Sec. 33-717. Shareholder agreement.
Sec. 33-717. Shareholder agreement. (a) An agreement among the shareholders
of a corporation that complies with this section is effective among the shareholders and
the corporation even though it is inconsistent with one or more other provisions of
sections 33-600 to 33-998, inclusive, in that it:
(1) Eliminates the board of directors or restricts the discretion or powers of the
board of directors;
(2) Governs the authorization or making of distributions whether or not in proportion to ownership of shares, subject to the limitations in section 33-687;
(3) Establishes who shall be directors or officers of the corporation, or their terms
of office or manner of selection or removal;
(4) Governs, in general or in regard to specific matters, the exercise or division of
voting power by or between the shareholders and directors or by or among any of them,
including use of weighted voting rights or director proxies;
(5) Establishes the terms and conditions of any agreement for the transfer or use
of property or the provision of services between the corporation and any shareholder,
director, officer or employee of the corporation or among any of them;
(6) Transfers to one or more shareholders or other persons all or part of the authority
to exercise the corporate powers or to manage the business and affairs of the corporation,
including the resolution of any issue about which there exists a deadlock among directors
or shareholders;
(7) Requires dissolution of the corporation at the request of one or more of the
shareholders or upon the occurrence of a specified event or contingency; or
(8) Otherwise governs the exercise of the corporate powers or the management of
the business and affairs of the corporation or the relationship among the shareholders,
the directors and the corporation, or among any of them, and is not contrary to public
policy.
(b) An agreement authorized by this section shall be: (1) Set forth (A) in the certificate of incorporation or bylaws and approved by all persons who are shareholders at
the time of the agreement or (B) in a written agreement that is signed by all persons
who are shareholders at the time of the agreement and is made known to the corporation;
(2) subject to amendment only by all persons who are shareholders at the time of the
amendment, unless the agreement provides otherwise; and (3) valid for ten years, unless
the agreement provides otherwise.
(c) The existence of any agreement authorized by this section shall be noted conspicuously on the front or back of each certificate for outstanding shares or on the information
statement required by subsection (b) of section 33-677. If at the time of the agreement
the corporation has shares outstanding represented by certificates, the corporation shall
recall the outstanding certificates and issue substitute certificates that comply with this
subsection. The failure to note the existence of the agreement on the certificate or information statement shall not affect the validity of the agreement or any action taken pursuant to it. Any purchaser of shares who, at the time of purchase, did not have knowledge
of the existence of the agreement shall be entitled to rescission of the purchase. A purchaser shall be deemed to have knowledge of the existence of the agreement if its existence is noted on the certificate or information statement for the shares in compliance
with this subsection and, if the shares are not represented by a certificate, the information
statement is delivered to the purchaser at or prior to the time of purchase of the shares.
An action to enforce the right of rescission authorized by this subsection must be commenced within the earlier of ninety days after discovery of the existence of the agreement
or two years after the time of purchase of the shares.
(d) An agreement authorized by this section shall cease to be effective when the
corporation becomes a public corporation. If the agreement ceases to be effective for
any reason, the board of directors may, if the agreement is contained or referred to in
the corporation's certificate of incorporation or bylaws, adopt an amendment to the
certificate of incorporation or bylaws, without shareholder action, to delete the
agreement and any references to it.
(e) An agreement authorized by this section that limits the discretion or powers of
the board of directors shall relieve the directors of, and impose upon the person or
persons in whom such discretion or powers are vested, liability for acts or omissions
imposed by law on directors to the extent that the discretion or powers of the directors
are limited by the agreement.
(f) The existence or performance of an agreement authorized by this section shall
not be a ground for imposing personal liability on any shareholder for the acts or debts
of the corporation even if the agreement or its performance treats the corporation as if
it were a partnership or results in failure to observe the corporate formalities otherwise
applicable to the matters governed by the agreement.
(g) Incorporators or subscribers for shares may act as shareholders with respect to
an agreement authorized by this section if no shares have been issued when the agreement
is made.
(P.A. 94-186, S. 74, 215; P.A. 96-271, S. 58, 59, 254; P.A. 06-68, S. 3.)
History: P.A. 94-186 effective January 1, 1997; P.A. 96-271 replaced "articles" of incorporation with "certificate" of
incorporation where appearing, effective January 1, 1997; P.A. 06-68 amended Subsec. (d) by replacing "when shares of
the corporation are listed on a national securities exchange or regularly traded in a market maintained by one or more
members of a national or affiliated securities association" with "when the corporation becomes a public corporation".
Board of director's resolution setting forth parameters of electing a board of directors held to be valid shareholder
agreement under this section. 72 CA 426.