§31D-1-101. Short title.
     This chapter is and may be cited as the "West Virginia Business Corporation Act".
§31D-1-101a. Legislative acknowledgment.
     The Legislature acknowledges the work and contribution to the drafting of this chapter of the late Ann Maxey, professor of law at the West Virginia university college of law.
§31D-1-102. Reservation of powers.
     The Legislature has power to amend or repeal all or part of this act at any time and all domestic and foreign corporations subject to this act are governed by the amendment or repeal.
§31D-1-103. Construction of chapter.
     In the event of any inconsistency between any of the provisions of this chapter and the provisions made for particular classes of corporations by chapters thirty-one, thirty-one-a or thirty-three of this code, the provisions contained in said chapters prevail to the extent of the inconsistency.

PART 2. FILING DOCUMENTS.

§31D-1-120. Filing requirements.
     (a) A document must satisfy the requirements of this section and any other provision of this code that adds to or varies these requirements to be entitled to filing by the secretary of state.
    (b) The document to be filed must be typewritten or printed or, if electronically transmitted, it must be in a format that can be retrieved or reproduced in typewritten or printed form.
    (c) The document to be filed must be in the English language: Provided, That a corporate name is not required to be in the English language if it is written in English letters or Arabic or Roman numerals: Provided, however, That the certificate of existence required of foreign corporations is not required to be in the English language if it is accompanied by a reasonably authenticated English translation.
    (d) The document to be filed must be executed:
     (1) By the chairman of the board of directors of a domestic or foreign corporation, by its president, or by another of its officers;
     (2) If directors have not been selected or the corporation has not been formed, by an incorporator; or
     (3) If the corporation is in the hands of a receiver, trustee, or other court-appointed fiduciary, by that fiduciary.
     (e) The person executing the document to be filed shall sign it and state beneath or opposite his or her signature his or her name and the capacity in which he or she signs. The document may contain a corporate seal, attestation, acknowledgment or verification.
     (f) The document to be filed must be delivered to the office of the secretary of state for filing. Delivery may be made by electronic transmission as permitted by the secretary of state. The secretary of state may require one exact or conformed copy to be delivered with the document to be filed if the document is filed in typewritten or printed form and not transmitted electronically: Provided, That a document filed pursuant to section five hundred three, article five of this chapter and section one thousand five hundred nine, article fifteen of this chapter concerning the resignation of a registered agent must be accompanied by two exact or conformed copies as required by those sections.
    (g) When a document is delivered to the office of the secretary of state for filing, the correct filing fee and any franchise tax, license fee or penalty required by this chapter or any other provision of this code must be paid or provision for payment made in a manner permitted by the secretary of state.
    (h) In the case of service of notice and process as permitted by subsection (c), section five hundred four, article five of this chapter and subsections (d) and (e), section one thousand five hundred ten, article fifteen of this chapter, the notice and process must be filed with the secretary of state as one original, plus two copies for each person to be served or noticed.
§31D-1-121. Forms.
    (a) The secretary of state may prescribe and, upon request, furnish forms for documents required or permitted to be filed by this chapter. Use of these forms is not mandatory.
    (b) The secretary of state may adopt procedural rules in accordance with the provisions of this article governing the form for filing with, and delivery of documents to, the office of the secretary of state under this chapter by electronic means, including facsimile and computer transmission.
§31D-1-122. Filing, service and copying fees.
    The secretary of state shall collect all fees required to be charged and collected in accordance with the provisions of section one, article twelve-c, chapter eleven of this code and section two, article one, chapter fifty-nine of this code.
§31D-1-123. Effective time and date of document.
     (a) Except as provided in subsection (b) of this section and subsection (c), section one hundred twenty-four of this article, a document accepted for filing is effective:
     (1) At the date and time of filing, as evidenced by means as the secretary of state may use for the purpose of recording the date and time of filing; or
     (2) At the time specified in the document as its effective time on the date it is filed.
     (b) A document may specify a delayed effective time and date and if it does so, the document becomes effective at the time and date specified. If a delayed effective date but no time is specified, the document is effective at the close of business on that date. A delayed effective date for a document may not be later than the ninetieth day after the date it is filed.
§31D-1-124. Correcting filed document.
     (a) A domestic or foreign corporation may correct a document filed by the secretary of state if:
     (1) The document contains an inaccuracy;
     (2) The document was defectively executed, attested, sealed, verified or acknowledged; or
     (3) The electronic transmission was defective.
     (b) A document is corrected:
     (1) By preparing articles of correction that:
     (A) Describe the document, including its filing date, or attach a copy of the document to the articles;
    (B) Specify the inaccuracy or defect to be corrected; and (C) Correct the inaccuracy or defect; and
     (2) By delivering the articles to the secretary of state for filing.
     (c) Articles of correction are effective on the effective date of the document they correct: Provided, That articles of correction are effective when filed as to persons who have relied on the uncorrected document and have been adversely affected by the correction.
§31D-1-125. Filing duty of secretary of state.
     (a) If a document delivered to the office of the secretary of state for filing satisfies the requirements of section one hundred twenty of this article, the secretary of state shall file it.
     (b) The secretary of state files a document by recording it as filed on the date and time of receipt unless a delayed effective time is specified in the document. After filing a document, except as provided in section five hundred three, article five of this chapter and section one thousand five hundred nine, article fifteen of this chapter, the secretary of state shall deliver to the domestic or foreign corporation or its representative a receipt for the record and the fees. Upon request and payment of a fee, the secretary of state shall send to the requester a certified copy of the requested record.
     (c) If the secretary of state refuses to file a document, he or she shall return it to the domestic or foreign corporation or its representative within five days after the document was delivered, together with a brief, written explanation of the reason for his or her refusal.
     (d) The secretary of state's duty to file documents under this section is ministerial. His or her filing or refusing to file a document does not:
     (1) Affect the validity or invalidity of the document in whole or in part;
    (2) Relate to the correctness or incorrectness of information contained in the document; or
     (3) Create a presumption that the document is valid or invalid or that information contained in the document is correct or incorrect.
§31D-1-126. Appeal from secretary of state’s refusal to file document.
     (a) If the secretary of state refuses to file a document delivered to his or her office for filing, the domestic or foreign corporation may appeal the refusal to the circuit court within thirty days after the return of the document to the corporation. The appeal is commenced by petitioning the court to compel filing the document and by attaching to the petition the document and the secretary of state's explanation of his or her refusal to file.
     (b) The circuit court may summarily order the secretary of state to file the document or take other action the court considers appropriate.
     (c) The circuit court's final decision may be appealed to the West Virginia supreme court of appeals as in other civil proceedings.
§31D-1-127. Evidentiary effect of copy of filed document.
     All courts, public offices and official bodies shall take and receive copies of documents filed in the office of the secretary of state and certified by him or her, in accordance with the provisions of this article, as conclusive evidence that the original document is on file with the secretary of state.
§31D-1-128. Certificate of existence.
     (a) Any person may request a certificate of existence for a domestic corporation or a certificate of authorization for a foreign corporation from the secretary of state.
     (b) A certificate of existence or authorization provides the following information:
     (1) The domestic corporation's corporate name or the foreign corporation's corporate name used in this state;
     (2) If the corporation is a domestic corporation, that the corporation is duly incorporated under the laws of this state, the date of its incorporation and the period of its duration if it is less than perpetual;
     (3) If the corporation is a foreign corporation, that the corporation is authorized to transact business in this state; and
     (4) If payment is reflected in the records of the secretary of state and if nonpayment affects the existence or authorization of the domestic or foreign corporation, whether all fees, taxes and penalties owed to this state have been paid.
     (c) Subject to any qualification stated in the certificate, a certificate of existence or authorization issued by the secretary of state may be relied upon as conclusive evidence that the domestic or foreign corporation is in existence or is authorized to transact business in this state.
§31D-1-129. Penalty for signing false document.
     Any person who signs a document he or she knows is false in any material respect and knows that the document is to be delivered to the secretary of state for filing is guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than one thousand dollars or confined in the county or regional jail not more than one year, or both.

PART 3. SECRETARY OF STATE.

§31D-1-130. Powers.
     The secretary of state has the power reasonably necessary to perform the duties required of him or her by this chapter. The secretary of state has the power and authority to propose legislative rules for promulgation in accordance with the provisions of chapter twenty-nine-a of this code in order to carry out and implement the provisions of this chapter.

PART 4. VENUE.

§31D-1-140. Venue.
     Unless otherwise provided by any provision of this code, any civil action or other proceeding brought pursuant to this chapter may be initiated in the circuit court of any county of this state as provided in section one, article one, chapter fifty-six of this code.

PART 5. DEFINITIONS.

§31D-1-150. Definitions.
     As used in this chapter, unless the context otherwise requires a different meaning, the term:
     (1) "Articles of incorporation" includes, but is not limited to, amended and restated articles of incorporation and articles of merger.
     (2) "Authorized shares" means the shares of all classes a domestic or foreign corporation is authorized to issue.
     (3) "Conspicuous" means written so that a reasonable person against whom the writing is to operate should have noticed, including, but not limited to, printing in italics or boldface or contrasting color, or typing in capitals or underlined.
     (4) "Corporation" or "domestic corporation" means a corporation for profit, which is not a foreign corporation, incorporated under or subject to the provisions of this chapter.
     (5) "Deliver" or "delivery" means any method of delivery used in conventional commercial practice, including, but not limited to, delivery by hand, mail, commercial delivery and electronic transmission.
     (6) "Distribution" means a direct or indirect transfer of money or other property or incurrence of indebtedness by a corporation to or for the benefit of its shareholders in respect of any of its shares: Provided, That "distribution" does not include a direct or indirect transfer of a corporation’s own shares. A distribution may be in the form of a declaration or payment of a dividend; a purchase, redemption or other acquisition of shares; or a distribution of indebtedness.
     (7) "Effective date of notice" means the date as determined pursuant to section one hundred fifty-one of this article.
     (8) "Electronic transmission" or "electronically transmitted" means any process of communication not directly involving the physical transfer of paper that is suitable for the retention, retrieval and reproduction of information by the recipient.
     (9) "Employee" includes an officer and may include a director: Provided, That the director has accepted duties that make him or her also an employee.
     (10) "Entity" includes corporations and foreign corporations; nonprofit corporations; profit and nonprofit unincorporated associations; limited liability companies and foreign limited liability companies; business trusts, estates, partnerships, trusts and two or more persons having a joint or common economic interest; and state, United States and foreign government.
     (11) "Foreign corporation" means a corporation for profit incorporated under a law other than the laws of this state.
     (12) "Governmental subdivision" includes, but is not limited to, authorities, counties, districts and municipalities.
     (13) "Individual" includes, but is not limited to, the estate of an incompetent or deceased individual.
     (14) "Person" includes, but is not limited to, an individual and an entity.
     (15) "Principal office" means the office so designated in the return required pursuant to section three, article twelve-c, chapter eleven of this code where the principal executive offices of a domestic or foreign corporation are located.
     (16) "Proceeding" includes, but is not limited to, civil suits and criminal, administrative and investigatory actions.
     (17) "Record date" means the date established under article six or seven of this chapter on which a corporation determines the identity of its shareholders and their shareholdings. The determinations are to be made as of the close of business on the record date unless another time for doing so is specified when the record date is fixed.
     (18) "Registered agent" means the agent identified by the corporation pursuant to section five hundred one, article five of this chapter.
     (19) "Registered office" means the address of the registered agent for the corporation, as provided in section five hundred one, article five of this chapter.
     (20) "Secretary" means the corporate officer to whom the board of directors has delegated responsibility under subsection (c), section eight hundred forty, article eight of this chapter for custody of the minutes of the meetings of the board of directors and the meetings of the shareholders and for authenticating records of the corporation.
     (21) "Shareholder" means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation.
     (22) "Shares" means the units into which the proprietary interests in a corporation are divided.
     (23) "Sign" or "signature" includes, but is not limited to, any manual, facsimile, conformed or electronic signature.
     (24) "State", when referring to a part of the United States, includes a state and commonwealth and a territory and insular possession of the United States and their agencies and governmental subdivisions.
     (25) "Subscriber" means a person who subscribes for shares in a corporation, whether before or after incorporation.
     (26) "United States" includes, but is not limited to, districts, authorities, bureaus, commissions, departments and any other agency of the United States.
     (27) "Voting group" means all shares of one or more classes or series that, pursuant to the articles of incorporation or this chapter, are entitled to vote and be counted together collectively on a matter at a meeting of shareholders. All shares entitled by the articles of incorporation or this chapter to vote generally on the matter are for that purpose a single voting group.
     (28) "Voting power" means the current power to vote in the election of directors.
§31D-1-151. Notice.
     (a) Notice under this chapter must be in writing unless oral notice is reasonable under the circumstances. Notice by electronic transmission is to be considered written notice.
     (b) Notice may be communicated in person; by mail or other method of delivery; or by telephone, voice mail or other electronic means. If these forms of personal notice are impracticable, notice may be communicated by a newspaper of general circulation in the area where published, or by radio, television or other form of public broadcast communication.
     (c) Written notice by a domestic or foreign corporation to its shareholder, if in a comprehensible form, is effective: (1) Upon deposit in the United States mail, if mailed postpaid and correctly addressed to the shareholder's address shown in the corporation's current record of shareholders; or (2) when electronically transmitted to the shareholder in a manner authorized by the shareholder.
     (d) Written notice to a domestic or foreign corporation authorized to transact business in this state may be addressed to its registered agent at its registered office or to the corporation or its secretary at its principal office shown in its most recent return required pursuant to section three, article twelve-c, chapter eleven of this code or, in the case of a foreign corporation that has not yet delivered a return, in its application for a certificate of authority.
     (e) Except as provided in subsection (c) of this section, written notice, if in a comprehensible form, is effective at the earliest of the following:
     (1) When received;
     (2) Five days after its deposit in the United States mail, if mailed postpaid and correctly addressed; or
     (3) On the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee.
     (f) Oral notice is effective when communicated, if communicated in a comprehensible manner.
     (g) If other provisions of this chapter prescribe notice requirements for particular circumstances, those requirements govern. If articles of incorporation or bylaws prescribe notice requirements, not inconsistent with this section or other provisions of this chapter, those requirements govern.
§31D-1-152. Number of shareholders.
     (a) For purposes of this chapter, the following, identified as a shareholder in a corporation's current record of shareholders, constitutes one shareholder:
     (1) Three or fewer coowners;
     (2) A corporation, partnership, trust, estate or other entity; or
     (3) The trustees, guardians, custodians or other fiduciaries of a single trust, estate or account.
     (b) For purposes of this chapter, shareholdings registered in substantially similar names constitute one shareholder if it is reasonable to believe that the names represent the same person.

ARTICLE 2. INCORPORATION.

§31D-2-201. Incorporators.
     One or more persons may act as the incorporator or incorporators of a corporation by delivering articles of incorporation to the secretary of state for filing.
§31D-2-202. Articles of incorporation.
     (a) The articles of incorporation must set forth:
     (1) A corporate name for the corporation that satisfies the requirements of section four hundred one, article four of this chapter;
     (2) The number of shares the corporation is authorized to issue, the par value of each of the shares, or a statement that all shares are without par value;
     (3) The street address of the corporation's initial registered office, if any, and the name of its initial registered agent at that office, if any;
     (4) The name and address of each incorporator; and
     (5) The purpose or purposes for which the corporation is organized.
     (b) The articles of incorporation may set forth:
     (1) The names and addresses of the individuals who are to serve as the initial directors;
     (2) Provisions not inconsistent with law regarding:
     (A) Managing the business and regulating the affairs of the corporation;
     (B) Defining, limiting and regulating the powers of the corporation, its board of directors and shareholders; or
     (C) The imposition of personal liability on shareholders for the debts of the corporation to a specified extent and upon specified conditions;
     (3) Any provision that, under this chapter, is required or permitted to be set forth in the bylaws;
     (4) A provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director: Provided, That a provision may not eliminate or limit the liability of a director: (A) For any breach of the director’s duty of loyalty to the corporation or its stockholders; (B) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (C) under section eight hundred thirty-three, article eight of this chapter for unlawful distributions; or (D) for any transaction from which the director derived an improper personal benefit. No provision may eliminate or limit the liability of a director for any act or omission occurring prior to the date when that provision becomes effective; and
     (5) A provision permitting or making obligatory indemnification of a director for liability as that term is defined in section eight hundred fifty, article eight of this chapter to any person for any action taken, or any failure to take any action, as a director except liability for: (A) Receipt of a financial benefit to which he or she is not entitled; (B) an intentional infliction of harm on the corporation or its shareholders; (C) a violation of section eight hundred thirty-three, article eight of this chapter for unlawful distributions; or (D) an intentional violation of criminal law.
     (c) The articles of incorporation need not set forth any of the corporate powers enumerated in this chapter.
§31D-2-203. Incorporation.
     (a) Unless a delayed effective date is specified, the corporate existence begins when the articles of incorporation are filed.
     (b) The secretary of state's filing of the articles of incorporation is conclusive proof that the incorporators satisfied all conditions precedent to incorporation except in a proceeding by the state to cancel or revoke the incorporation or involuntarily dissolve the corporation.
§31D-2-204.
     (a) After incorporation:
     (1) If initial directors are named in the articles of incorporation, the initial directors shall hold an organizational meeting, at the call of a majority of the directors, to complete the organization of the corporation by appointing officers, adopting bylaws and carrying on any other business brought before the meeting; or
     (2) If initial directors are not named in the articles, the incorporator or incorporators shall hold an organizational meeting at the call of a majority of the incorporators:
     (A) To elect directors and complete the organization of the corporation; or
     (B) To elect a board of directors who shall complete the organization of the corporation.
     (b) Action required or permitted by this chapter to be taken by incorporators at an organizational meeting may be taken without a meeting if the action taken is evidenced by one or more written consents describing the action taken and signed by each incorporator.
     (c) An organizational meeting may be held in or out of this state.
§31D-2-205. Bylaws.
     (a) The incorporators or board of directors of a corporation shall adopt initial bylaws for the corporation.
     (b) The bylaws of a corporation may contain any provision for managing the business and regulating the affairs of the corporation that is not inconsistent with law or the articles of incorporation.
§31D-2-206. Emergency bylaws.
     (a) Unless the articles of incorporation provide otherwise, the board of directors of a corporation may adopt bylaws to be effective only in an emergency defined in subsection (d) of this section. The emergency bylaws, which are subject to amendment or repeal by the shareholders, may make all provisions necessary for managing the corporation during the emergency, including:
     (1) Procedures for calling a meeting of the board of directors;
     (2) Quorum requirements for the meeting; and
     (3) Designation of additional or substitute directors.
     (b) All provisions of the regular bylaws consistent with the emergency bylaws remain effective during the emergency. The emergency bylaws are not effective after the emergency ends.
     (c) Corporate action taken in good faith in accordance with the emergency bylaws:
     (1) Binds the corporation; and
     (2) May not be used to impose liability on a corporate director, officer, employee or agent.
     (d) An emergency exists for purposes of this section if a quorum of the corporation's directors cannot readily be assembled because of some catastrophic event.

ARTICLE 3. PURPOSES AND POWERS.

     (a) Every corporation incorporated under this chapter has the purpose of engaging in any lawful business unless a more limited purpose is set forth in the articles of incorporation.
     (b) A corporation engaging in a business that is subject to regulation under another statute of this state may incorporate under this chapter only if permitted by, and subject to all limitations of, the other statute.
§31D-3-302. General powers.
     Unless its articles of incorporation provide otherwise, every corporation has perpetual duration and succession in its corporate name and has the same powers as an individual to do all things necessary or convenient to carry out its business and affairs, including, without limitation, power:
     (1) To sue and be sued, complain and defend in its corporate name;
     (2) To have a corporate seal, which may be altered at will, and to use it, or a facsimile of it, by impressing or affixing it or in any other manner reproducing it;
     (3) To make and amend bylaws, not inconsistent with its articles of incorporation or with the laws of this state, for managing the business and regulating the affairs of the corporation;
     (4) To purchase, receive, lease or otherwise acquire and own, hold, improve, use and otherwise deal with real or personal property, or any legal or equitable interest in property, wherever located;
     (5) To sell, convey, mortgage, pledge, lease, exchange and otherwise dispose of all or any part of its property;
     (6) To purchase, receive, subscribe for or otherwise acquire; own, hold, vote, use, sell, mortgage, lend, pledge or otherwise dispose of; and deal in and with shares or other interests in, or obligations of, any other entity;
     (7) To make contracts and guarantees; incur liabilities; borrow money; issue its notes, bonds and other obligations which may be convertible into or include the option to purchase other securities of the corporation; and secure any of its obligations by mortgage, deed of trust or pledge of any of its property, franchises or income;
     (8) To lend money, invest and reinvest its funds and receive and hold real and personal property as security for repayment;
     (9) To be a promoter, partner, member, associate or manager of any partnership, joint venture, trust or other entity;
     (10) To conduct its business, locate offices and exercise the powers granted by this chapter within or without this state;
     (11) To elect directors and appoint officers, employees and agents of the corporation; define their duties; fix their compensation; and lend them money and credit;
     (12) To pay pensions and establish pension plans, pension trusts, profit-sharing plans, share bonus plans, share option plans and benefit or incentive plans for any or all of its current or former directors, officers, employees and agents;
     (13) To make donations for the public welfare or for charitable, scientific or educational purposes and for other purposes that further the corporate interest;
     (14) To transact any lawful business that will aid governmental policy; and
     (15) To make payments or donations, or do any other act, not inconsistent with law, that furthers the business and affairs of the corporation.
§31D-3-303. Emergency powers.
     (a) In anticipation of or during an emergency defined in subsection (d) of this section, the board of directors of a corporation may:
     (1) Modify lines of succession to accommodate the incapacity of any director, officer, employee or agent; and
     (2) Relocate the principal office, designate alternative principal offices or regional offices or authorize the officers to do so.
     (b) During an emergency defined in subsection (d) of this section, unless emergency bylaws provide otherwise:
     (1) Notice of a meeting of the board of directors need be given only to those directors whom it is practicable to reach and may be given in any practicable manner, including by publication and radio; and
     (2) One or more officers of the corporation present at a meeting of the board of directors may be deemed to be directors for the meeting, in order of rank and within the same rank in order of seniority, as necessary to achieve a quorum.
     (c) Corporate action taken in good faith during an emergency under this section to further the ordinary business affairs of the corporation:
     (1) Binds the corporation; and
     (2) May not be used to impose liability on a corporate director, officer, employee or agent.
     (d) An emergency exists for purposes of this section if a quorum of the corporation's directors cannot readily be assembled because of some catastrophic event.
§31D-3-304. Ultra vires.
     (a) Except as provided in subsection (b) of this section, the validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act.
     (b) A corporation's power to act may be challenged:
     (1) In a proceeding by a shareholder against the corporation to enjoin the act;
     (2) In a proceeding by the corporation, directly, derivatively or through a receiver, trustee or other legal representative, against an incumbent or former director, officer, employee or agent of the corporation; or
     (3) In a proceeding by the attorney general under section one thousand four hundred thirty, article fourteen of this chapter.
     (c) In a shareholder's proceeding under subdivision (1), subsection (b) of this section to enjoin an unauthorized corporate act, the circuit court may enjoin or set aside the act, if equitable and if all affected persons are parties to the proceeding, and may award damages for loss, except loss of anticipated profits, suffered by the corporation or another party because of enjoining the unauthorized act.

ARTICLE 4. NAME.

     (a) A corporate name:
     (1) Must contain the word "corporation", "incorporated", "company" or "limited", or the abbreviation "corp.", "inc.", "co." or "ltd.", or words or abbreviations of like import in another language; and
     (2) May not contain language stating or implying that the corporation is organized for a purpose other than that permitted by section three hundred one, article three of this chapter and its articles of incorporation.
     (b) Except as authorized by subsections (c) and (d) of this section, a corporate name must be distinguishable upon the records of the secretary of state from:
     (1) The corporate name of a corporation incorporated or authorized to transact business in this state;
     (2) A corporate name reserved or registered under section four hundred three or four hundred four of this article;
     (3) The fictitious name adopted by a foreign corporation authorized to transact business in this state because its real name is unavailable;
     (4) The corporate name of a nonprofit corporation incorporated or authorized to transact business in this state; and
     (5) The name of any other entity whose name is carried in the records of the secretary of state.
     (c) A corporation may apply to the secretary of state for authorization to use a name that is not distinguishable upon his or her records from one or more of the names described in subsection (b) of this section. The secretary of state shall authorize use of the name applied for if:
     (1) The other corporation consents to the use in writing and submits an undertaking in form satisfactory to the secretary of state to change the name so that it is distinguishable upon the records of the secretary of state from the name applied for; or
    (2) The applicant delivers to the secretary of state a certified copy of the final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this state.
     (d) A corporation may use the name, including the fictitious name, of another domestic or foreign corporation that is used in this state if the other corporation is incorporated or authorized to transact business in this state and the proposed user corporation:
     (1) Has merged with the other corporation;
     (2) Has been formed by reorganization of the other corporation; or
     (3) Has acquired all or substantially all of the assets, including the corporate name, of the other corporation.
     (e) This chapter does not control the use of fictitious names.
§31D-4-402. Use of the words "corporation", "incorporated" or "limited"; prohibitions; penalties.
     (a) No person may use the word "corporation" or "incorporated" or any abbreviation of these words in any trade name, business or other organization name unless the name is used by a domestic or foreign corporation authorized by the secretary of state to transact business in West Virginia under the provisions of this chapter or chapter thirty-one-e of this code.
     (b) No person may use the word "limited" or any abbreviation of the word "limited" in any trade name, business or other organization name unless the name is used by a domestic or foreign corporation authorized by the secretary of state to transact business in West Virginia under the provisions of this chapter, chapter thirty-one-b, thirty-one-e or forty-seven of this code.
     (c) The tax commissioner may not issue any business registration certificate under the provisions of article twelve, chapter eleven of this code to any business if the business name includes any of the words or their abbreviations as set forth in subsection (a) or (b) of this section unless the business is a domestic or foreign corporation or domestic or foreign nonprofit corporation.
     (d) Any person who unlawfully uses any one or more of the prescribed words or their abbreviations as set forth in subsection (a) or (b) of this section is to be deemed to be acting as a corporation without authority of law and subject to an action in quo warranto as provided in article two, chapter fifty-three of this code.
     (e) Any person who violates the provisions of this section is guilty of a misdemeanor and, upon conviction thereof, shall be fined not less than five hundred dollars nor more than one thousand dollars or confined in the county or regional jail not more than thirty days, or both.
     (f) The provisions of this section do not apply to businesses in existence prior to the first day of July, one thousand nine hundred eighty-eight.
§31D-4-403. Reserved name.
     (a) A person may reserve the exclusive use of a corporate name, including a fictitious name for a foreign corporation whose corporate name is not available, by delivering an application to the secretary of state for filing. The application must set forth the name and address of the applicant and the name proposed to be reserved. If the secretary of state finds that the corporate name applied for is available, he or she shall reserve the name for the applicant's exclusive use for a nonrenewable one hundred twenty-day period.
     (b) The owner of a reserved corporate name may transfer the reservation to another person by delivering to the secretary of state a signed notice of the transfer that states the name and address of the transferee.
§31D-4-404. Registered name.
     (a) A foreign corporation may register its corporate name, or its corporate name with any addition required by section one thousand five hundred six, article fifteen of this chapter, if the name is distinguishable upon the records of the secretary of state from the corporate names that are not available under subsection (b), section four hundred one of this article.
     (b) A foreign corporation registers its corporate name, or its corporate name with any addition required by section one thousand five hundred six, article fifteen of this chapter, by delivering to the secretary of state for filing an application:
     (1) Setting forth its corporate name, or its corporate name with any addition required by section one thousand five hundred six, article fifteen of this chapter, the state or country and date of its incorporation and a brief description of the nature of the business in which it is engaged; and
     (2) Accompanied by a certificate of existence, or a document of similar import, from the state or country of incorporation.
     (c) The name is registered for the applicant's exclusive use upon the effective date of the application.
     (d) A foreign corporation whose registration is effective may renew it for successive years by delivering to the secretary of state for filing a renewal application, which complies with the requirements of subsection (b) of this section, between the first day of October and the thirty-first day of December of the preceding year. The renewal application when filed renews the registration for the following calendar year.
     (e) A foreign corporation whose registration is effective may qualify as a foreign corporation under the registered name or consent in writing to the use of that name by a corporation incorporated under this chapter or by another foreign corporation authorized to transact business in this state. The registration terminates when the domestic corporation is incorporated or the foreign corporation qualifies or consents to the qualification of another foreign corporation under the registered name.

ARTICLE 5. OFFICE AND AGENT.

§31D-5-501. Registered office and registered agent.
     Each corporation may continuously maintain in this state:
     (1) A registered office that may be the same as any of its places of business; and
     (2) A registered agent, who may be:
     (A) An individual who resides in this state and whose business office is identical with the registered office;
     (B) A domestic corporation or domestic nonprofit corporation whose business office is identical with the registered office; or
     (C) A foreign corporation or foreign nonprofit corporation authorized to transact business in this state whose business office is identical with the registered office.
§31D-5-502. Change of registered office or registered agent.
     (a) A corporation may change its registered office or registered agent by delivering to the secretary of state for filing a statement of change that sets forth:
     (1) The name of the corporation;
     (2) The mailing address or description of physical location of its current registered office;
     (3) If the current registered office is to be changed, the street address or description of physical location of the new registered office;
     (4) The name of its current registered agent;
     (5) If the current registered agent is to be changed, the name of the new registered agent and the new agent's written consent, either on the statement or attached to it, to the appointment; and
     (6) That after the change or changes are made, the mailing addresses of its registered office and the business office of its registered agent will be identical.
     (b) If a registered agent changes the mailing address of his or her business office, he or she may change the mailing address of the registered office of any corporation for which he or she is the registered agent by notifying the corporation in writing of the change and signing, either manually or in facsimile, and delivering to the secretary of state for filing a statement that complies with the requirements of subsection (a) of this section and recites that the corporation has been notified of the change.
§31D-5-503. Resignation of registered agent.
     (a) A registered agent may resign his or her agency appointment by signing and delivering to the secretary of state for filing the signed original and two exact or conformed copies of a statement of resignation. The statement may include a statement that the registered office is also discontinued.
     (b) After filing the statement, the secretary of state shall mail one copy to the registered office if the registered office is not discontinued and the other copy to the corporation at its principal office.
     (c) The agency appointment is terminated, and the registered office is discontinued if provision for its discontinuation is made, on the thirty-first day after the date on which the statement was filed.
§31D-5-504. Service on corporation.
     (a) A corporation's registered agent is the corporation's agent for service of process, notice or demand required or permitted by law to be served on the corporation.
     (b) If a corporation has no registered agent, or the agent cannot with reasonable diligence be served, the corporation may be served by registered or certified mail, return receipt requested, addressed to the secretary of the corporation at its principal office. Service is perfected under this subsection at the earliest of:
     (1) The date the corporation receives the mail;
     (2) The date shown on the return receipt, if signed on behalf of the corporation; or
     (3) Five days after its deposit in the United States mail, as evidenced by the postmark, if mailed postpaid and correctly addressed.
     (c) In addition to the methods of service on a corporation provided in subsections (a) and (b) of this section, the secretary of state is hereby constituted the attorney-in-fact for and on behalf of each corporation created pursuant to the provisions of this chapter. The secretary of state has the authority to accept service of notice and process on behalf of each corporation and is an agent of the corporation upon whom service of notice and process may be made in this state for and upon each corporation. No act of a corporation appointing the secretary of state as attorney-in-fact is necessary. Service of any process, notice or demand on the secretary of state may be made by delivering to and leaving with the secretary of state the original process, notice or demand and two copies of the process, notice or demand for each defendant, along with the fee required by section two, article one, chapter fifty-nine of this code. Immediately after being served with or accepting any process or notice, the secretary of state shall: (1) File in his or her office a copy of the process or notice, endorsed as of the time of service or acceptance; and (2) transmit one copy of the process or notice by registered or certified mail, return receipt requested, to: (A) The corporation’s registered agent; or (B) if there is no registered agent, to the individual whose name and address was last given to the secretary of state’s office as the person to whom notice and process are to be sent and if no person has been named, to the principal office of the corporation as that address was last given to the secretary of state’s office. Service or acceptance of process or notice is sufficient if return receipt is signed by an agent or employee of the corporation, or the registered or certified mail sent by the secretary of state is refused by the addressee and the registered or certified mail is returned to the secretary of state, or to his or her office, showing the stamp of the United States postal service that delivery has been refused, and the return receipt or registered or certified mail is appended to the original process or notice and filed in the clerk’s office of the court from which the process or notice was issued. No process or notice may be served on the secretary of state or accepted by him or her less than ten days before the return day of the process or notice. The court may order continuances as may be reasonable to afford each defendant opportunity to defend the action or proceedings.
     (d) This section does not prescribe the only means, or necessarily the required means, of serving a corporation.

ARTICLE 6. SHARES AND DISTRIBUTIONS.

PART 1. SHARES.

§31D-6-601. Authorized shares.
     (a) The articles of incorporation must prescribe the classes of shares and the number of shares of each class that the corporation is authorized to issue. If more than one class of shares is authorized, the articles of incorporation must prescribe a distinguishing designation for each class and, prior to the issuance of shares of a class, the preferences, limitations and relative rights of that class must be described in the articles of incorporation. All shares of a class must have preferences, limitations and relative rights identical with those of other shares of the same class except to the extent otherwise permitted by section six hundred two of this article.
     (b) The articles of incorporation must authorize: (1) One or more classes of shares that together have unlimited voting rights; and (2) one or more classes of shares which may be the same class or classes as those with voting rights that together are entitled to receive the net assets of the corporation upon dissolution.
     (c) The articles of incorporation may authorize one or more classes of shares that:
     (1) Have special, conditional or limited voting rights, or no right to vote, except to the extent prohibited by this chapter;
     (2) Are redeemable or convertible as specified in the articles of incorporation:
    (A) At the option of the corporation, the shareholder or another person or upon the occurrence of a designated event; (B) for cash, indebtedness, securities or other property; or (C) in a designated amount or in an amount determined in accordance with a designated formula or by reference to extrinsic data or events;
     (3) Entitle the holders to distributions calculated in any manner, including dividends that may be cumulative, noncumulative or partially cumulative; or
     (4) Have preference over any other class of shares with respect to distributions, including dividends and distributions upon the dissolution of the corporation.
     (d) The description of the designations, preferences, limitations and relative rights of share classes in subsection (c) of this section is not exhaustive.
§31D-6-602. Terms of class or series determined by board of directors.
     (a) If the articles of incorporation provide, the board of directors may determine, in whole or in part, the preferences, limitations and relative rights within the limits set forth in section six hundred one of this article of: (1) Any class of shares before the issuance of any shares of that class; or (2) one or more series within a class before the issuance of any shares of that series.
     (b) Each series of a class must be given a distinguishing designation.
     (c) All shares of a series must have preferences, limitations and relative rights identical with those of other shares of the same series and, except to the extent otherwise provided in the description of the series, with those of other series of the same class.
     (d) Before issuing any shares of a class or series created under this section, the corporation must deliver to the secretary of state for filing articles of amendment, which are effective without shareholder action, that set forth:
     (1) The name of the corporation;
     (2) The text of the amendment determining the terms of the class or series of shares;
     (3) The date it was adopted; and
     (4) A statement that the amendment was duly adopted by the board of directors.
§31D-6-603. Issued and outstanding shares.
     (a) A corporation may issue the number of shares of each class or series authorized by the articles of incorporation. Shares that are issued are outstanding shares until they are reacquired, redeemed, converted or canceled.
     (b) The reacquisition, redemption, or conversion of outstanding shares is subject to the limitations of subsection (c) of this section and section six hundred forty of this article.
     (c) At all times that shares of the corporation are outstanding, one or more shares that together have unlimited voting rights and one or more shares that together are entitled to receive the net assets of the corporation upon dissolution must be outstanding.
§31D-6-604. Fractional shares.
     (a) A corporation may:
     (1) Issue fractions of a share or pay in money the value of fractions of a share;
     (2) Arrange for disposition of fractional shares by the shareholders; or
     (3) Issue scrip in registered or bearer form entitling the holder to receive a full share upon surrendering enough scrip to equal a full share.
     (b) Each certificate representing scrip must be conspicuously labeled "scrip" and must contain the information required by subsection (b), section six hundred twenty-five of this article.
     (c) The holder of a fractional share is entitled to exercise the rights of a shareholder, including the right to vote, to receive dividends and to participate in the assets of the corporation upon liquidation. The holder of scrip is not entitled to any of these rights unless the scrip provides for them.
     (d) The board of directors may authorize the issuance of scrip subject to any condition considered desirable, including:
     (1) That the scrip will become void if not exchanged for full shares before a specified date; and
     (2) That the shares for which the scrip is exchangeable may be sold and the proceeds paid to the scripholders.

PART 2. ISSUANCE OF SHARES.

§31D-6-620. Subscription for shares before incorporation.
     (a) A subscription for shares entered into before incorporation is irrevocable for six months unless the subscription agreement provides a longer or shorter period or all the subscribers agree to revocation.
     (b) The board of directors may determine the payment terms of subscription for shares that were entered into before incorporation, unless the subscription agreement specifies them. A call for payment by the board of directors must be uniform so far as practicable as to all shares of the same class or series unless the subscription agreement specifies otherwise.
     (c) Shares issued pursuant to subscriptions entered into before incorporation are fully paid and nonassessable when the corporation receives the consideration specified in the subscription agreement.
     (d) If a subscriber defaults in payment of money or property under a subscription agreement entered into before incorporation, the corporation may collect the amount owed as any other debt. Alternatively, unless the subscription agreement provides otherwise, the corporation may rescind the agreement and may sell the shares if the debt remains unpaid for more than twenty days after the corporation sends written demand for payment to the subscriber.
     (e) A subscription agreement entered into after incorporation is a contract between the subscriber and the corporation subject to section six hundred twenty-one of this article.
§31D-6-621. Issuance of shares.
     (a) The powers granted in this section to the board of directors may be reserved to the shareholders by the articles of incorporation.
     (b) The board of directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services to be performed or other securities of the corporation.
     (c) Before the corporation issues shares, the board of directors must determine that the consideration received or to be received for shares to be issued is adequate. That determination by the board of directors is conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully paid and nonassessable.
     (d) When the corporation receives the consideration for which the board of directors authorized the issuance of shares, the shares issued are fully paid and nonassessable.
    (e) The corporation may place in escrow shares issued for a contract for future services or benefits or a promissory note, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price until the services are performed, the note is paid or the benefits received. If the services are not performed, the note is not paid or the benefits are not received, the shares escrowed or restricted and the distributions credited may be canceled in whole or in part.
     (f) An issuance of shares or other securities convertible into or rights exercisable for shares, in a transaction or a series of integrated transactions, requires approval of the shareholders at a meeting at which a quorum exists consisting of at least a majority of the votes entitled to be cast on the matter, if:
     (1) The shares, other securities or rights are issued for consideration other than cash or cash equivalents; and
     (2) The voting power of shares that are issued and issuable as a result of the transaction or series of integrated transactions will comprise more than twenty percent of the voting power of the shares of the corporation that were outstanding immediately before the transaction.
     (g) As used in subsection (f) of this section:
     (1) For purposes of determining the voting power of shares issued and issuable as a result of a transaction or series of integrated transactions, the voting power of shares is the greater of: (A) The voting power of the shares to be issued; or (B) the voting power of the shares that would be outstanding after giving effect to the conversion of convertible shares and other securities and the exercise of rights to be issued.
     (2) A series of transactions is integrated if consummation of one transaction is made contingent on consummation of one or more of the other transactions.
§31D-6-622. Liability of shareholders.
     (a) A purchaser from a corporation of its own shares is not liable to the corporation or its creditors with respect to the shares except to pay the consideration for which the shares were authorized to be issued pursuant to section six hundred twenty-one of this article or specified in the subscription agreement entered pursuant to section six hundred twenty of this article.
     (b) Unless otherwise provided in the articles of incorporation, a shareholder of a corporation is not personally liable for the acts or debts of the corporation except that he or she may become personally liable by reason of his or her own acts or conduct.
§31D-6-623. Share dividends.
     (a) Unless the articles of incorporation provide otherwise, shares may be issued pro rata and without consideration to the corporation's shareholders or to the shareholders of one or more classes or series. An issuance of shares under this subsection is a share dividend.
     (b) Shares of one class or series may not be issued as a share dividend in respect of shares of another class or series unless: (1) The articles of incorporation authorize; (2) a majority of the votes entitled to be cast by the class or series to be issued approve the issue; or (3) there are no outstanding shares of the class or series to be issued.
     (c) If the board of directors does not fix the record date for determining shareholders entitled to a share dividend, it is the date the board of directors authorizes the share dividend.
§31D-6-624. Share Options.
     A corporation may issue rights, options or warrants for the purchase of shares of the corporation. The board of directors shall determine the terms upon which the rights, options or warrants are issued, their form and content, and the consideration for which the shares are to be issued.
§31D-6-625. Form and content of certificates.
     (a) Shares may, but need not, be represented by certificates. Unless this chapter or another provision of this code expressly provides otherwise, the rights and obligations of shareholders are identical whether or not their shares are represented by certificates.
     (b) At a minimum each share certificate must state on its face:
     (1) The name of the issuing corporation and that it is organized under the law of this state;
     (2) The name of the person to whom issued; and
     (3) The number and class of shares and the designation of the series, if any, the certificate represents.
     (c) If the issuing corporation is authorized to issue different classes of shares or different series within a class, the designations, relative rights, preferences and limitations applicable to each class and the variations in rights, preferences and limitations determined for each series and the authority of the board of directors to determine variations for future series must be summarized on the front or back of each certificate. Alternatively, each certificate may state conspicuously on its front or back that the corporation will furnish the shareholder this information on request in writing and without charge.
     (d) Each share certificate: (1) Must be signed, either manually or in facsimile, by two officers designated in the bylaws or by the board of directors; and (2) may bear the corporate seal or its facsimile.
     (e) If the person who signed, either manually or in facsimile, a share certificate no longer holds office when the certificate is issued, the certificate remains valid.
§31D-6-626. Shares without certificates.
     (a) Unless the articles of incorporation or bylaws provide otherwise, the board of directors of a corporation may authorize the issue of some or all of the shares of any or all of its classes or series without certificates. The authorization does not affect shares already represented by certificates until they are surrendered to the corporation.
     (b) Within a reasonable time after the issue or transfer of shares without certificates, the corporation shall send the shareholder a written statement of the information required on certificates by subsections (b) and (c), section six hundred twenty-five of this article and, if applicable, section six hundred twenty-seven of this article.
§31D-6-627. Restriction on transfer of shares and other securities.
     (a) The articles of incorporation, bylaws, an agreement among shareholders or an agreement between shareholders and the corporation may impose restrictions on the transfer or registration of transfer of shares of the corporation. A restriction does not affect shares issued before the restriction was adopted unless the holders of the shares are parties to the restriction agreement or voted in favor of the restriction.
     (b) A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this section and its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by subsection (b), section six hundred twenty-six of this article. Unless a restriction is noted as required by this subsection, a restriction is not enforceable against a person without knowledge of the restriction.
     (c) A restriction on the transfer or registration of transfer of shares is authorized:
     (1) To maintain the corporation's status when it is dependent on the number or identity of its shareholders;
     (2) To preserve exemptions under federal or state securities law; or
     (3) For any other reasonable purpose.
     (d) A restriction on the transfer or registration of transfer of shares may:
     (1) Obligate the shareholder first to offer the corporation or other persons an opportunity to acquire the restricted shares;
     (2) Obligate the corporation or other persons to acquire the restricted shares;
     (3) Require the corporation, the holders of any class of its shares or another person to approve the transfer of the restricted shares, if the requirement is not manifestly unreasonable; or
     (4) Prohibit the transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable.
     (e) For purposes of this section, "shares" includes a security convertible into or carrying a right to subscribe for or acquire shares.
§31D-6-628. Expense of issue.
     A corporation may pay the expenses of selling or underwriting its shares, and of organizing or reorganizing the corporation, from the consideration received for shares.
§31D-6-630. Shareholders’ preemptive rights.
     (a) The shareholders of a corporation do not have a preemptive right to acquire the corporation's unissued shares except to the extent the articles of incorporation provide.
     (b) A statement included in the articles of incorporation that "the corporation elects to have preemptive rights", or words of similar import, means that the following principles apply, except to the extent the articles of incorporation expressly provide otherwise:
     (1) The shareholders of the corporation have a preemptive right, granted on uniform terms and conditions prescribed by the board of directors to provide a fair and reasonable opportunity to exercise the right, to acquire proportional amounts of the corporation's unissued shares upon the decision of the board of directors to issue them.
     (2) A shareholder may waive his or her preemptive right. A waiver evidenced by a writing is irrevocable even though it is not supported by consideration.
     (3) There is no preemptive right with respect to:
     (A) Shares issued as compensation to directors, officers, agents or employees of the corporation, its subsidiaries or affiliates;
     (B) Shares issued to satisfy conversion or option rights created to provide compensation to directors, officers, agents or employees of the corporation, its subsidiaries or affiliates;
     (C) Shares authorized in articles of incorporation that are issued within six months from the effective date of incorporation; or
     (D) Shares sold otherwise than for money.
     (4) Holders of shares of any class without general voting rights but with preferential rights to distributions or assets have no preemptive rights with respect to shares of any class.
     (5) Holders of shares of any class with general voting rights but without preferential rights to distributions or assets have no preemptive rights with respect to shares of any class with preferential rights to distributions or assets unless the shares with preferential rights are convertible into or carry a right to subscribe for or acquire shares without preferential rights.
     (6) Shares subject to preemptive rights that are not acquired by shareholders may be issued to any person for a period of one year after being offered to shareholders at a consideration set by the board of directors that is not lower than the consideration set for the exercise of preemptive rights. An offer at a lower consideration or after the expiration of one year is subject to the shareholders' preemptive rights.
     (c) For purposes of this section, "shares" includes a security convertible into or carrying a right to subscribe for or acquire shares.
§31D-6-631. Corporation’s acquisition of its own shares.
     (a) Subject to the provisions of chapter thirty-one-a of this code and unless otherwise prohibited by law, a corporation may acquire its own shares and shares so acquired constitute authorized but unissued shares.
     (b) If the articles of incorporation prohibit the reissue of the acquired shares, the number of authorized shares is reduced by the number of shares acquired.
§31D-6-640. Distributions to shareholders.
     (a) A board of directors may authorize and the corporation may make distributions to its shareholders subject to restriction by the articles of incorporation and the limitation in subsection (c) of this section.
     (b) If the board of directors does not fix the record date for determining shareholders entitled to a distribution, it is the date the board of directors authorizes the distribution: Provided, That this subsection does not apply to a distribution involving a purchase, redemption or other acquisition of the corporation's shares.
     (c) No distribution may be made if, after giving it effect:
     (1) The corporation would not be able to pay its debts as they become due in the usual course of business; or
     (2) The corporation's total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution unless the articles of incorporation permit otherwise.
     (d) The board of directors may base a determination that a distribution is not prohibited under subsection (c) of this section either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.
     (e) Except as provided in subsection (g) of this section, the effect of a distribution under subsection (c) of this section is measured:
     (1) In the case of distribution by purchase, redemption or other acquisition of the corporation's shares, as of the earlier of: (A) The date money or other property is transferred or debt incurred by the corporation; or (B) the date the shareholder ceases to be a shareholder with respect to the acquired shares;
     (2) In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed; and
     (3) In all other cases, as of: (A) The date the distribution is authorized if the payment occurs within one hundred twenty days after the date of authorization; or (B) the date the payment is made if it occurs more than one hundred twenty days after the date of authorization.
     (f) A corporation's indebtedness to a shareholder incurred by reason of a distribution made in accordance with this section is at parity with the corporation's indebtedness to its general, unsecured creditors except to the extent subordinated by agreement.
     (g) Indebtedness of a corporation, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations under subsection (c) of this section if its terms provide that payment of principal and interest are made only if and to the extent that payment of a distribution to shareholders could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date the payment is actually made.

ARTICLE 7. SHAREHOLDERS.

PART 1. MEETINGS.

§31D-7-701. Annual meeting.
     (a) A corporation must hold a meeting of shareholders annually at a time stated in or fixed in accordance with the bylaws.
     (b) Annual shareholders' meetings may be held in or out of this state at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual meetings are to be held at the corporation's principal office.
     (c) The failure to hold an annual meeting at the time stated in or fixed in accordance with a corporation's bylaws does not affect the validity of any corporate action.
§31D-7-702. Special meeting.
     (a) A corporation must hold a special meeting of shareholders:
     (1) On call of its board of directors or the person or persons authorized by the articles of incorporation or bylaws; or
     (2) If the holders of at least ten percent of all the votes entitled to be cast on an issue proposed to be considered at the proposed special meeting sign, date and deliver to the corporation one or more written demands for the meeting describing the purpose or purposes for which it is to be held: Provided, That the articles of incorporation may fix a lower percentage or a higher percentage not exceeding twenty-five percent of all the votes entitled to be cast on any issue proposed to be considered. Unless otherwise provided in the articles of incorporation, a written demand for a special meeting may be revoked by a writing to that effect received by the corporation prior to the receipt by the corporation of demands sufficient in number to require the holding of a special meeting.
     (b) If not otherwise fixed under section seven hundred three or seven hundred seven of this article, the record date for determining shareholders entitled to demand a special meeting is the date the first shareholder signs the demand.
     (c) Special shareholders' meetings may be held in or out of this state at the place stated in or fixed in accordance with the bylaws. If no place is stated or fixed in accordance with the bylaws, special meetings are to be held at the corporation's principal office.
     (d) Only business within the purpose or purposes described in the meeting notice required by subsection (c), section seven hundred five of this article may be conducted at a special shareholders' meeting.
§31D-7-703. Court-ordered meeting.
     (a) The circuit court may summarily order a meeting to be held:
     (1) On application of any shareholder of the corporation entitled to participate in an annual meeting if an annual meeting was not held within the earlier of six months after the end of the corporation's fiscal year or fifteen months after its last annual meeting; or
     (2) On application of a shareholder who signed a demand for a special meeting valid under section seven hundred two of this article, if:
     (A) Notice of the special meeting was not given within thirty days after the date the demand was delivered to the corporation's secretary; or
     (B) The special meeting was not held in accordance with the notice.
     (b) The court may fix the time and place of the meeting; determine the shares entitled to participate in the meeting; specify a record date for determining shareholders entitled to notice of and to vote at the meeting; prescribe the form and content of the meeting notice; fix the quorum required for specific matters to be considered at the meeting or direct that the votes represented at the meeting constitute a quorum for action on those matters; and enter other orders necessary to accomplish the purpose or purposes of the meeting.
§31D-7-704. Action without meeting.
     (a) Action required or permitted by this chapter to be taken at a shareholders' meeting may be taken without a meeting if the action is taken by all the shareholders entitled to vote on the action. The action must be evidenced by one or more written consents bearing the date of signature and describing the action taken, signed by all the shareholders entitled to vote on the action, and delivered to the corporation for inclusion in the minutes or filing with the corporate records.
     (b) If not otherwise fixed under section seven hundred three or seven hundred seven of this article, the record date for determining shareholders entitled to take action without a meeting is the date the first shareholder signs the consent under subsection (a) of this section. No written consent may be effective to take the corporate action referred to in the consent unless, within sixty days of the earliest date appearing on a consent delivered to the corporation in the manner required by this section, written consents signed by all shareholders entitled to vote on the action are received by the corporation. A written consent may be revoked by a writing to that effect received by the corporation prior to receipt by the corporation of unrevoked written consents sufficient in number to take corporate action.
     (c) A consent signed under this section has the effect of a meeting vote and may be described as a meeting vote in any document.
     (d) If this chapter requires that notice of proposed action be given to nonvoting shareholders and the action is to be taken by unanimous consent of the voting shareholders, the corporation must give its nonvoting shareholders written notice of the proposed action at least ten days before the action is taken. The notice must contain or be accompanied by the same material that, under this chapter, would have been required to be sent to nonvoting shareholders in a notice of meeting at which the proposed action would have been submitted to the shareholders for action.
§31D-7-705. Notice of meeting.
     (a) A corporation is to notify shareholders of the date, time and place of each annual and special shareholders' meeting no fewer than ten nor more than sixty days before the meeting date. Unless this chapter or the articles of incorporation require otherwise, the corporation is required to give notice only to shareholders entitled to vote at the meeting.
     (b) Unless this chapter, the articles of incorporation or bylaws require otherwise, notice of an annual meeting need not include a description of the purpose or purposes for which the meeting is called.
     (c) Notice of a special meeting must include a description of the purpose or purposes for which the meeting is called.
     (d) If not otherwise fixed under section seven hundred three or seven hundred seven of this article, the record date for determining shareholders entitled to notice of and to vote at an annual or special shareholders' meeting is the day before the first notice is delivered to shareholders.
     (e) Unless the bylaws require otherwise, if an annual or special shareholders' meeting is adjourned to a different date, time or place, notice need not be given of the new date, time or place if the new date, time or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed under section seven hundred seven of this article, notice of the adjourned meeting must be given under this section to persons who are shareholders as of the new record date.
     (f) Unless the articles of incorporation or bylaws provide otherwise, any shareholder may participate in a regular or special meeting by any means of communication by which all shareholders participating may simultaneously hear each other during the meeting. A shareholder participating in a meeting by this means is deemed to be present in person at the meeting.
§31D-7-706. Waiver of notice.
     (a) A shareholder may waive any notice required by this chapter, the articles of incorporation or bylaws before or after the date and time stated in the notice. The waiver must be in writing, be signed by the shareholder entitled to the notice and be delivered to the corporation for inclusion in the minutes or filing with the corporate records.
     (b) A shareholder's attendance at a meeting:
     (1) Waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and
     (2) Waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.
§31D-7-707. Record date.
     (a) The bylaws may fix or provide the manner of fixing the record date for one or more voting groups in order to determine the shareholders entitled to notice of a shareholders' meeting, to demand a special meeting, to vote or to take any other action. If the bylaws do not fix or provide for fixing a record date, the board of directors of the corporation may fix a future date as the record date.
     (b) A record date fixed under this section may not be more than seventy days before the meeting or action requiring a determination of shareholders.
     (c) A determination of shareholders entitled to notice of or to vote at a shareholders' meeting is effective for any adjournment of the meeting unless the board of directors fixes a new record date, which it must do if the meeting is adjourned to a date more than one hundred twenty days after the date fixed for the original meeting.
     (d) If a court orders a meeting adjourned to a date more than one hundred twenty days after the date fixed for the original meeting, it may provide that the original record date continues in effect or it may fix a new record date.
§31D-7-708. Conduct of the meeting.
     (a) At each meeting of shareholders, a chair shall preside. The chair is to be appointed as provided in the bylaws or, in the absence of a provision in the bylaws, by the board of directors.
     (b) The chair, unless the articles of incorporation or bylaws provide otherwise, shall determine the order of business and has the authority to establish rules for the conduct of the meeting.
     (c) Any rules adopted for, and the conduct of, the meeting are to be fair to shareholders.
     (d) The chair of the meeting shall announce at the meeting when the polls close for each matter voted upon. If no announcement is made, the polls are to be deemed to have closed upon the final adjournment of the meeting. After the polls close, no ballots, proxies or votes nor any revocations or changes to a ballot, proxy or vote may be accepted.
     (e) If the articles of incorporation or bylaws authorize the use of electronic communication for shareholders’ meetings, any or all of the shareholders may participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all shareholders may simultaneously hear each other during the meeting.
§31D-7-720. Shareholders’ list for meeting.
     (a) After fixing a record date for a meeting, a corporation must prepare an alphabetical list of the names of all its shareholders who are entitled to notice of a shareholders' meeting. The list must be arranged by voting group and, within each voting group, by class or series of shares and show the address of and number of shares held by each shareholder.
     (b) The shareholders' list must be available for inspection by any shareholder, beginning two business days after notice of the meeting is given for which the list was prepared and continuing through the meeting, at the corporation's principal office or at a place identified in the meeting notice in the city where the meeting will be held. A shareholder, his or her agent or attorney is entitled on written demand to inspect and, subject to the requirements of subsection (c), section one thousand six hundred two, article sixteen of this chapter, to copy the list, during regular business hours and at his or her expense, during the period it is available for inspection.
     (c) The corporation must make the shareholders' list available at the meeting and any shareholder, his or her agent or attorney is entitled to inspect the list at any time during the meeting or any adjournment.
     (d) If the corporation refuses to allow a shareholder, his or her agent or attorney to inspect the shareholders' list before or at the meeting, or to copy the list as permitted by subsection (b) of this section, the circuit court, on application of the shareholder, may summarily order the inspection or copying at the corporation's expense and may postpone the meeting for which the list was prepared until the inspection or copying is complete.
     (e) Refusal or failure to prepare or make available the shareholders' list does not affect the validity of action taken at the meeting.
§31D-7-721. Voting entitlement of shares.
     (a) Except as provided in subsections (b) and (d) of this section or unless the articles of incorporation provide otherwise, each outstanding share, regardless of class, is entitled to one vote on each matter voted on at a shareholders' meeting. Only shares are entitled to vote.
     (b) Absent special circumstances, the shares of a corporation are not entitled to vote if they are owned, directly or indirectly, by a second corporation, domestic or foreign, and the first corporation owns, directly or indirectly, a majority of the shares entitled to vote for directors of the second corporation.
     (c) Subsection (b) of this section does not limit the power of a corporation to vote any shares, including its own shares, held by it in a fiduciary capacity.
     (d) Redeemable shares are not entitled to vote after notice of redemption is mailed to the holders and a sum sufficient to redeem the shares has been deposited with a bank, trust company or other financial institution under an irrevocable obligation to pay the holders the redemption price on surrender of the shares.
§31D-7-722. Proxies.
     (a) Unless the articles of incorporation or bylaws provide otherwise, a shareholder may vote his or her shares in person or by proxy.
     (b) A shareholder or his or her agent or attorney-in-fact may appoint a proxy to vote or otherwise act for the shareholder by signing an appointment form or by an electronic transmission of the appointment. An electronic transmission must contain or be accompanied by information from which one can determine that the shareholder, the shareholder's agent or the shareholder's attorney-in-fact authorized the electronic transmission.
     (c) An appointment of a proxy is effective when a signed appointment form or an electronic transmission of the appointment is received by the inspector of election or the officer or agent of the corporation authorized to tabulate votes. An appointment is valid for eleven months unless a longer period is expressly provided in the appointment form.
     (d) An appointment of a proxy is revocable unless the appointment form or electronic transmission states that it is irrevocable and the appointment is coupled with an interest. Appointments coupled with an interest include the appointment of:
     (1) A pledgee;
     (2) A person who purchased or agreed to purchase the shares;
     (3) A creditor of the corporation who extended it credit under terms requiring the appointment;
     (4) An employee of the corporation whose employment contract requires the appointment; or
     (5) A party to a voting agreement created under section seven hundred thirty-one of this article.
     (e) The death or incapacity of the shareholder appointing a proxy does not affect the right of the corporation to accept the proxy's authority unless notice of the death or incapacity is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises his or her authority under the appointment.
     (f) An appointment made irrevocable under subsection (d) of this section is revoked when the interest with which it is coupled is extinguished.
     (g) A transferee for value of shares subject to an irrevocable appointment may revoke the appointment if he or she did not know of its existence when he or she acquired the shares and the existence of the irrevocable appointment was not noted conspicuously on the certificate representing the shares or on the information statement for shares without certificates.
    (h) Subject to section seven hundred twenty-four of this article and to any express limitation on the proxy's authority stated in the appointment form or electronic transmission, a corporation is entitled to accept the proxy's vote or other action as that of the shareholder making the appointment.
§31D-7-723. Shares held by nominees.
     (a) A corporation may establish a procedure by which the beneficial owner of shares that are registered in the name of a nominee is recognized by the corporation as the shareholder. The extent of this recognition may be determined in the procedure.
     (b) The procedure may set forth:
     (1) The types of nominees to which it applies;
     (2) The rights or privileges that the corporation recognizes in a beneficial owner;
     (3) The manner in which the procedure is selected by the nominee;
     (4) The information that must be provided when the procedure is selected;
     (5) The period for which selection of the procedure is effective; and
     (6) Other aspects of the rights and duties created.
§31D-7-724. Corporation’s acceptance of votes.
     (a) If the name signed on a vote, consent, waiver or proxy appointment corresponds to the name of a shareholder, the corporation if acting in good faith is entitled to accept the vote, consent, waiver or proxy appointment and give it effect as the act of the shareholder.
     (b) If the name signed on a vote, consent, waiver or proxy appointment does not correspond to the name of its shareholder, the corporation if acting in good faith is entitled to accept the vote, consent, waiver or proxy appointment and give it effect as the act of the shareholder if:
     (1) The shareholder is an entity and the name signed purports to be that of an officer or agent of the entity;
     (2) The name signed purports to be that of an administrator, executor, guardian or conservator representing the shareholder and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the vote, consent, waiver or proxy appointment;
     (3) The name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the vote, consent, waiver or proxy appointment;
     (4) The name signed purports to be that of a pledgee, beneficial owner or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the shareholder has been presented with respect to the vote, consent, waiver or proxy appointment; or
     (5) Two or more persons are the shareholder as cotenants or fiduciaries and the name signed purports to be the name of at least one of the coowners and the person signing appears to be acting on behalf of all the coowners.
     (c) The corporation is entitled to reject a vote, consent, waiver or proxy appointment if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder.
     (d) The corporation and its officer or agent who accepts or rejects a vote, consent, waiver or proxy appointment in good faith and in accordance with the standards of this section or subsection (b), section seven hundred twenty-two of this article are not liable in damages to the shareholder for the consequences of the acceptance or rejection.
     (e) Corporate action based on the acceptance or rejection of a vote, consent, waiver or proxy appointment under this section is valid unless a court of competent jurisdiction determines otherwise.
§31D-7-725. Quorum and voting requirements for voting groups.
     (a) Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Unless the articles of incorporation or this chapter provide otherwise, a majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter.
     (b) Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting.
     (c) If a quorum exists, action on a matter, other than the election of directors, by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action unless the articles of incorporation or this chapter require a greater number of affirmative votes.
     (d) An amendment of articles of incorporation adding, changing or deleting a quorum or voting requirement for a voting group greater than specified in subsection (a) or (c) of this section is governed by section seven hundred twenty-seven of this article.
     (e) The election of directors is governed by section seven hundred twenty-eight of this article.
§31D-7-726. Action by single and multiple voting groups.
     (a) If the articles of incorporation or this chapter provide for voting by a single voting group on a matter, action on that matter is taken when voted upon by that voting group as provided in section seven hundred twenty-five of this article.
     (b) If the articles of incorporation or this chapter provide for voting by two or more voting groups on a matter, action on that matter is taken only when voted upon by each of those voting groups counted separately as provided in section seven hundred twenty-five of this article. Action may be taken by one voting group on a matter even though no action is taken by another voting group entitled to vote on the matter.
§31D-7-727. Greater quorum or voting requirements.
     (a) The articles of incorporation may provide for a greater quorum or voting requirement for shareholders or voting groups of shareholders than is provided for by this chapter.
     (b) An amendment to the articles of incorporation that adds, changes or deletes a greater quorum or voting requirement must meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirements then in effect or proposed to be adopted, whichever is greater.
§31D-7-728. Voting for directors; cumulative voting.
     (a) Unless otherwise provided in the articles of incorporation, directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present.
     (b) Each shareholder or designated voting group of shareholders holding shares having the right to vote for directors has a right to cumulate his or her votes for directors.
     (c) A statement included in the articles of incorporation that "all or a designated voting group of shareholders are entitled to cumulate their votes for directors", or words of similar import, means that the shareholders designated are entitled to multiply the number of votes they are entitled to cast by the number of directors for whom they are entitled to vote and cast the product for a single candidate or distribute the product among two or more candidates.
     (d) Shares otherwise entitled to vote cumulatively may not be voted cumulatively at a particular meeting unless:
     (1) The meeting notice or proxy statement accompanying the notice states conspicuously that cumulative voting is authorized; or
     (2) A shareholder who has the right to cumulate his or her votes gives notice to the corporation not less than forty-eight hours before the time set for the meeting of his or her intent to cumulate his or her votes during the meeting and if one shareholder gives this notice all other shareholders in the same voting group participating in the election are entitled to cumulate their votes without giving further notice.
§31D-7-729. Inspectors of election.
     (a) A corporation having any shares 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 must, and any other corporation may, appoint one or more inspectors to act at a meeting of shareholders and make a written report of the inspectors' determinations. Each inspector shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of the inspector's ability.
     (b) The inspectors shall:
     (1) Ascertain the number of shares outstanding and the voting power of each;
     (2) Determine the shares represented at a meeting;
     (3) Determine the validity of proxies and ballots;
     (4) Count all votes; and
     (5) Determine the result.
     (c) An inspector may be an officer or employee of the corporation.

PART 3. VOTING TRUSTS AND AGREEMENTS.

§31D-7-730. Voting trusts.
     (a) One or more shareholders may create a voting trust, conferring on a trustee the right to vote or otherwise act for them, by signing an agreement setting out the provisions of the trust, including, but not limited to, anything consistent with its purpose, and transferring their shares to the trustee. When a voting trust agreement is signed, the trustee shall prepare a list of the names and addresses of all owners of beneficial interests in the trust, together with the number and class of shares each transferred to the trust, and deliver copies of the list and agreement to the corporation's principal office.
     (b) A voting trust becomes effective on the date the first shares subject to the trust are registered in the trustee's name. A voting trust is valid for not more than ten years after its effective date unless extended under subsection (c) of this section.
     (c) All or some of the parties to a voting trust may extend it for additional terms of not more than ten years each by signing written consent to the extension. An extension is valid for ten years from the date the first shareholder signs the extension agreement. The voting trustee must deliver copies of the extension agreement and list of beneficial owners to the corporation's principal office. An extension agreement binds only those parties signing it.
§31D-7-731. Voting agreements.
(a) Two or more shareholders may provide for the manner in which they will vote their shares by signing an agreement for that purpose. A voting agreement created under this section is not subject to the provisions of section seven hundred thirty of this article.
     (b) A voting agreement created under this section is specifically enforceable.
§31D-7-732. Shareholder agreements.
     (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 this chapter 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 six hundred forty, article six of this chapter;
     (3) Establishes who are to 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 must be:
     (1) Set forth:
     (A) In the articles 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 an agreement authorized by this section must be noted conspicuously on the front or back of each certificate for outstanding shares or on the information statement required by subsection (b), section six hundred twenty-six, article six of this chapter. If at the time of the agreement the corporation has shares outstanding represented by certificates, the corporation must recall the outstanding certificates and issue substitute certificates that comply with this subsection