Section 450.2309 - Default in payment of amount due under subscription agreement; rights and duties of corporation; interpretation; limiting and adding to rights and remedies of corporation.
NONPROFIT CORPORATION ACT (EXCERPT)
Act 162 of 1982
450.2309 Default in payment of amount due under subscription agreement; rights and duties of corporation; interpretation; limiting and adding to rights and remedies of corporation.
Sec. 309.
(1) In case of default in payment of an installment or call or other amount due under a subscription agreement, including an amount which may become due as a result of a default in performance of any provision thereof, the corporation has the following rights and duties:
(a) It may collect the amount due in the same manner as any other debt owing to it.
(b) If the articles of incorporation or bylaws of a corporation organized upon a stock basis permit the transfer of shares, it may sell the shares in any reasonable manner consistent therewith at any time before full satisfaction of the claim or a judgment therefor. Notice of the time and place of a public sale or of the time after which a private sale may be had, together with a statement of the amount due upon each share, shall be given in writing to the subscriber personally or by registered or certified mail at least 20 days before any such time stated in the notice. Any excess of net proceeds realized over the amount due plus interest shall be paid to the subscriber. If the sale is made in good faith, in a reasonable manner, and upon such notice, the corporation may recover the difference between the amount due plus interest and the net proceeds of the sale. A good faith purchaser for value acquires title to the sold shares free of any right of the subscriber even though the corporation fails to comply with 1 or more of the requirements of this subdivision.
(c) It may rescind the subscription, with the effect provided in section 310, and may recover damages for breach of contract. In the case of transferable shares of a corporation organized upon a stock basis, unless special circumstances show proximate damages of a different amount, the measure of damages shall be the difference between the market price at the time and place of tender of the shares and the unpaid contract price. Liquidated damages may be provided for in the subscription agreement in any amount which is reasonable, including the difficulties of proof of loss. The subscriber may have restitution of the amount by which the sum of payments exceeds the corporation's damages for breach of contract, whether fixed by agreement or judgment.
(2) The rights and duties set forth in this section shall be interpreted as cumulative so far as is consistent with entitling the corporation to a full and single recovery of the amount due or its damages. The subscription agreement may limit the rights and remedies of the corporation set forth in this section, and may add to them so far as is consistent with this subsection.
History: 1982, Act 162, Eff. Jan. 1, 1983