§ 7-5.1-5 - Eligibility of personnel – Transfer of stock.
SECTION 7-5.1-5
§ 7-5.1-5 Eligibility of personnel –Transfer of stock. – (a) If any shareholder becomes ineligible, he or she shall transfer his or hershares to an eligible person, or offer them to the corporation for redemptionat their fair market value. If the articles of incorporation or the by-laws ofthe corporation restrict transfer of its shares, and transfer of the shares toan eligible person is prevented, the corporation shall redeem the shares of theineligible shareholder, and compensate the ineligible shareholder in full forthe fair market value of his or her shares determined as of the date that theineligibility occurred. Nothing contained in these provisions is to beinterpreted to prevent a shareholder and the corporation from making a bindingagreement as to a method for determining the fair market value or fordetermining what constitutes the fair market value of his or her shares. In theevent the corporation and an ineligible shareholder cannot agree as to the fairmarket value, the regulatory agency excluding the division of professionalregulation shall, upon application by either party, appoint a board of not lessthan three (3) qualified persons engaged in performing similar professionalservices to determine the fair market value of the shares, and the decision ofthe board is final and binding upon the parties. The division of professionalregulation shall, upon application by either party, appoint a neutralarbitrator with experience in business valuation whose fees will be paid by thecorporation petitioner to determine the fair market value of the shares, andthe decision of the arbitrator is final and binding upon the parties. Theredemption of its shares by a professional service corporation shall not beeffected at a time or in a manner so as to impair or prejudice the rights orremedies of any creditor of the corporation. As used in this chapter,"ineligible shareholder" includes a shareholder electing to retire or withdrawfrom active employment in the corporation. Nothing contained in theseprovisions is to be interpreted to prohibit the temporary exercise of incidenceof ownership of stock in any corporation by persons or corporate fiduciariesnot authorized to practice, solely for purposes of administering estates ofshareholders deceased or under legal disability to transfer their shares. Forpurposes of this section, "temporary incidence of ownership" means any periodof time not exceeding two (2) years; and "administering estates ofshareholders" shall include, but not be limited to, contracting with licensedprofessionals to operate the practice upon the death of the person licensed topractice.
(b) Every shareholder of a corporation organized under thischapter who is entitled to vote at a meeting of the shareholders or to expressconsent without a meeting may authorize any other shareholder of thecorporation to act for him or her by proxy executed, in writing, by theshareholder or by his or her duly authorized attorney in fact.