16-10a-1003 - Amendment by board of directors and shareholders.
16-10a-1003. Amendment by board of directors and shareholders.
(1) A corporation's board of directors may propose one or more amendments to thearticles of incorporation for submission to the shareholders.
(2) For an amendment to the articles of incorporation proposed pursuant to Subsection(1) to be adopted:
(a) the board of directors shall recommend the amendment to the shareholders unless theboard determines that, because of conflicts of interest or other special circumstances, it shouldmake no recommendation and communicates the basis for its determination to the shareholderswith the amendment; and
(b) shareholders entitled to vote on the amendment shall approve the amendment asprovided in Subsection (5).
(3) The board of directors may condition its submission of the proposed amendment onany basis.
(4) The corporation shall give notice, in accordance with Section 16-10a-705, of theshareholders' meeting at which the amendment will be voted upon, to each shareholder entitled tovote on the proposed amendment. The notice of the meeting shall state that one of the purposesof the meeting is to consider the proposed amendment and it shall contain or be accompanied bya copy or summary of the amendment.
(5) Unless this chapter, the articles of incorporation, the bylaws, if authorized by thearticles of incorporation, or the board of directors acting pursuant to Subsection (3) require agreater vote or a vote by voting groups, the amendment to be adopted must be approved by:
(a) a majority of the votes entitled to be cast on the amendment by any voting group withrespect to which the amendment would create dissenters' rights;
(b) a majority of the votes entitled to be cast on the amendment by any voting group withrespect to which the amendment would materially and adversely affect rights in respect of theshares of the voting group because it:
(i) alters or abolishes a preferential right of the shares;
(ii) creates, alters, or abolishes a right in respect of redemption, including a provisionrespecting a sinking fund for the redemption or repurchase, of the shares;
(iii) alters or abolishes a preemptive right of the holder of the shares to acquire shares orother securities;
(iv) excludes or limits the right of the shares to vote on any matter, or to cumulate votes,other than a limitation by dilution through issuance of shares or other securities with similarvoting rights; or
(v) reduces the number of shares owned by the shareholder to a fraction of a share orscrip if the fractional share or scrip so created is to be acquired for cash or the scrip is to bevoided under Section 16-10a-604; and
(c) the votes required by Sections 16-10a-725 and 16-10a-726 by every other votinggroup entitled to vote on the amendment.
(6) If any amendment to the articles of incorporation would impose personal liability onshareholders for the debts of a corporation, it must be approved by all of the outstanding sharesaffected, regardless of limitations or restrictions on the voting rights of the shares.
Amended by Chapter 378, 2010 General Session