§ 7-1.2-602 - Authorized shares – Shares in classes or series – Issuance of shares.
SECTION 7-1.2-602
§ 7-1.2-602 Authorized shares –Shares in classes or series – Issuance of shares. – (a) Every corporation has the power to create and issue the number of sharesstated in its articles of incorporation or any amendment thereto.
(b) Classes and series. As stated in the articles ofincorporation or in any amendment thereto, or in the resolution or resolutionsproviding for the issue of such shares adopted by the board of directorspursuant to authority expressly vested in it by the provisions of its articlesof incorporation, a corporation may issue one or more classes of shares,including one or more classes of common shares, or one or more series of shareswithin any class thereof, any or all of which classes or series of shares maybe certificated or uncertificated, with par value or without par value, andwhich classes or series may have such voting powers, full or limited, or novoting powers, and such designations, preferences and relative, participating,optional or other special rights, and qualifications, limitations orrestrictions thereof as are stated and expressed in the articles ofincorporation or any amendment thereto, or in the resolution or resolutionsproviding for the issue of such shares adopted by the board of directorspursuant to the authority expressly vested in it by the provisions of itsarticles of incorporation.
(c) Without limiting the authority contained in theseprovisions, a corporation, when provided for in its articles of incorporation,may issue shares of preferred or special classes or series:
(1) Redeemable for cash, property, promissory notes orrights, including securities of any other corporation, at the option of eitherthe holder or the corporation or upon the happening of a specified event, atthe time or times, at the price or prices, or the rate or rates, and with theadjustments stated and expressed or provided for in the articles ofincorporation or any amendment thereto, or in the vote or votes providing forthe issuance of the shares adopted by the board of directors as previouslyprovided; provided, however, that immediately following any such redemption thecorporation must have outstanding one or more shares of one or more classes orseries, which share, or shares together, have unlimited voting rights.
(2) Entitling the holders of the shares to cumulative,noncumulative, or partially cumulative dividends.
(3) Having preference over any other class or classes orseries of shares as to the payment of dividends.
(4) Having preference in the assets of the corporation overany other class or classes or series of shares upon the voluntary orinvoluntary liquidation of the corporation.
(5) To the extent not inconsistent with this chapter, havinglimited or no voting rights, or having special voting rights including thepower to elect one or more directors.
(6) Convertible into, or exchangeable for, at the option ofeither the holder or the corporation or upon the happening of a specifiedevent, shares of any other class or classes or any other series of shares ofthe corporation, at such price or prices or at such rate or rates of exchangeand with such adjustments as are stated in the articles of incorporation or inthe resolution or resolutions providing for the issuance of such shares adoptedby the board of directors.
(d) If the articles of incorporation expressly vest authorityin the board of directors, then, to the extent that the articles ofincorporation have not established series and fixed and determined thevariations in the relative rights and preferences as between the series, theboard of directors has authority to divide any or all of the classes intoseries and, within the limitations, if any, stated in the articles ofincorporation, to fix and determine the relative rights and preferences of theshares of any series established.
(e) Open-End investment company. Notwithstanding theprovisions of subsections (a) and (b) of this section, the board of directorsof a corporation that is registered or intends to register as an open-endinvestment company under the Investment Company Act of 1940, as heretofore orhereafter amended, after the registration as an open-end investment companytakes effect, may increase or decrease the aggregate number of shares or thenumber of shares of any class or series that the corporation has authority toissue unless a provision has been included in the articles of incorporation ofthe corporation after July 1, 2001 prohibiting such an action by the board ofdirectors to increase or decrease the aggregate number of shares or the numberof shares of any class or series that the corporation has authority to issue.
(2) Conditional license of franchise. Any shares of acorporation which holds (directly or indirectly) a license or franchise from agovernmental agency to conduct its business or is a member of a nationalsecurities exchange, which license, franchise or membership is conditioned uponsome or all of the holders of its shares possessing prescribed qualificationsmay be made subject to redemption by the corporation to the extent necessary toprevent the loss of such license, franchise or membership or to reinstate it.
(f) Dividends. The holders of preferred or specialshares of any class or of any series of shares are entitled to receivedividends at the rates, on the conditions and at the times that are stated andexpressed in the articles of incorporation or in the vote or votes providingfor the issue of the shares adopted by the board of directors as previouslyprovided, payable in preference to, or in relation to, the dividends, payableon any other class or classes of shares, or of any other series of shares, andcumulative, non-cumulative or partially cumulative as is stated and expressed.When dividends upon the preferred and special shares, if any, to the extent ofthe preferences to which the shares are entitled, have been paid or declaredand set apart for payment, a dividend on the remaining class or classes orseries of shares may then be paid out of the remaining assets of thecorporation available for dividends.
(g) Rights upon liquidation. The holders of thepreferred or special shares of any class or of any series of shares areentitled to the rights upon the dissolution of, or upon any distribution of theassets or liquidation, voluntary or involuntary, of the corporation as arestated and expressed in the articles of incorporation or in the vote or votesproviding for the issue of the shares adopted by the board of directors aspreviously provided.
(h) Facts ascertainable outside the articles ofincorporation. Any of the voting powers, designations, preferences, rightsand qualifications, limitations or restrictions of any class or series ofshares may be made dependent upon facts ascertainable outside the articles ofincorporation or outside the resolution or resolutions providing for the issueof such shares adopted by the board of directors pursuant to authorityexpressly vested in it by its articles of incorporation, provided that themanner in which such facts operate upon the voting powers, designations,preferences, rights and qualifications, limitations or restrictions of suchclass or series of shares is clearly and expressly set forth in the articles ofincorporation or in the resolution or resolutions providing for the issue ofsuch shares adopted by the board of directors. The term "facts," as used inthis subsection, includes, but is not limited to, the occurrence of any event,including a determination or action by any person, including the corporation.
(i) Amendment of rights and restrictions by board ofdirectors. Subject to subsection (j), unless otherwise provided in thearticles of incorporation, if no shares have been issued of a class or seriesestablished by resolution of the board of directors, the voting powers,designations, preferences, and relative, participating optional or otherrights, if any or the qualifications, limitations or restrictions thereof, maybe amended by a resolution or resolutions adopted by the board of directors.
(j) Issuance. Before any corporation issues any sharesof any class or of any series of any class of which the voting powers,designations, preferences, and relative, participating, optional, or otherrights, if any, or the qualifications, limitations, or restrictions of theshare, if any, have not been stated in the articles of incorporation but areprovided for in a vote or votes adopted by the board of directors pursuant toauthority expressly vested in it by the provisions of the articles ofincorporation, a certificate presenting a copy of the vote or votes and thenumber of shares of the class or series must be signed by an authorized officerof the corporation and filed in accordance with § 7-1.2-105. Upon filing,the certificate constitutes an amendment to the articles of incorporation.
(2) Increase or decrease of shares. Unless otherwise providedin any vote or votes, the number of shares of any class or series as stated inthe vote or votes may be increased or decreased (but not below the number ofshares then outstanding) by a certificate likewise made, signed, and filedpresenting a statement that a specified increase or decrease in the number ofshares had been authorized and directed by a vote or votes likewise adopted bythe board of directors. If the number of shares is decreased, the number ofshares specified in the certificate resume the status which they had before tothe adoption of the prior resolution.