AN ACT Relating to the
Washington business corporation act; amending RCW 23B.14.220, 23B.14.300,
23B.14.330, 23B.14.340, 23B.07.320, 23B.08.080, and 34.08.020; reenacting and
amending RCW 23B.01.400; and adding a new section to chapter 23B.14 RCW.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF
WASHINGTON:
Sec. 1. RCW 23B.01.400 and 1991
c 269 s 35 and 1991 c 72 s 28 are each reenacted and amended to read as
follows:
Unless the context
clearly requires otherwise, the definitions in this section apply throughout
this title.
(1) "Articles of
incorporation" include 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 so written that a reasonable person against whom
the writing is to operate should have noticed it. For example, printing in
italics or boldface or contrasting color, or typing in capitals or underlined,
is conspicuous.
(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 title.
(5) "Deliver"
includes (a) mailing and (b) for purposes of delivering a demand, consent, or
waiver to the corporation or one of its officers, transmission by facsimile
equipment.
(6)
"Distribution" means a direct or indirect transfer of money or other
property, except its own shares, or incurrence of indebtedness by a corporation
to or for the benefit of its shareholders in respect to any of its shares. A
distribution may be in the form of a declaration or payment of a dividend; a
distribution in partial or complete liquidation, or upon voluntary or involuntary
dissolution; a purchase, redemption, or other acquisition of shares; a
distribution of indebtedness; or otherwise.
(7) "Effective
date of notice" has the meaning provided in RCW 23B.01.410.
(8)
"Employee" includes an officer but not a director. A director may
accept duties that make the director also an employee.
(9) "Entity"
includes a corporation and foreign corporation, not-for-profit corporation,
profit and not-for-profit unincorporated association, business trust, estate,
partnership, trust, and two or more persons having a joint or common economic
interest, and the state, United States, and a foreign government.
(10) "Foreign
corporation" means a corporation for profit incorporated under a law other
than the law of this state.
(11) "Foreign
limited partnership" means a partnership formed under laws other than of
this state and having as partners one or more general partners and one or more
limited partners.
(12) "Governmental
subdivision" includes authority, county, district, and municipality.
(13)
"Includes" denotes a partial definition.
(14)
"Individual" includes the estate of an incompetent or deceased
individual.
(15) "Limited
partnership" or "domestic limited partnership" means a
partnership formed by two or more persons under the laws of this state and
having one or more general partners and one or more limited partners.
(16) "Means"
denotes an exhaustive definition.
(17) "Notice"
has the meaning provided in RCW 23B.01.410.
(18) "Person"
includes an individual and an entity.
(19) "Principal
office" means the office, in or out of this state, so designated in the
annual report where the principal executive offices of a domestic or foreign
corporation are located.
(20)
"Proceeding" includes civil suit and criminal, administrative, and
investigatory action.
(21) "Public
company" means a corporation that has a class of shares registered with
the federal securities and exchange commission pursuant to section 12 of the
securities exchange act of 1934, or section 8 of the investment company act of
1940, or any successor statute, and that has more than three hundred holders of
record of its shares.
(22) "Record
date" means the date established under chapter 23B.07 RCW on which a
corporation determines the identity of its shareholders and their shareholdings
for purposes of this title. The determinations shall 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.
(23)
"Secretary" means the corporate officer to whom the board of
directors has delegated responsibility under RCW 23B.08.400(3) for custody of
the minutes of the meetings of the board of directors and of the shareholders
and for authenticating records of the corporation.
(24) "Shares"
means the units into which the proprietary interests in a corporation are
divided.
(25)
"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.
(26) "State,"
when referring to a part of the United States, includes a state and
commonwealth, and their agencies and governmental subdivisions, and a territory
and insular possession, and their agencies and governmental subdivisions, of
the United States.
(27)
"Subscriber" means a person who subscribes for shares in a
corporation, whether before or after incorporation.
(28) "United
States" includes a district, authority, bureau, commission, department,
and any other agency of the United States.
(29) "Voting
group" means all shares of one or more classes or series that under the
articles of incorporation or this title 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 title to vote generally on
the matter are for that purpose a single voting group.
Sec. 2. RCW 23B.14.220 and 1989
c 165 s 162 are each amended to read as follows:
(1) A corporation
administratively dissolved under RCW 23B.14.210 may apply to the secretary of
state for reinstatement within ((two)) five years after the
effective date of dissolution. The application must:
(a) Recite the name of
the corporation and the effective date of its administrative dissolution;
(b) State that the
ground or grounds for dissolution either did not exist or have been eliminated;
and
(c) State that the
corporation's name satisfies the requirements of RCW 23B.04.010.
(2) If the secretary of
state determines that the application contains the information required by
subsection (1) of this section and that the name is available, the secretary of
state shall reinstate the corporation and give the corporation written notice
of the reinstatement that recites the effective date of reinstatement. If the
name is not available, the corporation must file articles of amendment changing
its name with its application for reinstatement.
(3) When the
reinstatement is effective, it relates back to and takes effect as of the
effective date of the administrative dissolution and the corporation resumes
carrying on its business as if the administrative dissolution had never
occurred.
(4) The application
must be authorized either by action of the shareholders, or of the
corporation's board of directors, membership in both groups determined as of
the date of administrative dissolution. If vacancies in the board of directors
occur after the date of dissolution, the shareholders, or the remaining
directors, even if less than a quorum of the board, may fill the vacancies. A
special meeting of the shareholders for purposes of authorizing the application
for reinstatement, or for purposes of electing directors, may be called by any
person who was an officer, director, or shareholder of the corporation at the
time of administrative dissolution.
Sec. 3. RCW 23B.14.300 and 1993
c 290 s 3 are each amended to read as follows:
The superior courts may
dissolve a corporation:
(1) In a proceeding by
the attorney general if it is established that:
(a) The corporation
obtained its articles of incorporation through fraud; or
(b) The corporation has
continued to exceed or abuse the authority conferred upon it by law;
(2) In a proceeding by
a shareholder if it is established that:
(a) The directors are
deadlocked in the management of the corporate affairs, the shareholders are
unable to break the deadlock, and irreparable injury to the corporation is
threatened or being suffered, or the business and affairs of the corporation
can no longer be conducted to the advantage of the shareholders generally,
because of the deadlock;
(b) The directors or
those in control of the corporation have acted, are acting, or will act in a
manner that is illegal, oppressive, or fraudulent;
(c) The shareholders
are deadlocked in voting power and have failed, for a period that includes at
least two consecutive annual meeting dates, to elect successors to directors
whose terms have expired, and irreparable injury to the corporation is
threatened or being suffered, or the business and affairs of the corporation
can no longer be conducted to the advantage of the shareholders generally,
because of the deadlock;
(d) The corporate
assets are being misapplied or wasted; or
(e) The corporation has
ceased all business activity and has failed, within a reasonable time, to
dissolve, to liquidate its assets, or to distribute its remaining assets among
its shareholders;
(3) In a proceeding by
a creditor if it is established that:
(a) The creditor's
claim has been reduced to judgment, the execution on the judgment was returned
unsatisfied, and the corporation is insolvent; or
(b) The corporation has
admitted in writing that the creditor's claim is due and owing and the
corporation is insolvent; or
(4) In a proceeding by
the corporation to have its voluntary dissolution continued under court
supervision.
Sec. 4. RCW 23B.14.330 and 1989
c 165 s 166 are each amended to read as follows:
(1) If after a hearing
the court determines that one or more grounds for judicial dissolution
described in RCW 23B.14.300 exist, it may enter a decree dissolving the
corporation and specifying the effective date of the dissolution, ((and the
clerk of the court shall deliver a certified copy of the decree to the
secretary of state, who shall file it)) or, with or without ordering
dissolution, may make such other orders and decrees and issue such injunctions
in the case as justice and equity require.
(2) ((After entering
the)) The court shall not enter or sign any decree of dissolution until
it receives a copy of a revenue clearance certificate for the corporation
issued pursuant to RCW 82.32.260.
(3) If the court
enters a decree of dissolution, the petitioner or moving party shall
deliver a certified copy of the decree and a copy of the revenue clearance
certificate to the secretary of state, who shall file them. The court
shall then direct the winding up and liquidation of the corporation's
business and affairs in accordance with RCW 23B.14.050 ((and the
notification of claimants in accordance with RCW 23B.14.060)).
Sec. 5. RCW 23B.14.340 and 1990
c 178 s 6 are each amended to read as follows:
The dissolution of a
corporation either: (1) By the ((issuance of a certificate of)) filing
by the secretary of state of its articles of dissolution, (2) by administrative
dissolution by the secretary of state, (((2))) (3) by a decree of
court, or (((3))) (4) by expiration of its period of duration
shall not take away or impair any remedy available against such corporation,
its directors, officers, or shareholders, for any right or claim existing, or
any liability incurred, prior to such dissolution if action or other proceeding
thereon is commenced within two years after the date of such dissolution. Any
such action or proceeding against the corporation may be defended by the
corporation in its corporate name.
Sec. 6. RCW 23B.07.320 and 1993
c 290 s 4 are each amended to read as follows:
(1) An agreement among
the shareholders of a corporation that is not contrary to public policy and
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 title in that it:
(a) Eliminates the
board of directors or restricts the discretion or powers of the board of
directors;
(b) Governs the
authorization or making of distributions whether or not in proportion to
ownership of shares, subject to the limitations in RCW 23B.06.400;
(c) Establishes who
shall be directors or officers of the corporation, or their terms of office or
manner of selection or removal;
(d) 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;
(e) 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;
(f) 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;
(g) ((Resolves any
issue about which there exists)) Provides a process by which a
deadlock among directors or shareholders may be resolved;
(h) Requires
dissolution of the corporation at the request of one or more shareholders or
upon the occurrence of a specified event or contingency; or
(i) 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)).
(2) An agreement
authorized by this section shall be:
(a) Set forth 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;
(b) Subject to
amendment only by all persons who are shareholders at the time of the
amendment, unless the agreement provides otherwise; and
(c) Valid for ten
years, unless the agreement provides otherwise.
(3) The existence of an
agreement authorized by this section shall be noted conspicuously on the front
or back of each certificate for outstanding shares or on the information
statement required by RCW 23B.06.260(2). If at the time of the agreement the
corporation has shares outstanding represented by certificates, the corporation
shall recall the outstanding certificates and issue substitute certificates
that comply with this subsection. The failure to note the existence of the
agreement on the certificate or information statement shall not affect the
validity of the agreement or any action taken pursuant to it. ((Any
purchaser of shares who, at the time of purchase, did not have knowledge of the
existence of the agreement shall be entitled to rescission of the purchase.))
Unless the agreement provides otherwise, any person who acquires outstanding
or newly issued shares in the corporation after an agreement authorized by this
section has been effected, whether by purchase, gift, operation of law, or
otherwise, is deemed to have assented to the agreement and to be a party to the
agreement. A purchaser of shares who is aggrieved because he or she at the
time of purchase did not have actual or constructive knowledge of the existence
of the agreement may either: (a) Bring an action to rescind the purchase
within the earlier of ninety days after discovery of the existence of the
agreement or two years after the purchase of the shares; or (b) continue to
hold the shares subject to the agreement but with a right of action for any
damages resulting from nondisclosure of the existence of the agreement. A
purchaser shall be deemed to have constructive knowledge of the
existence of the agreement if its existence is noted on the certificate or
information statement for the shares in compliance with this subsection and, if
the shares are not represented by a certificate, the information statement is
delivered to the purchaser at or prior to the time of purchase of the shares.
((An action to enforce the right of rescission authorized by this subsection
must be commenced within the earlier of ninety days after discovery of the
existence of the agreement or two years after the time of purchase of the shares.))
(4) An agreement
authorized by this section shall cease to be effective when shares of the
corporation are 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.
(5) An agreement
authorized by this section that limits the discretion or powers of the board of
directors shall relieve the directors of, and impose upon the person or persons
in whom such discretion or powers are vested, liability for acts or omissions
imposed by law on directors to the extent that the discretion or powers of the
directors are limited by the agreement.
(6) The existence or
performance of an agreement authorized by this section shall not be a ground
for imposing personal liability on any shareholder for the acts or debts of the
corporation even if the agreement or its performance treats the corporation as
if it were a partnership or results in failure to observe the corporate
formalities otherwise applicable to the matters governed by the agreement.
(7) Incorporators or
subscribers for shares may act as shareholders with respect to an agreement
authorized by this section if no shares have been issued when the agreement is
made.
Sec. 7. RCW 23B.08.080 and 1989
c 165 s 87 are each amended to read as follows:
(1) The shareholders
may remove one or more directors with or without cause unless the articles of
incorporation provide that directors may be removed only for cause.
(2) If a director is
elected by holders of one or more authorized classes or series of shares, only
the holders of those classes or series of shares may participate in the vote to
remove the director.
(3) If cumulative
voting is authorized, ((a)) and if less than the entire board is to
be removed, no director may ((not)) be removed if the number of
votes sufficient to elect the director under cumulative voting is voted against
the director's removal. If cumulative voting is not authorized, a director may
be removed only if the number of votes cast to remove the director exceeds the
number of votes cast not to remove the director.
(4) A director may be
removed by the shareholders only at a special meeting called for the purpose of
removing the director and the meeting notice must state that the purpose, or
one of the purposes, of the meeting is removal of the director.
NEW SECTION. Sec.
8. A new section is added
to chapter 23B.14 RCW to read as follows:
On the first day of
each month, the secretary of state shall prepare a list of corporations
dissolved during the preceding month pursuant to RCW 23B.14.030, 23B.14.210,
and 23B.14.330.
Sec. 9. RCW 34.08.020 and 1987 c
186 s 8 are each amended to read as follows:
There is hereby created
a state publication to be called the Washington State Register, which shall be
published on no less than a monthly basis. The register shall contain, but is
not limited to, the following materials received by the code reviser's office
during the pertinent publication period:
(1)(a) The full text of
any proposed new or amendatory rule, as defined in RCW 34.05.010, and the
citation of any existing rules the repeal of which is proposed, prior to the
public hearing on such proposal. Such material shall be considered, when
published, to be the official notification of the intended action, and no state
agency or official thereof may take action on any such rule except on emergency
rules adopted in accordance with RCW 34.05.350, until twenty days have passed
since the distribution date of the register in which the rule and hearing
notice have been published or a notice regarding the omission of the rule has
been published pursuant to RCW 34.05.210(4) as now or hereafter amended;
(b) The small business
economic impact statement, if required by RCW 19.85.030, preceding the full
text of the proposed new or amendatory rule;
(2) The full text of
any new or amendatory rule adopted, and the citation of any existing rule
repealed, on a permanent or emergency basis;
(3) Executive orders
and emergency declarations of the governor;
(4) Public meeting
notices of any and all agencies of state government, including state elected
officials whose offices are created by Article III of the state Constitution or
RCW 48.02.010;
(5) Rules of the state
supreme court which have been adopted but not yet published in an official
permanent codification;
(6) Summaries of
attorney general opinions and letter opinions, noting the number, date,
subject, and other information, and prepared by the attorney general for
inclusion in the register;
(7) Juvenile
disposition standards and security guidelines proposed and adopted under RCW
13.40.030;
(8) Proposed and
adopted rules of the commission on judicial conduct; ((and))
(9) The maximum
allowable rates of interest and retail installment contract service charges
filed by the state treasurer under RCW 19.52.025 and 63.14.135. In addition,
the highest rate of interest permissible for the current month and the maximum
retail installment contract service charge for the current year shall be
published in each issue of the register. The publication of the maximum
allowable interest rate established pursuant to RCW 19.52.025 shall be accompanied
by the following advisement: NOTICE: FEDERAL LAW PERMITS FEDERALLY INSURED
FINANCIAL INSTITUTIONS IN THE STATE TO CHARGE THE HIGHEST RATE OF INTEREST THAT
MAY BE CHARGED BY ANY FINANCIAL INSTITUTION IN THE STATE. THE MAXIMUM
ALLOWABLE RATE OF INTEREST SET FORTH ABOVE MAY NOT APPLY TO A PARTICULAR
TRANSACTION; and
(10) A
list of corporations dissolved during the preceding month filed by the
secretary of state under chapter 23B.14 RCW.
