AN
ACT Relating to amending provisions regarding significant business transactions
in the Washington business corporation act; amending RCW 23B.19.020,
23B.19.030, 23B.19.040, 23B.01.400, and 23B.02.020; and repealing RCW
23B.17.020.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
23B.19.020 and 1989 c 165 s 198 are each amended to read as follows:
The
definitions in this section apply throughout this chapter.
(1)
"Acquiring person" means a person or group of persons, other than the
target corporation or a subsidiary of the target corporation, who beneficially
owns ten percent or more of the outstanding voting shares of the target
corporation. The term "acquiring person" does not include a person
who (a) beneficially ((owns)) owned ten percent or more of the
outstanding voting shares of the target corporation on March 23, 1988; (b)
acquires its shares by gift, inheritance, or in a transaction in which no
consideration is exchanged; ((or)) (c) exceeds the ten percent threshold
as a result of action taken solely by the target corporation, such as
redemption of shares, unless that person, by its own action, acquires
additional shares of the target corporation; (d) beneficially was the owner
of ten percent or more of the outstanding voting shares prior to the time the
target corporation had a class of voting shares registered with the securities
and exchange commission pursuant to section 12 or 15 of the exchange act; or
(e) beneficially was the owner of ten percent or more of the outstanding voting
shares prior to the time the target corporation amended its articles of
incorporation to provide that the corporation shall be subject to the
provisions of this chapter. An agent, bank, broker, nominee, or trustee
for another person, if the other person is not an acquiring person, who acts in
good faith and not for the purpose of circumventing this chapter, is not an
acquiring person. For the purpose of determining whether a person is an
acquiring person, the number of voting shares of the target corporation that
are outstanding shall include shares beneficially owned by the person through
application of subsection (4) of this section, but shall not include any other
unissued voting shares of the target corporation which may be issuable pursuant
to any agreement, arrangement, or understanding; or upon exercise of conversion
rights, warrants, or options; or otherwise.
(2)
"Affiliate" means a person who directly or indirectly controls, or is
controlled by, or is under common control with, a person.
(3)
"Announcement date," when used in reference to any significant
business transaction, means the date of the first public announcement of the
final, definitive proposal for such a significant business transaction.
(4)
"Associate" means (a) a domestic or foreign corporation or
organization of which a person is an officer, director, member, or
partner or in which a person performs a similar function; (b) a direct or
indirect beneficial owner of ten percent or more of any class of equity
securities of a person; (c) a trust or estate in which a person has a
beneficial interest or as to which a person serves as trustee or in a similar
fiduciary capacity; and (d) ((if having the same residence as a person, the
person's relative, spouse, or spouse's relative)) the spouse or a parent
or sibling of a person or a child, grandchild, sibling, parent, or spouse of
any thereof, of a person or an individual having the same home as a person.
(((4)))
(5) "Beneficial ownership," when used with respect to any
shares, means ownership by a person:
(a)
Who, individually or with or through any of its affiliates or associates,
beneficially owns such shares, directly or indirectly; or
(b)
Who, individually or with or through any of its affiliates or associates, has
(i) the right to acquire the shares, whether the right is exercisable
immediately or only after the passage of time, pursuant to any agreement,
arrangement, or understanding, whether or not in writing, or upon the exercise
of conversion rights, exchange rights, warrants or options, or otherwise. A
person is not the beneficial owner of shares tendered pursuant to a tender or
exchange offer made by the person or any of the person's affiliates or
associates until the tendered shares are accepted for purchase or exchange; or
(ii) the right to vote the shares pursuant to any agreement, arrangement, or
understanding, whether or not in writing. A person is not the beneficial owner
of any shares under (b)(ii) of this subsection if the agreement, arrangement,
or understanding to vote the shares arises solely from a revocable proxy or
consent given in response to a proxy or consent solicitation made in accordance
with the applicable rules and regulations under the exchange act and is not
then reportable on schedule 13D under the exchange act, or any comparable or
successor report; or
(c)
Who has any agreement, arrangement, or understanding, whether or not in
writing, for the purpose of acquiring, holding, voting, except voting pursuant
to a revocable proxy or consent as described in (b)(ii) of this subsection, or
disposing of the shares with any other person who beneficially owns, or whose affiliates
or associates beneficially own, directly or indirectly, the shares.
(((5)))
(6) "Common shares" means any shares other than preferred shares.
(7)
"Consummation date," with respect to any significant business
transaction, means the date of consummation of such a significant business
transaction, or, in the case of a significant business transaction as to which
a shareholder vote is taken, the later of the business day prior to the vote or
twenty days prior to the date of consummation of such a significant business
transaction.
(8)
"Control," "controlling," "controlled by," and
"under common control with," means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting shares, by
contract, or otherwise. A person's beneficial ownership of ten percent or more
of a domestic or foreign corporation's outstanding voting shares shall create a
rebuttable presumption that such person has control of such
corporation. However, a person does not have control of a domestic or foreign
corporation if the person holds voting shares, in good faith and not for the
purpose of circumventing this chapter, as an agent, bank, broker, nominee,
custodian, or trustee for one or more beneficial owners who do not individually
or as a group have control of such corporation.
(((6)))
(9) "Domestic corporation" means an issuer of voting shares which
is organized under chapter 23B.02 RCW or any predecessor provision.
(10)
"Exchange act" means the federal securities exchange act of 1934, as
amended.
(((7)))
(11) "Market value," in the case of property other than cash
or shares, means the fair market value of the property on the date in question
as determined by the board of directors of the target corporation in good
faith.
(((8)))
(12) "Person" means an individual, domestic or foreign
corporation, partnership, trust, unincorporated association, or other entity;
an affiliate or associate of any such person; or any two or more persons acting
as a partnership, syndicate, or other group for the purpose of acquiring,
holding, or dispersing of securities of a domestic or foreign corporation.
(((9)))
(13) "Preferred shares" means any class or series of shares of a
target corporation which under the bylaws or articles of incorporation of such
a corporation is entitled to receive payment of dividends prior to any payment
of dividends on some other class or series of shares, or is entitled in the
event of any voluntary liquidation, dissolution, or winding up of the target
corporation to receive payment or distribution of a preferential amount before
any payments or distributions are received by some other class or series of
shares.
(14)
"Shares" means any:
(a)
Shares or similar security, any certificate of interest, any participation in
any profit sharing agreement, any voting trust certificate, or any certificate
of deposit for shares; and
(b)
Security convertible, with or without consideration, into shares, or any
warrant, call, or other option or privilege of buying shares without being
bound to do so, or any other security carrying any right to acquire, subscribe
to, or purchase shares.
(15)
"Significant business transaction" means:
(a)
A merger, share exchange, or consolidation of a target corporation or a
subsidiary of a target corporation with (i) an acquiring person, or (ii) any
other domestic or foreign corporation which is, or after the merger, share
exchange, or consolidation would be, an affiliate or associate of the
acquiring person;
(b)
A sale, lease, exchange, mortgage, pledge, transfer, or other disposition or
encumbrance, whether in one transaction or a series of transactions, to or with
an acquiring person or an affiliate or associate of an acquiring person of
assets of a target corporation or a subsidiary of a target corporation (i)
having an aggregate market value equal to five percent or more of the aggregate
market value of all the assets, determined on a consolidated basis, of the
target corporation, (ii) having an aggregate market value equal to five percent
or more of the aggregate market value of all the outstanding shares of the
target corporation, or (iii) representing five percent or more of the earning
power or net income, determined on a consolidated basis, of the target
corporation;
(c)
The termination, while the corporation has an acquiring person and as a result
of the acquiring person's acquisition of ten percent or more of the shares of
the corporation, of five percent or more of the employees of the target
corporation or its subsidiaries employed in this state, whether at one time or
over the five-year period following the share acquisition ((date)) time.
For the purposes of (c) of this subsection, a termination other than an
employee's death or disability or bona fide voluntary retirement, transfer,
resignation, termination for cause under applicable common law principles,
or leave of absence shall be presumed to be a termination resulting from the
acquiring person's acquisition of shares, which presumption ((may be
rebutted by clear and convincing evidence)) is rebuttable. A bona
fide voluntary transfer of employees between the target corporation and its
subsidiaries or between its subsidiaries is not a termination for the purposes
of (c) of this subsection;
(d)
The issuance, transfer, or redemption by a target corporation or a subsidiary
of a target corporation, whether in one transaction or a series of
transactions, of shares or of options, warrants, or rights to acquire shares of
a target corporation or a subsidiary of a target corporation to or beneficially
owned by an acquiring person or an affiliate or associate of an acquiring
person except pursuant to the exercise of warrants or rights to purchase shares
offered, or a dividend, distribution, or redemption paid or made pro rata to,
all shareholders or holders of options, warrants, or rights to acquire shares
of the target corporation, and except for involuntary redemptions permitted by
the target corporation's charter or by the law of this state or the state of
incorporation;
(e)
The ((adoption of a plan or proposal for the sale of assets,))
liquidation((,)) or dissolution of a target corporation proposed by, or
pursuant to an agreement, arrangement, or understanding, whether or not in
writing, with an acquiring person or an affiliate or associate of an acquiring
person;
(f)
A reclassification of securities, including, without limitation, any ((stock))
shares split, ((stock)) shares dividend, or other
distribution of ((stock)) shares in respect of stock, or any
reverse ((stock)) shares split, or recapitalization of a target
corporation, or a merger or consolidation of a target corporation with a
subsidiary of the target corporation, or any other transaction, whether or not
with or into or otherwise involving an acquiring person, proposed by, or
pursuant to an agreement, arrangement, or understanding, whether or not in writing,
with an acquiring person or an affiliate or associate of an acquiring person,
that has the effect, directly or indirectly, of increasing the proportionate
share of the outstanding shares of a class or series of voting shares or
securities convertible into voting shares of a target corporation or a
subsidiary of the target corporation that is directly or indirectly owned by an
acquiring person or an affiliate or associate of an acquiring person, except as
a result of immaterial changes due to fractional share adjustments; or
(g)
A receipt by an acquiring person or an affiliate or associate of an acquiring
person of the benefit, directly or indirectly, except proportionately as a
shareholder of a target corporation, of loans, advances, guarantees, pledges,
or other financial assistance or tax credits or other tax advantages provided
by or through a target corporation((; or
(h)
An agreement, contract, or other arrangement providing for any of the
transactions in this subsection)).
(((10)))
(16)"Share acquisition ((date)) time" means the
((date on)) time at which a person first becomes an acquiring
person of a target corporation.
(((11)))
(17) "Subsidiary" means a domestic or foreign corporation that
has a majority of its outstanding voting shares owned, directly or indirectly,
by another domestic or foreign corporation.
(((12)))
(18) "Tangible assets" means tangible real and personal
property of all kinds. It shall also include leasehold interests in tangible
real and personal property.
(((13)))
(19) "Target corporation" means:
(a)
Every domestic corporation ((organized under chapter 23B.02 RCW or any
predecessor provision if, as of the share acquisition date, the corporation's
principal executive office is located in the state and either a majority of the
corporation's employees, together with those of its subsidiaries, are residents
of the state or the corporation, together with its subsidiaries, employs more
than one thousand residents of the state)), if:
(i)
The corporation has a class of voting shares registered with the securities and
exchange commission pursuant to section 12 or 15 of the exchange act; or
(ii)
The corporation's articles of incorporation have been amended to provide that
such a corporation shall be subject to the provisions of this chapter, if the
corporation did not have a class of voting shares registered with the
securities and exchange commission pursuant to section 12 or 15 of the exchange
act on the effective date of that amendment; and
(b)
Every foreign corporation required to have a certificate of authority to
transact business in this state pursuant to chapter 23B.15 RCW, if((, as of
the share acquisition date)):
(i)
The corporation has a class of voting shares registered with the securities
and exchange commission pursuant to section 12 or 15 of the exchange act;
(ii)
The corporation's principal executive office is located in the state;
(((ii)))
(iii) The corporation has: (A) More than ten percent of its
shareholders of record resident in the state; or (B) more than ten percent of
its shares owned of record by state residents; or (C) one thousand or more
shareholders of record resident in the state;
(((iii)))
(iv) A majority of the corporation's employees, together with those of
its subsidiaries, are residents of the state or the corporation, together with
its subsidiaries, employs more than one thousand residents of the state; and
(((iv)))
(v) A majority of the corporation's tangible assets, together with those
of its subsidiaries, measured by market value, are located in the state or the
corporation, together with its subsidiaries, has more than fifty million
dollars' worth of tangible assets located in the state.
For
purposes of this subsection, the record date for determining the percentages
and numbers of shareholders and shares shall be the last shareholder record
date before the event requiring that the determination be made. A shareholder
record date shall be determined pursuant to ((RCW 23B.07.070 for a domestic
corporation and)) the comparable provision to RCW 23B.07.070 of the
law of the state in which a foreign corporation is incorporated. If a
shareholder record date has not been fixed by the board of directors within the
preceding four months, the determination shall be made as of the end of the ((domestic
or foreign)) corporation's most recent fiscal quarter.
The
residence of each shareholder is presumed to be the address appearing in the
records of the ((domestic or foreign)) corporation. Shares held of
record by brokers or nominees shall be disregarded for purposes of calculating
the percentages and numbers specified in this subsection. Shares of a ((domestic
or foreign)) corporation allocated to the account of an employee or former
employee or beneficiaries of employees or former employees of a ((domestic
or foreign)) corporation and held in a plan that is qualified under section
401(a) of the federal internal revenue code of 1986, as amended, and is a
defined contribution plan within the meaning of section 414(i) of the code
shall be deemed, for the purposes of this subsection, to be held of record by
the employee to whose account such shares are allocated.
A
domestic or foreign corporation shall be deemed to be a target corporation if
the domestic or foreign corporation's failure to satisfy the requirements of
this subsection is caused by the action of, or is the result of a proposal by,
an acquiring person or affiliate or associate of an acquiring person.
(20)
"Voting shares" means shares of a corporation entitled to vote
generally in the election of directors.
Sec.
2. RCW
23B.19.030 and 1989 c 165 s 199 are each amended to read as follows:
This
chapter does not apply to((:
(1)
A significant business transaction of a target corporation that does not have a
class of voting stock registered with the securities and exchange commission
pursuant to section 12 of the exchange act [15 U.S.C. Sec. 78L]; or
(2))) a
significant business transaction of a target corporation with an acquiring
person of the target corporation which became an acquiring person
inadvertently, if the acquiring person (((a))) (1) as soon as
practicable, divests itself of a sufficient amount of the voting shares of the
target corporation so that it no longer is the beneficial owner, directly or
indirectly, of ten percent or more of the outstanding voting shares of the
target corporation, and (((b))) (2) would not at any time within
the five-year period preceding the announcement date ((of the first
public announcement)) of the significant business transaction have been an
acquiring person but for the inadvertent acquisition.
Sec.
3. RCW
23B.19.040 and 1989 c 165 s 200 are each amended to read as follows:
(1)(a)
Notwithstanding ((any provision of this title)) anything to the
contrary contained in this title, except under subsection (2) of this section
and RCW 23B.19.030, a target corporation shall not engage in any
significant business transaction for a period of five years following the
acquiring person's share acquisition ((date)) time unless the
significant business transaction or the purchase of shares made by the
acquiring person ((on the share acquisition date)) is approved prior to
the acquiring person's share acquisition ((date)) time by a
majority of the members of the board of directors of the target corporation.
(b)
If a good faith proposal for a significant business transaction is made in
writing to the board of directors of the target corporation prior to the
significant business transaction or prior to the share acquisition ((date))
time, the board of directors shall respond in writing, within thirty
days or such shorter period, if any, as may be required by the exchange act
setting forth its reasons for its decision regarding the proposal. If a good
faith proposal to purchase shares is made in writing to the board of directors
of the target corporation, the board of directors, unless it responds
affirmatively in writing within thirty days or a shorter period, if any, as may
be required by the exchange act shall be deemed to have disapproved such share
purchase.
(2)
Notwithstanding anything to the contrary contained in this title, except
under subsection (1) of this section and RCW 23B.19.030, a target corporation
shall not engage at any time in any significant business transaction with any
acquiring person of such a corporation other than a significant business
transaction that meets all of the following conditions:
(a)
The aggregate amount of the cash and the market value as of the consummation
date of consideration other than cash to be received per share by holders of
outstanding common shares of such a target corporation in a significant
business transaction is at least equal to the higher of the following:
(i)
The highest per share price paid by such an acquiring person at a time when the
person was the beneficial owner, directly or indirectly, of five percent or
more of the outstanding voting shares of a target corporation, for any shares
of common shares of the same class or series acquired by it: (A) Within the
five-year period immediately prior to the announcement date with respect to a significant
business transaction; or (B) within the five-year period immediately prior to,
or in, the transaction in which the acquiring person became an acquiring
person, whichever is higher plus, in either case, interest compounded annually
from the earliest date on which the highest per share acquisition price was
paid through the consummation date at the rate for one-year United States
treasury obligations from time to time in effect; less the aggregate amount of
any cash dividends paid, and the market value of any dividends paid other than
in cash, per share of common shares since the earliest date, up to the amount
of the interest; and
(ii)
The market value per share of common shares on the announcement date with
respect to a significant business transaction or on the date of the acquiring
person's share acquisition time, whichever is higher; plus interest compounded
annually from such a date through the consummation date at the rate for
one-year United States treasury obligations from time to time in effect; less
the aggregate amount of any cash dividends paid, and the market value of any
dividends paid other than in cash, per share of common shares since the date,
up to the amount of the interest.
(b)
The aggregate amount of the cash and the market value as of the consummation
date of consideration other than cash to be received per share by holders of
outstanding shares of any class or series of shares, other than common shares,
of the target corporation is at least equal to the highest of the following,
whether or not the acquiring person has previously acquired any shares of such
a class or series of shares:
(i)
The highest per share price paid by an acquiring person at a time when the
person was the beneficial owner, directly or indirectly, of five percent or
more of the outstanding voting shares of a resident domestic corporation, for
any shares of the same class or series of shares acquired by it: (A) Within
the five-year period immediately prior to the announcement date with respect to
a significant business transaction; or (B) within the five-year period
immediately prior to, or in, the transaction in which the acquiring person
became an acquiring person, whichever is higher; plus, in either case, interest
compounded annually from the earliest date on which the highest per share
acquisition price was paid through the consummation date at the rate for
one-year United States treasury obligations from time to time in effect; less
the aggregate amount of any cash dividends paid, and the market value of any
dividends paid other than in cash, per share of the same class or series of
shares since the earliest date, up to the amount of the interest;
(ii)
The highest preferential amount per share to which the holders of shares of the
same class or series of shares are entitled in the event of any voluntary
liquidation, dissolution, or winding up of the target corporation, plus the
aggregate amount of any dividends declared or due as to which the holders are
entitled prior to payment of dividends on some other class or series of shares,
unless the aggregate amount of the dividends is included in the preferential
amount; and
(iii)
The market value per share of the same class or series of shares on the
announcement date with respect to a significant business transaction or on the
date of the acquiring person's share acquisition time, whichever is higher;
plus interest compounded annually from such a date through the consummation
date at the rate for one-year United States treasury obligations from time to
time in effect; less the aggregate amount of any cash dividends paid and the
market value of any dividends paid other than in cash, per share of the same
class or series of shares since the date, up to the amount of the interest.
(c)
The consideration to be received by holders of a particular class or series of
outstanding shares, including common shares, of the target corporation in a
business combination is in cash or in the same form as the acquiring person has
used to acquire the largest number of shares of the same class or series of
shares previously acquired by the person, and the consideration shall be
distributed promptly.
(3)
Subsection (2) of this section does not apply to a target corporation that on
the effective date of this act had a provision in its articles of
incorporation, adopted under RCW 23B.17.020(3)(d), expressly electing not to be
covered under RCW 23B.17.020, which is repealed by section 6 of this act.
(4)
A ((target corporation that engages in a)) significant business
transaction that ((violates)) is made in violation of subsection
(1) or (2) of this section and that is not exempt under RCW ((23B.19.010
shall have its certificate of incorporation or certificate of authority to
transact business in this state revoked under RCW 23B.14.200 or 23B.15.300 for
domestic or foreign target corporations, respectively. In addition, such
significant transaction shall be)) 23B.19.030 is void.
Sec.
4. RCW
23B.01.400 and 1995 c 47 s 1 are each 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 or 15 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.
5. RCW
23B.02.020 and 1994 c 256 s 27 are each amended to read as follows:
(1)
The articles of incorporation must set forth:
(a)
A corporate name for the corporation that satisfies the requirements of RCW
23B.04.010;
(b)
The number of shares the corporation is authorized to issue in accordance with
RCW 23B.06.010 and 23B.06.020;
(c)
The street address of the corporation's initial registered office and the name
of its initial registered agent at that office in accordance with RCW
23B.05.010; and
(d)
The name and address of each incorporator in accordance with RCW 23B.02.010.
(2)
The articles of incorporation or bylaws must either specify the number of
directors or specify the process by which the number of directors will be
fixed, unless the articles of incorporation dispense with a board of directors
pursuant to RCW 23B.08.010.
(3)
Unless its articles of incorporation provide otherwise, a corporation is
governed by the following provisions:
(a)
The board of directors may adopt bylaws to be effective only in an emergency as
provided by RCW 23B.02.070;
(b)
A corporation has the purpose of engaging in any lawful business under RCW
23B.03.010;
(c)
A corporation has perpetual existence and succession in its corporate name
under RCW 23B.03.020;
(d)
A corporation has the same powers as an individual to do all things necessary
or convenient to carry out its business and affairs, including itemized powers
under RCW 23B.03.020;
(e)
All shares are of one class and one series, have unlimited voting rights, and
are entitled to receive the net assets of the corporation upon dissolution
under RCW 23B.06.010 and 23B.06.020;
(f)
If more than one class of shares is authorized, all shares of a class must
have preferences, limitations, and relative rights identical to those of other
shares of the same class under RCW 23B.06.010;
(g)
If the board of directors is authorized to designate the number of shares in a
series, the board may, after the issuance of shares in that series, reduce the
number of authorized shares of that series under RCW 23B.06.020;
(h)
The board of directors must authorize any issuance of shares under RCW
23B.06.210;
(i)
Shares may be issued pro rata and without consideration to shareholders under
RCW 23B.06.230;
(j)
Shares of one class or series may not be issued as a share dividend with
respect to another class or series, unless there are no outstanding shares of
the class or series to be issued, or a majority of votes entitled to be cast by
such class or series approve as provided in RCW 23B.06.230;
(k)
A corporation may issue rights, options, or warrants for the purchase of shares
of the corporation under RCW 23B.06.240;
(l)
A shareholder has, and may waive, a preemptive right to acquire the
corporation's unissued shares as provided in RCW 23B.06.300;
(m)
Shares of a corporation acquired by it may be reissued under RCW 23B.06.310;
(n)
The board may authorize and the corporation may make distributions not
prohibited by statute under RCW 23B.06.400;
(o)
The preferential rights upon dissolution of certain shareholders will be
considered a liability for purposes of determining the validity of a
distribution under RCW 23B.06.400;
(p)
Unless this title requires otherwise, the corporation is required to give
notice only to shareholders entitled to vote at a meeting and the notice for an
annual meeting need not include the purpose for which the meeting is called
under RCW 23B.07.050;
(q)
A corporation that is a public company shall hold a special meeting of
shareholders if the holders of at least ten percent of the votes entitled to be
cast on any issue proposed to be considered at the meeting demand a meeting
under RCW 23B.07.020;
(r)
Subject to statutory exceptions, each outstanding share, regardless of class,
is entitled to one vote on each matter voted on at a shareholders' meeting
under RCW 23B.07.210;
(s)
A majority of the votes entitled to be cast on a matter by a voting group
constitutes a quorum, unless the title provides otherwise under RCW 23B.07.250
and 23B.07.270;
(t)
Action on a matter, other than 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 this title requires a greater number
of affirmative votes under RCW 23B.07.250;
(u)
All shares of one or more classes or series that are entitled to vote will be
counted together collectively on any matter at a meeting of shareholders under
RCW 23B.07.260;
(v)
Directors are elected by cumulative voting under RCW 23B.07.280;
(w)
Directors are elected by a plurality of votes cast by shares entitled to vote
under RCW 23B.07.280;
(x)
A corporation must have a board of directors under RCW 23B.08.010;
(y)
All corporate powers must be exercised by or under the authority of, and the
business and affairs of the corporation managed under the direction of, its
board of directors under RCW 23B.08.010;
(z)
The shareholders may remove one or more directors with or without cause under
RCW 23B.08.080;
(aa)
A vacancy on the board of directors may be filled by the shareholders or the
board of directors under RCW 23B.08.100;
(bb)
A corporation shall indemnify a director who was wholly successful in the
defense of any proceeding to which the director was a party because the
director is or was a director of the corporation against reasonable expenses
incurred by the director in connection with the proceeding under RCW
23B.08.520;
(cc)
A director of a corporation who is a party to a proceeding may apply for
indemnification of reasonable expenses incurred by the director in connection
with the proceeding to the court conducting the proceeding or to another court
of competent jurisdiction under RCW 23B.08.540;
(dd)
An officer of the corporation who is not a director is entitled to mandatory
indemnification under RCW 23B.08.520, and is entitled to apply for
court-ordered indemnification under RCW 23B.08.540, in each case to the same
extent as a director under RCW 23B.08.570;
(ee)
The corporation may indemnify and advance expenses to an officer, employee, or
agent of the corporation who is not a director to the same extent as to a
director under RCW 23B.08.570;
(ff)
A corporation may indemnify and advance expenses to an officer, employee, or
agent who is not a director to the extent, consistent with law, that may be
provided by its articles of incorporation, bylaws, general or specific action
of its board of directors, or contract under RCW 23B.08.570;
(gg)
A corporation's board of directors may adopt certain amendments to the
corporation's articles of incorporation without shareholder action under RCW
23B.10.020;
(hh)
Unless the title or the board of directors require a greater vote or a vote by
voting groups, an amendment to the corporation's articles of incorporation
must be approved by each voting group entitled to vote on the proposed
amendment by two‑thirds, or, in the case of a public company, a majority,
of all the votes entitled to be cast by that voting group under RCW 23B.10.030;
(ii)
A corporation's board of directors may amend or repeal the corporation's
bylaws unless this title reserves this power exclusively to the shareholders in
whole or in part, or unless the shareholders in amending or repealing a bylaw
provide expressly that the board of directors may not amend or repeal that
bylaw under RCW 23B.10.200;
(jj)
Unless this title or the board of directors require a greater vote or a vote
by voting groups, a plan of merger or share exchange must be approved by each voting
group entitled to vote on the merger or share exchange by two-thirds of all the
votes entitled to be cast by that voting group under RCW 23B.11.030;
(kk)
Approval by the shareholders of the sale, lease, exchange, or other
disposition of all, or substantially all, the corporation's property in the
usual and regular course of business is not required under RCW 23B.12.010;
(ll)
Approval by the shareholders of the mortgage, pledge, dedication to the
repayment of indebtedness, or other encumbrance of any or all of the
corporation's property, whether or not in the usual and regular course of
business, is not required under RCW 23B.12.010;
(mm)
Unless the board of directors requires a greater vote or a vote by voting
groups, a sale, lease, exchange, or other disposition of all or substantially
all of the corporation's property, other than in the usual and regular course
of business, must be approved by each voting group entitled to vote on such
transaction by two-thirds of all votes entitled to be cast by that voting group
under RCW 23B.12.020; and
(nn)
Unless the board of directors requires a greater vote or a vote by voting
groups, a proposal to dissolve must be approved by each voting group entitled
to vote on the dissolution by two-thirds of all votes entitled to be cast by
that voting group under RCW 23B.14.020((; and
(oo)
A corporation with fewer than three hundred holders of record of its shares
does not require special approval of interested shareholder transactions under
RCW 23B.17.020)).
(4)
Unless its articles of incorporation or its bylaws provide otherwise, a
corporation is governed by the following provisions:
(a)
The board of directors may authorize the issuance of some or all of the shares
of any or all of the corporation's classes or series without certificates under
RCW 23B.06.260;
(b)
A corporation that is not a public company shall hold a special meeting of
shareholders if the holders of at least ten percent of the votes entitled to be
cast on any issue proposed to be considered at the meeting demand a meeting
under RCW 23B.07.020;
(c)
A director need not be a resident of this state or a shareholder of the
corporation under RCW 23B.08.020;
(d)
The board of directors may fix the compensation of directors under RCW
23B.08.110;
(e)
Members of the board of directors may participate in a meeting of the board by
any means of similar communication by which all directors participating can
hear each other during the meeting under RCW 23B.08.200;
(f)
Action permitted or required by this title to be taken at a board of
directors' meeting may be taken without a meeting if action is taken by all
members of the board under RCW 23B.08.210;
(g)
Regular meetings of the board of directors may be held without notice of the
date, time, place, or purpose of the meeting under RCW 23B.08.220;
(h)
Special meetings of the board of directors must be preceded by at least two
days' notice of the date, time, and place of the meeting, and the notice need
not describe the purpose of the special meeting under RCW 23B.08.220;
(i)
A quorum of a board of directors consists of a majority of the number of
directors under RCW 23B.08.240;
(j)
If a quorum is present when a vote is taken, the affirmative vote of a
majority of directors present is the act of the board of directors under RCW
23B.08.240;
(k)
A board of directors may create one or more committees and appoint members of
the board of directors to serve on them under RCW 23B.08.250; and
(l)
Unless approved by the shareholders, a corporation may indemnify, or make
advances to, a director for reasonable expenses incurred in the defense of any
proceeding to which the director was a party because of being a director only
to the extent such action is consistent with RCW 23B.08.500 through 23B.08.580.
(5)
The articles of incorporation may contain the following provisions:
(a)
The names and addresses of the individuals who are to serve as initial
directors;
(b)
The par value of any authorized shares or classes of shares;
(c)
Provisions not inconsistent with law related to the management of the business
and the regulation of the affairs of the corporation;
(d)
Any provision that under this title is required or permitted to be set forth
in the bylaws;
(e)
Provisions not inconsistent with law defining, limiting, and regulating the
powers of the corporation, its board of directors, and shareholders;
(f)
If the articles of incorporation authorize dividing shares into classes, the
election of all or a specified number of directors may be effected by the
holders of one or more authorized classes of shares under RCW 23B.08.040;
(g)
The terms of directors may be staggered under RCW 23B.08.060;
(h)
Shares may be redeemable or convertible (i) at the option of the corporation,
the shareholder, or another person, or upon the occurrence of a designated
event; (ii) for cash, indebtedness, securities, or other property; or (iii) in
a designated amount or in an amount determined in accordance with a designated
formula or by reference to extrinsic data or events under RCW 23B.06.010; and
(i)
A director's personal liability to the corporation or its shareholders for
monetary damages for conduct as a director may be eliminated or limited under
RCW 23B.08.320.
(6)
The articles of incorporation or the bylaws may contain the following
provisions:
(a)
A restriction on the transfer or registration of transfer of the corporation's
shares under RCW 23B.06.270;
(b)
Shareholders may participate in a meeting of shareholders by any means of
communication by which all persons participating in the meeting can hear each
other under RCW 23B.07.080;
(c)
A quorum of the board of directors may consist of as few as one-third of the
number of directors under RCW 23B.08.240;
(d)
If the corporation is registered as an investment company under the investment
company act of 1940, a provision limiting the requirement to hold an annual
meeting of shareholders as provided in RCW 23B.07.010(2); and
(e)
If the corporation is registered as an investment company under the investment
company act of 1940, a provision establishing terms of directors which terms
may be longer than one year as provided in RCW 23B.05.050.
(7)
The articles of incorporation need not set forth any of the corporate powers
enumerated in this title.
NEW
SECTION. Sec. 6. RCW
23B.17.020 and 1989 c 165 s 189 are each repealed.
