for which the person
26 had owner liability before the merger or share exchange shall continue to
27 apply to the collection or discharge of any owner liability preserved by
28 paragraph (a) of this subsection, as if the merger or share exchange had
29 not occurred.
30 (d) The person shall have whatever rights of contribution from other per-
31 sons as are provided by the organic law of the entity for which the person
32 had owner liability with respect to any owner liability preserved by para-
33 graph (a) of this subsection, as if the merger or share exchange had not
34 occurred.
35 SECTION 49. That Section 30-1-1107, Idaho Code, be, and the same is
36 hereby repealed.
37 SECTION 50. That Part 11, Chapter 1, Title 30, Idaho Code, be, and the
38 same is hereby amended by the addition thereto of a NEW SECTION, to be known
39 and designated as Section 30-1-1108, Idaho Code, and to read as follows:
40 30-1-1108. ABANDONMENT OF A MERGER OR SHARE EXCHANGE. (1) Unless other-
41 wise provided in a plan of merger or share exchange or in the laws under which
42 a foreign business corporation or a domestic or foreign eligible entity that
43 is a party to a merger or a share exchange is organized or by which it is gov-
44 erned, after the plan has been adopted and approved as required by this part,
45 and at any time before the merger or share exchange has become effective, it
46 may be abandoned by a domestic business corporation that is a party thereto
47 without action by its shareholders in accordance with any procedures set forth
48 in the plan of merger or share exchange or, if no such procedures are set
49 forth in the plan, in the manner determined by the board of directors, subject
50 to any contractual rights of other parties to the merger or share exchange.
51 (2) If a merger or share exchange is abandoned under subsection (1) of
52 this section after articles of merger or share exchange have been filed with
43
1 the secretary of state but before the merger or share exchange has become
2 effective, a statement that the merger or share exchange has been abandoned in
3 accordance with this section, executed on behalf of a party to the merger or
4 share exchange by an officer or other duly authorized representative, shall be
5 delivered to the secretary of state for filing prior to the effective date of
6 the merger or share exchange. Upon filing, the statement shall take effect and
7 the merger or share exchange shall be deemed abandoned and shall not become
8 effective.
9 SECTION 51. That the Heading for Part 12, Chapter 1, Title 30, Idaho
10 Code, be, and the same is hereby amended to read as follows:
11 PART 12.
12 SALE DISPOSITION OF ASSETS
13 SECTION 52. That Section 30-1-1201, Idaho Code, be, and the same is
14 hereby amended to read as follows:
15 30-1-1201. SALE DISPOSITION OF ASSETS IN REGULAR COURSE OF BUSINESS AND
16 MORTGAGE OF ASSETS NOT REQUIRING SHAREHOLDER APPROVAL. No approval of the
17 shareholders of a corporation is required, unless the articles of incorpora-
18 tion otherwise provide:
19 (1) A corporation may, on the terms and conditions and for the consider-
20 ation determined by the board of directors:
21 (a) Sell To sell, lease, exchange, or otherwise dispose of all any, or
22 substantially all, of its property the corporation's assets in the usual
23 and regular course of business;
24 (b2) To mMortgage, pledge, dedicate to the repayment of indebtedness,
25 whether with or without recourse, or otherwise encumber any or all of its
26 property the corporation's assets, whether or not in the usual and regular
27 course of business; or
28 (c3) To tTransfer any or all of its property the corporation's assets to
29 a corporation one (1) or more corporations or eligible entities all the shares
30 or interests of which are owned by the corporation.; or
31 (24) Unless the articles of incorporation require it, approval by the
32 shareholders of a transaction described in subsection (1) of this section is
33 not required To distribute assets pro rata to the holders of one (1) or more
34 classes or series of the corporation's shares.
35 SECTION 53. That Section 30-1-1202, Idaho Code, be, and the same is
36 hereby amended to read as follows:
37 30-1-1202. SALE OF ASSETS OTHER THAN IN REGULAR COURSE OF BUSINESS SHARE-
38 HOLDER APPROVAL OF CERTAIN DISPOSITIONS. (1) A corporation may sell sale,
39 lease, exchange or otherwise dispose of all, or substantially all, of its
40 property, with or without the good will, otherwise than in the usual and regu-
41 lar course of business, on the terms and conditions and for the consideration
42 determined by the corporation's board of directors, if other disposition of
43 assets, other than a disposition described in section 30-1-1201, Idaho Code,
44 requires approval of the corporation's shareholders if the disposition would
45 leave the corporation without a significant continuing business activity. If a
46 corporation retains a business activity that represented at least twenty-five
47 percent (25%) of total assets at the end of the most recently completed fiscal
48 year, and twenty-five percent (25%) of either income from continuing opera-
49 tions before taxes or revenues from continuing operations for that fiscal
44
1 year, in each case of the corporation and its subsidiaries on a consolidated
2 basis, the corporation will conclusively be deemed to have retained a signifi-
3 cant continuing business activity.
4 (2) A disposition that requires approval of the shareholders under sub-
5 section (1) of this section shall be initiated by a resolution by the board of
6 directors proposes and its authorizing the disposition. After adoption of such
7 a resolution, the board of directors shall submit the proposed disposition to
8 the shareholders for their approval. The board of directors shall also trans-
9 mit to the shareholders a recommendation that the shareholders approve the
10 proposed transaction. disposition,
11 (2) For a transaction to be authorized:
12 (a) The board of directors must recommend the proposed transaction to the
13 shareholders unless the board of directors determines makes a determina-
14 tion that because of a conflicts of interest or other special circum-
15 stances it should not make no such a recommendation, and communicates the
16 basis for its determination in which case the board of directors shall
17 transmit to the shareholders with the submission of the proposed transac-
18 tion; and
19 (b) The shareholders entitled to vote must approve the transaction the
20 basis for that determination.
21 (3) The board of directors may condition its submission of a disposition
22 to the proposed transaction shareholders under subsection (1) of this section
23 on any basis.
24 (4) If a disposition is required to be approved by the shareholders under
25 subsection (1) of this section, and if the approval is to be given at a meet-
26 ing, tThe corporation shall notify each shareholder, whether or not entitled
27 to vote, of the proposed shareholders' meeting in accordance with section
28 30-1-705, Idaho Code. The notice must also of shareholders at which the dispo-
29 sition is to be submitted for approval. The notice shall state that the pur-
30 pose, or one (1) of the purposes, of the meeting is to consider the sale,
31 lease, exchange or other disposition of all, or substantially all, the prop-
32 erty of the corporation and contain or be accompanied by and shall contain a
33 description of the transaction disposition, including the terms and conditions
34 thereof and the consideration to be received by the corporation.
35 (5) Unless the articles of incorporation or the board of directors, act-
36 ing pursuant to subsection (3) of this section, require a greater vote or a
37 vote by voting groups, the transaction to be authorized must be approved by
38 greater number of votes to be present, the approval of a disposition by the
39 shareholders shall require the approval of the shareholders at a meeting at
40 which a quorum consisting of at least a majority of all the votes entitled to
41 be cast on the transaction disposition exists.
42 (6) After a sale, lease, exchange or other disposition of property is
43 authorized, the transaction has been approved by the shareholders under sub-
44 section (2) of this section, and at any time before the disposition has been
45 consummated, it may be abandoned by the corporation without action by the
46 shareholders, subject to any contractual rights, without further shareholder
47 action of other parties to the disposition.
48 (7) A transaction that constitutes a distribution is governed by section
49 30-1-640, Idaho Code, and not disposition of assets in the course of dissolu-
50 tion under part 14 of this chapter is not governed by this section.
51 (8) The assets of a direct or indirect consolidated subsidiary shall be
52 deemed the assets of the parent corporation for the purposes of this section.
53 SECTION 54. That the Heading for Part 13, Chapter 1, Title 30, Idaho
54 Code, be, and the same is hereby amended to read as follows:
45
1 PART 13.
2 DISSENTERS' APPRAISAL RIGHTS
3 SECTION 55. That Section 30-1-1301, Idaho Code, be, and the same is
4 hereby amended to read as follows:
5 30-1-1301. DEFINITIONS. In this part:
6 (1) "Affiliate" means a person that directly or indirectly through one
7 (1) or more intermediaries controls, is controlled by, or is under common con-
8 trol with another person or is a senior executive thereof. For purposes of
9 section 30-1-1302(2)(d), Idaho Code, a person is deemed to be an affiliate of
10 its senior executives.
11 (2) "Beneficial shareholder" means a person who is the beneficial owner
12 of shares held in a voting trust or by a nominee on the beneficial owner's
13 behalf.
14 (3) "Corporation" means the issuer of the shares held by a dissenter
15 before the corporate action, or shareholder demanding appraisal and, for mat-
16 ters covered in sections 30-1-1322 through 30-1-1331, Idaho Code, includes the
17 surviving or acquiring corporation by entity in a merger. or share exchange of
18 that issuer.
19 (2) "Dissenter" means a shareholder who is entitled to dissent from cor-
20 porate action under section 30-1-1302, Idaho Code, and who exercises that
21 right when and in the manner required by sections 30-1-1320 through 30-1-1328,
22 Idaho Code.
23 (34) "Fair value," with respect to a dissenter's shares, means the value
24 of the corporation's shares determined:
25 (a) Iimmediately before the effectuation of the corporate action to which
26 the dissenter shareholder objects, excluding any appreciation or deprecia-
27 tion in anticipation of the corporate action unless exclusion would be
28 inequitable;
29 (b) Using customary and current valuation concepts and techniques gener-
30 ally employed for similar businesses in the context of the transaction
31 requiring appraisal; and
32 (c) Without discounting for lack of marketability or minority status
33 except, if appropriate, for amendments to the articles pursuant to section
34 30-1-1302(1)(e), Idaho Code.
35 (45) "Interest" means interest from the effective date of the corporate
36 action until the date of payment, at the average rate currently paid by the
37 corporation on its principal bank loans or, if none, at a rate that is fair
38 and equitable under all the circumstances of interest on judgments in this
39 state on the effective date of the corporate action.
40 (6) "Preferred shares" means a class or series of shares whose holders
41 have preference over any other class or series with respect to distributions.
42 (57) "Record shareholder" means the person in whose name shares are reg-
43 istered in the records of the corporation or the beneficial owner of shares to
44 the extent of the rights granted by a nominee certificate on file with a the
45 corporation.
46 (68) "Beneficial shareholder" means the person who is a beneficial owner
47 of shares held in a voting trust or by a nominee as the record shareholder
48 "Senior executive" means the chief executive officer, chief operating officer,
49 chief financial officer, and anyone in charge of a principal business unit or
50 function.
51 (79) "Shareholder" means the both a record shareholder or the and a bene-
52 ficial shareholder.
46
1 SECTION 56. That Section 30-1-1302, Idaho Code, be, and the same is
2 hereby amended to read as follows:
3 30-1-1302. RIGHT TO DISSENT APPRAISAL. (1) A shareholder is entitled to
4 dissent from appraisal rights, and to obtain payment of the fair value of his
5 that shareholder's shares, in the event of, any of the following corporate
6 actions:
7 (a) Consummation of a plan of merger to which the corporation is a party:
8 (i) If shareholder approval is required for the merger by section
9 30-1-11034, Idaho Code, or the articles of incorporation and the
10 shareholder is entitled to vote on the merger, except that appraisal
11 rights shall not be available to any shareholder of the corporation
12 with respect to shares of any class or series that remain outstanding
13 after consummation of the merger; or
14 (ii) If the corporation is a subsidiary that is merged with its par-
15 ent under and the merger is governed by section 30-1-11045, Idaho
16 Code;
17 (b) Consummation of a plan of share exchange to which the corporation is
18 a party as the corporation whose shares will be acquired, if the share-
19 holder is entitled to vote on the plan exchange, except that appraisal
20 rights shall not be available to any shareholder of the corporation with
21 respect to any class or series of shares of the corporation that is not
22 exchanged;
23 (c) Consummation of a sale or exchange of all, or substantially all, of
24 the property of the corporation other than in the usual and regular course
25 of business disposition of assets pursuant to section 30-1-1202, Idaho
26 Code, if the shareholder is entitled to vote on the sale or exchange,
27 including a sale in dissolution, but not including a sale pursuant to
28 court order or a sale for cash pursuant to a plan by which all or substan-
29 tially all of the net proceeds of the sale will be distributed to the
30 shareholders within one (1) year after the date of sale disposition;
31 (d) An amendment of the articles of incorporation with respect to a class
32 or series of shares that materially and adversely affects rights in
33 respect of a dissenter's shares because it:
34 (i) Alters or abolishes a preferential right of the shares;
35 (ii) Creates, alters or abolishes a right in respect of redemption,
36 including a provision respecting a sinking fund for the redemption or
37 repurchase, of the shares;
38 (iii) Alters or abolishes a preemptive right of the holder of the
39 shares to acquire shares or other securities;
40 (iv) Excludes or limits the right of the shares to vote on any mat-
41 ter, or to cumulate votes, other than a limitation by dilution
42 through issuance of shares or other securities with similar voting
43 rights; or
44 (v) Rreduces the number of shares of a class or series owned by the
45 shareholder to a fraction of a share if the corporation has the obli-
46 gation or right to repurchase the fractional share so created; is to
47 be acquired for cash under section 30-1-604, Idaho Code; or
48 (e) Any corporate action taken pursuant to a shareholder vote other
49 amendment to the articles of incorporation, merger, share exchange or dis-
50 position of assets to the extent provided by the articles of incorpora-
51 tion, bylaws, or a resolution of the board of directors. provides that
52 voting or nonvoting shareholders are entitled to dissent and obtain pay-
53 ment for their shares.
54 (2) Notwithstanding subsection (1) of this section, the availability of
47
1 appraisal rights under subsections (1)(a), (b), (c) and (d) shall be limited
2 in accordance with the following provisions:
3 (a) Appraisal rights shall not be available for the holders of shares of
4 any class or series of shares which are:
5 (i) Listed on the New York stock exchange or the American stock
6 exchange or designated as a national market system security on an
7 interdealer quotation system by the national association of securi-
8 ties dealers, inc.; or
9 (ii) Not so listed or designated, but have at least two thousand
10 (2,000) shareholders and the outstanding shares of such class or
11 series have a market value of at least twenty million dollars
12 ($20,000,000), exclusive of the value of such shares held by its sub-
13 sidiaries, senior executives, directors and beneficial shareholders
14 owning more than ten percent (10%) of such shares.
15 (b) The applicability of subsection (2)(a) of this section shall be
16 determined as of:
17 (i) The record date fixed to determine the shareholders entitled to
18 receive notice of, and vote at, the meeting of shareholders to act
19 upon the corporate action requiring appraisal rights; or
20 (ii) The day before the effective date of such corporate action if
21 there is no meeting of shareholders.
22 (c) Subsection (2)(a) of this section shall not be applicable and
23 appraisal rights shall be available pursuant to subsection (1) of this
24 section for the holders of any class or series of shares who are required
25 by the terms of the corporate action requiring appraisal rights to accept
26 for such shares anything other than cash or shares of any class or any
27 series of shares of any corporation, or any other proprietary interest of
28 any other entity, that satisfies the standards set forth in subsection
29 (2)(a) of this section at the time the corporate action becomes effective.
30 (d) Subsection (2)(a) of this section shall not be applicable and
31 appraisal rights shall be available pursuant to subsection (1) of this
32 section for the holders of any class or series of shares where:
33 (i) Any of the shares or assets of the corporation are being
34 acquired or converted, whether by merger, share exchange or other-
35 wise, pursuant to the corporate action by a person, or by an affili-
36 ate of a person, who:
37 (A) Is, or at any time in the one (1) year period immediately
38 preceding approval by the board of directors of the corporate
39 action requiring appraisal rights was, the beneficial owner of
40 twenty percent (20%) or more of the voting power of the corpora-
41 tion, excluding any shares acquired pursuant to an offer for all
42 shares having voting power if such offer was made within one (1)
43 year prior to the corporate action requiring appraisal rights
44 for consideration of the same kind and of a value equal to or
45 less than that paid in connection with the corporate action; or
46 (B) Directly or indirectly has, or at any time in the one (1)
47 year period immediately preceding approval by the board of
48 directors of the corporation of the corporate action requiring
49 appraisal rights had, the power, contractually or otherwise, to
50 cause the appointment or election of twenty-five percent (25%)
51 or more of the directors to the board of directors of the corpo-
52 ration; or
53 (ii) Any of the shares or assets of the corporation are being
54 acquired or converted, whether by merger, share exchange or other-
55 wise, pursuant to such corporate action by a person, or by an affili-
48
1 ate of a person, who is, or at any time in the one (1) year period
2 immediately preceding approval by the board of directors of the cor-
3 porate action requiring appraisal rights was, a senior executive or
4 director of the corporation or a senior executive of any affiliate
5 thereof, and that senior executive or director will receive, as a
6 result of the corporate action, a financial benefit not generally
7 available to other shareholders as such, other than:
8 (A) Employment, consulting, retirement or similar benefits
9 established separately and not as part of or in contemplation of
10 the corporate action; or
11 (B) Employment, consulting, retirement or similar benefits
12 established in contemplation of, or as part of, the corporate
13 action that are not more favorable than those existing before
14 the corporate action or, if more favorable, that have been
15 approved on behalf of the corporation in the same manner as is
16 provided in section 30-1-862, Idaho Code; or
17 (C) In the case of a director of the corporation who will, in
18 the corporate action, become a director of the acquiring entity
19 in the corporate action or one (1) of its affiliates, rights and
20 benefits as a director that are provided on the same basis as
21 those afforded by the acquiring entity generally to other direc-
22 tors of such entity or such affiliate.
23 (e) For the purposes of subsection (2)(d) of this section only, the term
24 "beneficial owner" means any person who, directly or indirectly, through
25 any contract, arrangement, or understanding, other than a revocable proxy,
26 has or shares the power to vote, or to direct the voting of, shares, pro-
27 vided that a member of a national securities exchange shall not be deemed
28 to be a beneficial owner of securities held directly or indirectly by it
29 on behalf of another person solely because such member is the record
30 holder of such securities if the member is precluded by the rules of such
31 exchange from voting without instruction on contested matters or matters
32 that may affect substantially the rights or privileges of the holders of
33 the securities to be voted. When two (2) or more persons agree to act
34 together for the purpose of voting their shares of the corporation, each
35 member of the group formed thereby shall be deemed to have acquired bene-
36 ficial ownership, as of the date of such agreement, of all voting shares
37 of the corporation beneficially owned by any member of the group.
38 (3) Notwithstanding any other provision of this section, the articles of
39 incorporation as originally filed or any amendment thereto may limit or elimi-
40 nate appraisal rights for any class or series of preferred shares, but any
41 such limitation or elimination contained in an amendment to the articles of
42 incorporation that limits or eliminates appraisal rights for any of such
43 shares that are outstanding immediately prior to the effective date of such
44 amendment or that the corporation is or may be required to issue or sell
45 thereafter pursuant to any conversion, exchange or other right existing imme-
46 diately before the effective date of such amendment shall not apply to any
47 corporate action that becomes effective within one (1) year of that date if
48 such action would otherwise afford appraisal rights.
49 (4) A shareholder entitled to dissent and obtain payment for his shares
50 appraisal rights under this part may not challenge the a completed corporate
51 action creating his entitlement unless the action is unlawful or fraudulent
52 with respect to the shareholder or the corporation for which appraisal rights
53 are available unless such corporate action:
54 (a) Was not effectuated in accordance with the applicable provisions of
55 part 10, 11 or 12 of this chapter or the corporation's articles of incor-
49
1 poration, bylaws or board of directors' resolution authorizing the corpo-
2 rate action; or
3 (b) Was procured as a result of fraud or material misrepresentation.
4 (3) This section does not apply to the holders of shares of any class or
5 series if the shares of the class or series are redeemable securities issued
6 by a registered investment company as defined pursuant to the investment com-
7 pany act of 1940 (15 U.S.C. 80a-15 U.S.C. 80a-64).
8 (4) Unless the articles of incorporation of the corporation provide
9 otherwise, this section does not apply to the holders of shares of a class or
10 series if the shares of the class or series were registered on a national
11 securities exchange, were listed on the national market systems of the
12 national association of securities dealers automated quotation system or were
13 held of record by at least two thousand (2,000) shareholders on the date fixed
14 to determine the shareholders entitled to vote on the proposed corporate
15 action.
16 SECTION 57. That Section 30-1-1303, Idaho Code, be, and the same is
17 hereby amended to read as follows:
18 30-1-1303. DISSENT ASSERTION OF RIGHTS BY NOMINEES AND BENEFICIAL OWNERS.
19 (1) A record shareholder may assert dissenters' appraisal rights as to fewer
20 than all the shares registered in his the record shareholder's name but owned
21 by a beneficial shareholder only if he dissents the record shareholder objects
22 with respect to all shares beneficially of the class or series owned by any
23 one (1) person the beneficial shareholder and notifies the corporation in
24 writing of the name and address of each person beneficial shareholder on whose
25 behalf he asserts dissenters' appraisal rights are being asserted. The rights
26 of a partial dissenter record shareholder who asserts appraisal rights for
27 only part of the shares held of record in the record shareholder's name under
28 this subsection are shall be determined as if the shares as to which he dis-
29 sents the record shareholder objects and his the record shareholder's other
30 shares were registered in the names of different record shareholders.
31 (2) A beneficial shareholder may assert dissenters' appraisal rights as
32 to shares held on his behalf of the shareholder only if such shareholder:
33 (a) He sSubmits to the corporation the record shareholder's written con-
34 sent to the dissent not later than the time the beneficial shareholder
35 asserts dissenters' assertion of such rights no later than the date
36 referred to in section 30-1-1322(2)(b)(ii), Idaho Code; and
37 (b) He dDoes so with respect to all shares of which he is the class or
38 series that are beneficially owned by the beneficial shareholder. or over
39 which he has power to direct the vote.
40 SECTION 58. That Section 30-1-1320, Idaho Code, be, and the same is
41 hereby amended to read as follows:
42 30-1-1320. NOTICE OF DISSENTERS' APPRAISAL RIGHTS. (1) If proposed corpo-
43 rate action creating dissenters' rights under described in section
44 30-1-1302(1), Idaho Code, is to be submitted to a vote at a shareholders'
45 meeting, the meeting notice must state that the corporation has concluded that
46 shareholders are, are not or may be entitled to assert dissenters' appraisal
47 rights under this part. and be accompanied by If the corporation concludes
48 that appraisal rights are or may be available, a copy of this part must accom-
49 pany the meeting notice sent to those record shareholders entitled to exercise
50 appraisal rights.
51 (2) If corporate action creating dissenters' rights under In a merger
50
1 pursuant to section 30-1-1302105, Idaho Code, is taken without a vote of
2 shareholders, the parent corporation shall must notify in writing all record
3 shareholders of the subsidiary who are entitled to assert dissenters'
4 appraisal rights that the corporate action was taken and send them the
5 dissenters' notice became effective. Such notice must be sent within ten (10)
6 days after the corporate action became effective and include the materials
7 described in section 30-1-1322, Idaho Code.
8 SECTION 59. That Section 30-1-1321, Idaho Code, be, and the same is
9 hereby amended to read as follows:
10 30-1-1321. NOTICE OF INTENT TO DEMAND PAYMENT. (1) If proposed corporate
11 action creating dissenters' requiring appraisal rights under section
12 30-1-1302, Idaho Code, is submitted to a vote at a shareholders' meeting, a
13 shareholder who wishes to assert dissenters' appraisal rights with respect to
14 any class or series of shares:
15 (a) Must deliver to the corporation before the vote is taken written
16 notice of his the shareholder's intent to demand payment for his shares if
17 the proposed action is effectuated; and
18 (b) Must not vote, his shares or cause or permit to be voted, any shares
19 of such class or series in favor of the proposed action.
20 (2) A shareholder who does not satisfy the requirements of subsection (1)
21 of this section is not entitled to payment for his shares under this part.
22 SECTION 60. That Section 30-1-1322, Idaho Code, be, and the same is
23 hereby amended to read as follows:
24 30-1-1322. DISSENTERS' APPRAISAL NOTICE AND FORM. (1) If proposed corpo-
25 rate action creating dissenters' requiring appraisal rights under section
26 30-1-1302, Idaho Code, is authorized at a shareholders' meeting becomes effec-
27 tive, the corporation shall must deliver a written dissenters' appraisal
28 notice and form required by subsection (2)(a) of this section to all share-
29 holders who satisfied the requirements of section 30-1-1321, Idaho Code. In
30 the case of a merger under section 30-1-1105, Idaho Code, the parent must
31 deliver a written appraisal notice and form to all record shareholders who may
32 be entitled to assert appraisal rights.
33 (2) The dissenters' appraisal notice must be sent no earlier than the
34 date the corporate action became effective and no later than ten (10) days
35 after the corporate action was taken, such date and must:
36 (a) State where the payment demand must be sent and where and when cer-
37 tificates for certificated shares must be deposited;
38 (b) Inform holders of uncertificated shares to what extent transfer of
39 the shares will be restricted after the payment demand is received;
40 (c) Supply a form for demanding payment that includes specifies the date
41 of the first announcement to news media or to shareholders of the princi-
42 pal terms of the proposed corporate action and requires that the person
43 shareholder asserting dissenters' appraisal rights to certify:
44 (i) Wwhether or not he acquired beneficial ownership of the those
45 shares for which appraisal rights are asserted was acquired before
46 that date; and
47 (ii) That the shareholder did not vote for the transaction;
48 (b) State:
49 (i) Where the form must be sent and where certificates for certifi-
50 cated shares must be deposited and the date by which those certifi-
51 cates must be deposited, which date may not be earlier than the date
51
1 for receiving the required form under subsection (2)(b)(ii) of this
2 section;
3 (dii) Set a A date by which the corporation must receive the payment
4 demand form, which date may not be fewer than thirty forty (340) nor
5 more than sixty (60) days after the date the appraisal notice and
6 form in subsection (1) of this section is delivered; are sent, and
7 state that the shareholder shall have waived the right to demand
8 appraisal with respect to the shares unless the form is received by
9 the corporation by such specified date;
10 (iii) The corporation's estimate of the fair value of the shares;
11 (iv) That, if requested in writing, the corporation will provide, to
12 the shareholders so requesting, within ten (10) days after the date
13 specified in subsection (2)(b)(ii) of this section the number of
14 shareholders who return the forms by the specified date and the total
15 number of shares owned by them; and
16 (v) The date by which the notice to withdraw under section
17 30-1-1323, Idaho Code, must be received, which date must be within
18 twenty (20) days after the date specified in subsection (2)(b)(ii) of
19 this section; and
20 (ec) Be accompanied by a copy of this part.
21 SECTION 61. That Section 30-1-1323, Idaho Code, be, and the same is
22 hereby amended to read as follows:
23 30-1-1323. DUTY TO DEMAND PAYMENT PERFECTION OF RIGHTS -- RIGHT TO WITH-
24 DRAW. (1) A shareholder sent a dissenters' who receives notice described in
25 pursuant to section 30-1-1322, Idaho Code, and who wishes to exercise
26 appraisal rights must demand payment, certify on the form sent by the corpora-
27 tion whether he the beneficial owner of such shares acquired beneficial owner-
28 ship of the shares before the date required to be set forth in the dissenters'
29 notice pursuant to section 30-1-1322(2)(ca), Idaho Code., and, with respect to
30 any certificated shares, If a shareholder fails to make this certification,
31 the corporation may elect to treat the shareholder's shares as after-acquired
32 shares under section 30-1-1325, Idaho Code. In addition, a shareholder who
33 wishes to exercise appraisal rights must execute and return the form and, in
34 the case of certificated shares, deposit his the shareholder's certificates in
35 accordance with the terms of the notice by the date referred to in the notice
36 pursuant to section 30-1-1322(2)(b)(ii), Idaho Code. Once a shareholder depos-
37 its that shareholder's certificates or, in the case of uncertificated shares,
38 returns the executed forms, that shareholder loses all rights as a share-
39 holder, unless the shareholder withdraws pursuant to subsection (2) of this
40 section.
41 (2) The shareholder who demands payment and, with respect to any certifi-
42 cated shares, deposits his share certificates under subsection (1) of this
43 section retains all other rights of a shareholder until these rights are can-
44 celled or modified by the taking of the proposed corporate action A share-
45 holder who has complied with subsection (1) of this section may nevertheless
46 decline to exercise appraisal rights and withdraw from the appraisal process
47 by so notifying the corporation in writing by the date set forth in the
48 appraisal notice pursuant to section 30-1-1322(2)(b)(v), Idaho Code. A share-
49 holder who fails to so withdraw from the appraisal process may not thereafter
50 withdraw without the corporation's written consent.
51 (3) A shareholder who does not demand payment or execute and return the
52 form and, in the case of certificated shares, deposit his that shareholder's
53 share certificates where required, each by the date set forth in the
52
1 dissenters' notice described in section 30-1-1322(2), Idaho Code, is shall not
2 be entitled to payment for his shares under this part.
3 SECTION 62. That Section 30-1-1324, Idaho Code, be, and the same is
4 hereby repealed.
5 SECTION 63. That Section 30-1-1325, Idaho Code, be, and the same is
6 hereby amended to read as follows:
7 30-1-13254. PAYMENT. (1) Except as provided in section 30-1-13275, Idaho
8 Code, as soon as the proposed corporate action is taken, or upon receipt of a
9 payment demand within thirty (30) days after the form required by section
10 30-1-1322(2)(b)(ii), Idaho Code, is due, the corporation shall pay each dis-
11 senter in cash to those shareholders who complied with section 30-1-1323(1),
12 Idaho Code, the amount the corporation estimates to be the fair value of his
13 their shares, plus accrued interest.
14 (2) The payment to each shareholder pursuant to subsection (1) of this
15 section must be accompanied by:
16 (a) The corporation's Financial statements of the corporation that issued
17 the shares to be appraised, consisting of a balance sheet as of the end of
18 a fiscal year ending not more than sixteen (16) months before the date of
19 payment, an income statement for that year, a statement of changes in
20 shareholders' equity for that year, and the latest available interim
21 financial statements, if any;
22 (b) A statement of the corporation's estimate of the fair value of the
23 shares, which estimate must equal or exceed the corporation's estimate
24 given pursuant to section 30-1-1322(2)(b)(iii), Idaho Code; and
25 (c) An explanation of how the interest was calculated;
26 (d) A statement of the dissenter's that shareholders described in subsec-
27 tion (1) of this section have the right to demand further payment under
28 section 30-1-13286, Idaho Code;, and
29 (e) A copy of that if any shareholder does not do so within the time
30 period specified therein, such shareholder shall be deemed to have
31 accepted such payment in full satisfaction of the corporation's obliga-
32 tions under this part.
33 SECTION 64. That Section 30-1-1326, Idaho Code, be, and the same is
34 hereby repealed.
35 SECTION 65. That Section 30-1-1327, Idaho Code, be, and the same is
36 hereby amended to read as follows:
37 30-1-13275. AFTER-ACQUIRED SHARES. (1) A corporation may elect to with-
38 hold payment required by section 30-1-13254, Idaho Code, from a dissenter
39 unless he was the any shareholder who did not certify that beneficial
40 ownership of the all of the shareholder's shares for which appraisal rights
41 are asserted was acquired before the date set forth in the dissenters'
42 appraisal notice as the date of the first announcement to news media or to
43 shareholders of the terms of the proposed corporate action sent pursuant to
44 section 30-1-1322(2)(a), Idaho Code.
45 (2) To the extent If the corporation elects elected to withhold payment
46 under subsection (1) of this section, after taking the proposed corporate
47 action, it shall estimate the fair value of the shares, plus accrued interest,
48 and shall pay this amount to each dissenter who agrees to accept it in full
49 satisfaction of his demand. The corporation shall send with its offer a state-
53
1 ment of its estimate of the fair value of the shares, an explanation of how
2 the interest was calculated, and a statement of the dissenter's right to
3 demand payment under section 30-1-1328, Idaho Code it must, within thirty (30)
4 days after the form required by section 30-1-1322(2)(b)(ii), Idaho Code, is
5 due, notify all shareholders who are described in subsection (1) of this sec-
6 tion:
7 (a) Of the information required by section 30-1-1324(2)(a), Idaho Code;
8 (b) Of the corporation's estimate of fair value pursuant to section
9 39-1-1324(2)(b), Idaho Code;
10 (c) That they may accept the corporation's estimate of fair value, plus
11 interest, in full satisfaction of their demands or demand appraisal under
12 section 30-1-1326, Idaho Code;
13 (d) That those shareholders who wish to accept such offer must so notify
14 the corporation of their acceptance of the corporation's offer within
15 thirty (30) days after receiving the offer; and
16 (e) That those shareholders who do not satisfy the requirements for
17 demanding appraisal under section 30-1-1326, Idaho Code, shall be deemed
18 to have accepted the corporation's offer.
19 (3) Within ten (10) days after receiving the shareholder's acceptance
20 pursuant to subsection (2) of this section, the corporation must pay in cash
21 the amount it offered under subsection (2)(b) of this section to each share-
22 holder who agreed to accept the corporation's offer in full satisfaction of
23 the shareholder's demand.
24 (4) Within forty (40) days after sending the notice described in subsec-
25 tion (2) of this section, the corporation must pay in cash the amount it
26 offered to pay under subsection (2)(b) of this section to each shareholder
27 described in subsection (2)(e) of this section.
28 SECTION 66. That Section 30-1-1328, Idaho Code, be, and the same is
29 hereby amended to read as follows:
30 30-1-13286. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
31 (1) A dissenter may shareholder paid pursuant to section 30-1-1324, Idaho
32 Code, who is dissatisfied with the amount of the payment must notify the cor-
33 poration in writing of his own that shareholder's estimate of the fair value
34 of his the shares and amount of interest due, and demand payment of his that
35 estimate plus interest, less any payment under section 30-1-13254, Idaho Code,
36 or reject the corporation's offer under section 30-1-1327, Idaho Code, and
37 demand payment of the fair value of his shares and interest due, if:
38 (a) The dissenter believes that the amount paid under section 30-1-1325,
39 Idaho Code, or offered under section 30-1-1327, Idaho Code, is less than
40 the fair value of his shares or that the interest due is incorrectly cal-
41 culated;
42 (b) The corporation fails to make payment under section 30-1-1325, Idaho
43 Code, within sixty (60) days after the date set for demanding payment; or
44 (c) The corporation, having failed to take the proposed action, does not
45 return the deposited certificates or release the transfer restrictions
46 imposed on uncertificated shares within sixty (60) days after the date set
47 for demanding payment. A shareholder offered payment under section
48 30-1-1325, Idaho Code, who is dissatisfied with that offer must reject the
49 offer and demand payment of the shareholder's stated estimate of the fair
50 value of the shares plus interest.
51 (2) A dissenter waives his right to demand payment under this section
52 unless he notifies shareholder who fails to notify the corporation in writing
53 of his that shareholder's demand in writing to be paid the shareholder's
54
1 stated estimate of the fair value plus interest under subsection (1) of this
2 section within thirty (30) days after receiving the corporation's made payment
3 or offered offer of payment for his shares under section 30-1-1324 or
4 30-1-1325, Idaho Code, respectively, waives the right to demand payment under
5 this section and shall be entitled only to the payment made or offered pursu-
6 ant to those respective sections.
7 SECTION 67. That Section 30-1-1330, Idaho Code, be, and the same is
8 hereby amended to read as follows:
9 30-1-1330. COURT ACTION. TO DETERMINE SHARE VALUE. (1) If a shareholder
10 makes demand for payment under section 30-1-13286, Idaho Code, which remains
11 unsettled, the corporation shall commence a proceeding within sixty (60) days
12 after receiving the payment demand and petition the court to determine the
13 fair value of the shares and accrued interest. If the corporation does not
14 commence the proceeding within the sixty-day period, it shall pay in cash to
15 each dissenter whose demand remains unsettled shareholder the amount demanded
16 pursuant to section 31-1-1326, Idaho Code, plus interest.
17 (2) The corporation shall commence the proceeding in the Idaho district
18 appropriate court of the county where a the corporation's principal office,
19 or, if none, in this state, its registered office, in this state is located.
20 If the corporation is a foreign corporation without a registered office in
21 this state, it shall commence the proceeding in the county in this state where
22 the principal office or registered office of the domestic corporation merged
23 with or whose shares were acquired by the foreign corporation was located at
24 the time of the transaction.
25 (3) The corporation shall make all dissenters shareholders, whether or
26 not residents of this state, whose demands remain unsettled parties to the
27 proceeding, as in an action against their shares, and all parties must be
28 served with a copy of the petition. Nonresidents may be served by registered
29 or certified mail or by publication as provided by law.
30 (4) The jurisdiction of the court in which the proceeding is commenced
31 under subsection (2) of this section is plenary and exclusive. The court may
32 appoint one (1) or more persons as appraisers to receive evidence and recom-
33 mend a decision on the question of fair value. The appraisers shall have the
34 powers described in the order appointing them, or in any amendment to it. The
35 dissenters shareholders demanding appraisal rights are entitled to the same
36 discovery rights as parties in other civil proceedings. There shall be no
37 right to a jury trial.
38 (5) Each dissenter shareholder made a party to the proceeding is entitled
39 to judgment:
40 (a) For the amount, if any, by which the court finds the fair value of
41 his the shareholder's shares, plus interest, exceeds the amount paid by
42 the corporation to the shareholder for such shares; or
43 (b) For the fair value, plus accrued interest, of his after-acquired the
44 shareholder's shares for which the corporation elected to withhold payment
45 under section 30-1-13275, Idaho Code.
46 SECTION 68. That Section 30-1-1331, Idaho Code, be, and the same is
47 hereby amended to read as follows:
48 30-1-1331. COURT COSTS AND COUNSEL FEES. (1) The court in an appraisal
49 proceeding commenced under section 30-1-1330, Idaho Code, shall determine all
50 costs of the proceeding, including the reasonable compensation and expenses of
51 appraisers appointed by the court. The court shall assess the costs against
55
1 the corporation, except that the court may assess costs against all or some of
2 the dissenters shareholders demanding appraisal, in amounts the court finds
3 equitable, to the extent the court finds the dissenters such shareholders
4 acted arbitrarily, vexatiously, or not in good faith in demanding payment
5 under section 30-1-1328, Idaho Code with respect to the rights provided by
6 this part.
7 (2) The court in an appraisal proceeding may also assess the fees and
8 expenses of counsel and experts for the respective parties, in amounts the
9 court finds equitable:
10 (a) Against the corporation and in favor of any or all dissenters share-
11 holders demanding appraisal if the court finds the corporation did not
12 substantially comply with the requirements of sections 30-1-1320, through
13 30-1-13282, 30-1-1324 or 30-1-1325, Idaho Code; or
14 (b) Against either the corporation or a dissenter shareholder demanding
15 appraisal, in favor of any other party, if the court finds that the party
16 against whom the fees and expenses are assessed acted arbitrarily,
17 vexatiously, or not in good faith with respect to the rights provided by
18 this part.
19 (3) If the court in an appraisal proceeding finds that the services of
20 counsel for any dissenter shareholder were of substantial benefit to other
21 dissenters shareholders similarly situated, and that the fees for those ser-
22 vices should not be assessed against the corporation, the court may award to
23 these such counsel reasonable fees to be paid out of the amounts awarded to
24 dissenters shareholders who were benefited.
25 (4) To the extent the corporation fails to make a required payment pursu-
26 ant to section 30-1-1324, 30-1-1325 or 30-1-1326, Idaho Code, the shareholder
27 may sue directly for the amount owed and, to the extent successful, shall be
28 entitled to recover from the corporation all costs and expenses of the suit,
29 including counsel fees.
30 SECTION 69. That Section 30-1-1402, Idaho Code, be, and the same is
31 hereby amended to read as follows:
32 30-1-1402. DISSOLUTION BY BOARD OF DIRECTORS AND SHAREHOLDERS. (1) A
33 corporation's board of directors may propose dissolution for submission to the
34 shareholders.
35 (2) For a proposal to dissolve to be adopted:
36 (a) The board of directors must recommend dissolution to the shareholders
37 unless the board of directors determines that because of conflicts of
38 interest or other special circumstances it should make no recommendation
39 and communicates the basis for its determination to the shareholders; and
40 (b) The shareholders entitled to vote must approve the proposal to dis-
41 solve as provided in subsection (5) of this section.
42 (3) The board of directors may condition its submission of the proposal
43 for dissolution on any basis.
44 (4) The corporation shall notify each shareholder, whether or not enti-
45 tled to vote, of the proposed shareholders' meeting. in accordance with sec-
46 tion 30-1-705, Idaho Code. The notice must also state that the purpose, or one
47 (1) of the purposes, of the meeting is to consider dissolving the corporation.
48 (5) Unless the articles of incorporation or the board of directors, act-
49 ing pursuant to subsection (3) of this section, require a greater vote, a
50 greater number of shares to be present, or a vote by voting groups, adoption
51 of the proposal to dissolve to be adopted must be approved by a majority of
52 all shall require the approval of the shareholders at a meeting at which a
53 quorum consisting of at least a majority of the votes entitled to be cast on
56
1 that proposal exists.
2 SECTION 70. That Section 30-1-1403, Idaho Code, be, and the same is
3 hereby amended to read as follows:
4 30-1-1403. ARTICLES OF DISSOLUTION. (1) At any time after dissolution is
5 authorized, the corporation may dissolve by delivering to the secretary of
6 state for filing articles of dissolution setting forth:
7 (a) The name of the corporation;
8 (b) The date dissolution was authorized; and
9 (c) If dissolution was approved by the shareholders:
10 (i) The number of votes entitled to be cast on the proposal to dis-
11 solve, and
12 (ii) Either the total number of votes cast for and against dissolu-
13 tion or the total number of undisputed votes cast for dissolution and
14 a statement that the number cast for dissolution was sufficient for
15 approval;
16 (d) If voting by voting groups was required, the information required by
17 paragraph (c) of this subsection must be separately provided for each vot-
18 ing group entitled to vote separately on the plan to dissolve, a statement
19 that the proposal to dissolve was duly approved by the shareholders in the
20 manner required by this chapter and by the articles of incorporation.
21 (2) A corporation is dissolved upon the effective date of its articles of
22 dissolution.
23 (3) For purposes of this part, "dissolved corporation" means a corpora-
24 tion whose articles of dissolution have become effective and includes a suc-
25 cessor entity to which the remaining assets of the corporation are transferred
26 subject to its liabilities for purposes of liquidation.
27 SECTION 71. That Section 30-1-1404, Idaho Code, be, and the same is
28 hereby amended to read as follows:
29 30-1-1404. REVOCATION OF DISSOLUTION. (1) A corporation may revoke its
30 dissolution within one hundred twenty (120) days of its effective date.
31 (2) Revocation of dissolution must be authorized in the same manner as
32 the dissolution was authorized unless that authorization permitted revocation
33 by action of the board of directors alone, in which event the board of direc-
34 tors may revoke the dissolution without shareholder action.
35 (3) After the revocation of dissolution is authorized, the corporation
36 may revoke the dissolution by delivering to the secretary of state for filing
37 articles of revocation of dissolution, together with a copy of its articles of
38 dissolution, that set forth:
39 (a) The name of the corporation;
40 (b) The effective date of the dissolution that was revoked;
41 (c) The date that the revocation of dissolution was authorized;
42 (d) If the corporation's board of directors or incorporators revoked the
43 dissolution, a statement to that effect;
44 (e) If the corporation's board of directors revoked a dissolution autho-
45 rized by the shareholders, a statement that revocation was permitted by
46 action by the board of directors alone pursuant to that authorization; and
47 (f) If shareholder action was required to revoke the dissolution, the
48 information required by section 30-1-1403(1)(c), or (d), Idaho Code.
49 (4) Revocation of dissolution is effective upon the effective date of the
50 articles of revocation of dissolution.
51 (5) When the revocation of dissolution is effective, it relates back to
57
1 and takes effect as of the effective date of the dissolution and the corpora-
2 tion resumes carrying on its business as if dissolution had never occurred.
3 SECTION 72. That Section 30-1-1406, Idaho Code, be, and the same is
4 hereby amended to read as follows:
5 30-1-1406. KNOWN CLAIMS AGAINST DISSOLVED CORPORATION. (1) A dissolved
6 corporation may dispose of the known claims against it by following the proce-
7 dure described in this section notifying its known claimants in writing of the
8 dissolution at any time after its effective date.
9 (2) The dissolved corporation shall notify its known claimants in writing
10 of the dissolution at any time after its effective date. The written notice
11 must:
12 (a) Describe information that must be included in a claim;
13 (b) Provide a mailing address where a claim may be sent;
14 (c) State the deadline, which may not be fewer than one hundred twenty
15 (120) days from the effective date of the written notice, by which the
16 dissolved corporation must receive the claim; and
17 (d) State that the claim will be barred if not received by the deadline.
18 (3) A claim against the dissolved corporation is barred:
19 (a) If a claimant who was given written notice under subsection (2) of
20 this section does not deliver the claim to the dissolved corporation by
21 the deadline; or
22 (b) If a claimant whose claim was rejected by the dissolved corporation
23 does not commence a proceeding to enforce the claim within ninety (90)
24 days from the effective date of the rejection notice.
25 (4) For purposes of this section, "claim" does not include a contingent
26 liability or a claim based on an event occurring after the effective date of
27 dissolution.
28 SECTION 73. That Section 30-1-1407, Idaho Code, be, and the same is
29 hereby amended to read as follows:
30 30-1-1407. UNKNOWN OTHER CLAIMS AGAINST DISSOLVED CORPORATION. (1) A dis-
31 solved corporation may also publish notice of its dissolution and request that
32 persons with claims against the dissolved corporation present them in accor-
33 dance with the notice.
34 (2) The notice must:
35 (a) Be published one (1) time in a newspaper of general circulation in
36 the county where the dissolved corporation's principal office or, if none
37 in this state, its registered office is or was last located;
38 (b) Describe the information that must be included in a claim and provide
39 a mailing address where the claim may be sent; and
40 (c) State that a claim against the dissolved corporation will be barred
41 unless a proceeding to enforce the claim is commenced within two (2) years
42 after the publication of the notice.
43 (3) If the dissolved corporation publishes a newspaper notice in accor-
44 dance with subsection (2) of this section, the claim of each of the following
45 claimants is barred unless the claimant commences a proceeding to enforce the
46 claim against the dissolved corporation within two (2) years after the publi-
47 cation date of the newspaper notice:
48 (a) A claimant who did was not receive given written notice under section
49 30-1-1406, Idaho Code;
50 (b) A claimant whose claim was timely sent to the dissolved corporation
51 but not acted on;
58
1 (c) A claimant whose claim is contingent or based on an event occurring
2 after the effective date of dissolution.
3 (4) A claim that is not barred by section 30-1-1406(3) or 30-1-1407(3),
4 Idaho Code, may be enforced: under this section:
5 (a) Against the dissolved corporation, to the extent of its undistributed
6 assets; or
7 (b) Except as provided in section 30-1-1408(4), Idaho Code, iIf the
8 assets have been distributed in liquidation, against a shareholder of the
9 dissolved corporation to the extent of his the shareholder's pro rata
10 share of the claim or the corporate assets distributed to him the share-
11 holder in liquidation, whichever is less, but a shareholder's total lia-
12 bility for all claims under this section may not exceed the total amount
13 of assets distributed to him the shareholder.
14 SECTION 74. That Part 14, Chapter 1, Title 30, Idaho Code, be, and the
15 same is hereby amended by the addition thereto of a NEW SECTION, to be known
16 and designated as Section 30-1-1408, Idaho Code, and to read as follows:
17 30-1-1408. COURT PROCEEDING. (1) A dissolved corporation that has pub-
18 lished a notice under section 30-1-1407, Idaho Code, may file an application
19 with the appropriate court of the county where the dissolved corporation's
20 principal office, or, if none in this state, its registered office, is located
21 for a determination of the amount and form of security to be provided for pay-
22 ment of claims that are contingent or have not been made known to the dis-
23 solved corporation or that are based on an event occurring after the effective
24 date of dissolution but that, based on the facts known to the dissolved corpo-
25 ration, are reasonably estimated to arise after the effective date of dissolu-
26 tion. Provision need not be made for any claim that is or is reasonably antic-
27 ipated to be barred under section 30-1-1407(3), Idaho Code.
28 (2) Within ten (10) days after the filing of the application, notice of
29 the proceeding shall be given by the dissolved corporation to each claimant
30 holding a contingent claim whose contingent claim is shown on the records of
31 the dissolved corporation.
32 (3) The court may appoint a guardian ad litem to represent all claimants
33 whose identities are unknown in any proceeding brought under this section. The
34 reasonable fees and expenses of such guardian, including all reasonable expert
35 witness fees, shall be paid by the dissolved corporation.
36 (4) Provision by the dissolved corporation for security in the amount and
37 the form ordered by the court under subsection (1) of this section, shall sat-
38 isfy the dissolved corporation's obligations with respect to claims that are
39 contingent, have not been made known to the dissolved corporation or are based
40 on an event occurring after the effective date of dissolution, and such claims
41 may not be enforced against a shareholder who received assets in liquidation.
42 SECTION 75. That Part 14, Chapter 1, Title 30, Idaho Code, be, and the
43 same is hereby amended by the addition thereto of a NEW SECTION, to be known
44 and designated as Section 30-1-1409, Idaho Code, and to read as follows:
45 30-1-1409. DIRECTOR DUTIES. (1) Directors shall cause the dissolved cor-
46 poration to discharge or make reasonable provision for the payment of claims
47 and make distributions of assets to shareholders after payment or provision
48 for claims.
49 (2) Directors of a dissolved corporation which has been disposed of
50 claims under section 30-1-1406, 30-1-1407 or 30-1-1408, Idaho Code, shall not
51 be liable for breach of subsection (1) of this section, with respect to claims
59
1 against the dissolved corporation that are barred or satisfied under section
2 30-1-1406, 30-1-1407 or 30-1-1408, Idaho Code.
3 SECTION 76. That Section 30-1-1601, Idaho Code, be, and the same is
4 hereby amended to read as follows:
5 30-1-1601. CORPORATE RECORDS. (1) A corporation shall keep as permanent
6 records minutes of all meetings of its shareholders and board of directors, a
7 record of all actions taken by the shareholders or board of directors without
8 a meeting, and a record of all actions taken by a committee of the board of
9 directors in place of the board of directors on behalf of the corporation.
10 (2) A corporation shall maintain appropriate accounting records.
11 (3) A corporation or its agent shall maintain a record of its share-
12 holders, in a form that permits preparation of a list of the names and
13 addresses of all shareholders, in alphabetical order by class of shares show-
14 ing the number and class of shares held by each.
15 (4) A corporation shall maintain its records in written form or in
16 another form capable of conversion into written form within a reasonable time.
17 (5) A corporation shall keep a copy of the following records at its prin-
18 cipal office:
19 (a) Its articles or restated articles of incorporation, and all amend-
20 ments to them currently in effect, and any notices to shareholders
21 referred to in section 30-1-120(11)(e), Idaho Code, regarding facts on
22 which a filed document is dependent;
23 (b) Its bylaws or restated bylaws and all amendments to them currently in
24 effect;
25 (c) Resolutions adopted by its board of directors creating one (1) or
26 more classes or series of shares, and fixing their relative rights, pref-
27 erences, and limitations, if shares issued pursuant to those resolutions
28 are outstanding;
29 (d) The minutes of all shareholders' meetings, and records of all action
30 taken by shareholders without a meeting, for the past three (3) years;
31 (e) All written communications to shareholders generally within the past
32 three (3) years, including the financial statements furnished for the past
33 three (3) years under section 30-1-1620, Idaho Code; and
34 (f) A list of the names and business addresses of its current directors
35 and officers; and
36 (g) Its most recent annual report delivered to the secretary of state
37 under section 30-1-1622, Idaho Code.
38 SECTION 77. That Section 30-1-1603, Idaho Code, be, and the same is
39 hereby amended to read as follows:
40 30-1-1603. SCOPE OF INSPECTION RIGHT. (1) A shareholder's agent or attor-
41 ney has the same inspection and copying rights as the shareholder he repre-
42 sents represented.
43 (2) The right to copy records under section 30-1-1602, Idaho Code,
44 includes, if reasonable, the right to receive copies made by photographic,
45 xerographic, or other means, including copies through an electronic transmis-
46 sion if available and so requested by the shareholder.
47 (3) The corporation may impose a reasonable charge, covering the costs of
48 labor and material, for copies of any documents provided to the shareholder.
49 The charge may not exceed the estimated cost of production or reproduction of
50 the records.
51 (4) The corporation may comply at its expense with a shareholder's demand
60
1 to inspect the record of shareholders under section 30-1-1602(2)(c), Idaho
2 Code, by providing him the shareholder with a list of shareholders that was
3 compiled no earlier than the date of the shareholder's demand.
4 (4) The corporation may impose a reasonable charge, covering the costs of
5 labor and material, for copies of any documents provided to the shareholder.
6 The charge may not exceed the estimated cost of production, reproduction or
7 transmission of the records.
8 SECTION 78. That Part 16, Chapter 1, Title 30, Idaho Code, be, and the
9 same is hereby amended by the addition thereto of a NEW SECTION, to be known
10 and designated as Section 30-1-1605, Idaho Code, and to read as follows:
11 30-1-1605. INSPECTION OF RECORDS BY DIRECTORS. (1) A director of a corpo-
12 ration is entitled to inspect and copy the books, records and documents of the
13 corporation at any reasonable time to the extent reasonably related to the
14 performance of the director's duties as a director, including duties as a mem-
15 ber of a committee, but not for any other purpose or in any manner that would
16 violate any duty to the corporation.
17 (2) The appropriate court of the county where the corporation's principal
18 office, or if none in this state, its registered office, is located may order
19 inspection and copying of the books, records and documents at the
20 corporation's expense, upon application of a director who has been refused
21 such inspection rights, unless the corporation establishes that the director
22 is not entitled to such inspection rights. The court shall dispose of an
23 application under this subsection on an expedited basis.
24 (3) If an order is issued, the court may include provisions protecting
25 the corporation from undue burden or expense, and prohibiting the director
26 from using information obtained upon exercise of the inspection rights in a
27 manner that would violate a duty to the corporation, and may also order the
28 corporation to reimburse the director for the director's costs, including rea-
29 sonable counsel fees, incurred in connection with the application.
30 SECTION 79. That Part 16, Chapter 1, Title 30, Idaho Code, be, and the
31 same is hereby amended by the addition thereto of a NEW SECTION, to be known
32 and designated as Section 30-1-1606, Idaho Code, and to read as follows:
33 30-1-1606. EXCEPTION TO NOTICE REQUIREMENT. (1) Whenever notice is
34 required to be given under any provision of this chapter to any shareholder,
35 such notice shall not be required to be given if:
36 (a) Notice of two (2) consecutive annual meetings, and all notices of
37 meetings during the period between such two (2) consecutive annual meet-
38 ings, have been sent to such shareholder at such shareholder's address as
39 shown on the records of the corporation and have been returned
40 undeliverable; or
41 (b) All, but not less than two (2), payments of dividends on securities
42 during a twelve (12) month period, or two (2) consecutive payments of div-
43 idends on securities during a period of more than twelve (12) months, have
44 been sent to such shareholder at such shareholder's address as shown on
45 the records of the corporation and have been returned undeliverable.
46 (2) If any such shareholder shall deliver to the corporation a written
47 notice setting forth such shareholder's then-current address, the requirement
48 that notice be given to such shareholder shall be reinstated.
STATEMENT OF PURPOSE
RS 13802
This legislation has been prepared by the Committee to Revise the Idaho
Corporate Code (the "Committee"), under the auspices of the State Bar's
Business and Corporate Law Section. The charge to the committee was to
review the Idaho Business Corporation Act for the purpose of developing
proposals to the Idaho Legislature for amendments to bring the Act into
conformity with the most current draft of the Revised Model Business
Corporation Act, as amended to date and published by the Committee on
Corporate Law of the Section of Corporation, Banking and Business Law of
the American Bar Association (the "ABA Committee").
The legislature completely revised Idaho's business corporation laws in
1997 based on recommendations of the Committee with the adoption of the
Model Act; subsequently a number of changes have been made to the Model
Act. The State Bar and the Committee recognize the need to keep up in
the rapidly changing area of business organization law. One of the
reasons for the Legislature's adoption of the Model Act in 1997 was to
take advantage of the benefits from substantial uniformity with the
statutes of other states, including our neighboring states of Montana,
Oregon, Utah and Wyoming, each of which now follows the Model Act closely
enough to be said to have adopted it. Many of the amendments proposed
in this report are designed to maintain this uniformity.
The Committee has limited this project to the subject of business
corporations and has not involved itself directly with nonprofit
corporations, professional corporations, limited liability companies, and
the several forms of partnerships or any other "specialty areas" of
business organization law. Some of those other forms of business
associations do become involved, however, in parts of the proposed
legislation. In its numerous and sometimes lengthy deliberations, the
Committee tried to come up with amendments which strike a balance between
the legitimate needs for flexibility and ease of operations for
corporations, on the one hand, and protection of the rights of
shareholders and creditors, on the other hand.
FISCAL NOTE
There should be no fiscal impact to the general fund.
Contact: Paul Street 331-4381
Committee to Revise the Idaho Corporate Code
Woody Richards 385-5451
BMC West
STATEMENT OF PURPOSE/FISCAL NOTE H 671