AN ACT Relating to
nonprofit organizations; amending RCW 24.06.005, 24.06.025, 24.06.030,
24.06.035, 24.06.100, 24.06.110, 24.06.115, 24.06.150, 24.06.185, 24.06.190,
24.06.195, 24.06.245, 24.06.250, and 24.06.255; and adding a new section to
chapter 24.06 RCW.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF
WASHINGTON:
Sec. 1. RCW 24.06.005 and 2000 c
167 s 1 are each amended to read as follows:
As used in this
chapter, unless the context otherwise requires, the term:
(1)
"Corporation" or "domestic corporation" means a mutual
corporation or miscellaneous corporation subject to the provisions of this
chapter, except a foreign corporation.
(2) "Foreign
corporation" means a mutual or miscellaneous corporation or other corporation
organized under laws other than the laws of this state which would be subject
to the provisions of this chapter if organized under the laws of this state.
(3) "Mutual
corporation" means a corporation organized to accomplish one or more of
its purposes on a mutual basis for members and other persons.
(4) "Miscellaneous
corporation" means any corporation which is organized for a purpose or in
a manner not provided for by the Washington business corporation act or by the
Washington nonprofit corporation act, and which is not required to be organized
under other laws of this state.
(5) "Articles of
incorporation" includes the original articles of incorporation and all
amendments thereto, and includes articles of merger.
(6) "Bylaws"
means the code or codes of rules adopted for the regulation or management of
the affairs of the corporation irrespective of the name or names by which such
rules are designated.
(7) "Member"
means one having membership rights in a corporation in accordance with
provisions of its articles of incorporation or bylaws.
(8) "Stock"
or "share" means the units into which the proprietary interests of a
corporation are divided in a corporation organized with stock.
(9)
"Stockholder" or "shareholder" means one who is a holder of
record of one or more shares in a corporation organized with stock.
(10) "Board of
directors" means the group of persons vested with the management of the
affairs of the corporation irrespective of the name by which such group is
designated.
(11) "Insolvent"
means inability of a corporation to pay debts as they become due in the usual
course of its affairs.
(12) "Duplicate
originals" means two copies, original or otherwise, each with original
signatures, or one original with original signatures and one copy thereof.
(13) "Conforms to
law" as used in connection with duties of the secretary of state in
reviewing documents for filing under this chapter, means the secretary of state
has determined the document complies as to form with the applicable requirements
of this chapter.
(14) "Effective
date" means, in connection with a document filing made by the secretary of
state, the date which is shown by affixing a "filed" stamp on the
documents. When a document is received for filing by the secretary of state in
a form which complies with the requirements of this chapter and which would
entitle the document to be filed immediately upon receipt, but the secretary of
state's approval action occurs subsequent to the date of receipt, the secretary
of state's filing date shall relate back to the date on which the secretary of
state first received the document in acceptable form. An applicant may request
a specific effective date no more than thirty days later than the receipt date
which might otherwise be applied as the effective date.
(15) "Executed by
an officer of the corporation," or words of similar import, means that any
document signed by such person shall be and is signed by that person under
penalties of perjury and in an official and authorized capacity on behalf of
the corporation or person making the document submission with the secretary of
state.
(16) "An officer
of the corporation" means, in connection with the execution of documents
submitted for filing with the secretary of state, the president, a vice
president, the secretary, or the treasurer of the corporation.
(17) "Electronic
transmission" or "electronically transmitted" means any process
of electronic communication not directly involving the physical transfer of
paper that is suitable for the retention, retrieval, and reproduction of the
transmitted information by the recipient. However, such an electronic
transmission must either set forth or be submitted with information, including
any security or validation controls used, from which it can reasonably be
determined that the electronic transmission was authorized by, as applicable,
the corporation or shareholder or member by or on behalf of which the
electronic transmission was sent.
(18) "Consumer
cooperative" means a corporation engaged in the retail sale, to its
members and other consumers, of goods or services of a type that are generally
for personal, living, or family use.
Sec. 2. RCW 24.06.025 and 1987 c
212 s 708 are each amended to read as follows:
The articles of
incorporation shall set forth:
(1) The name of the
corporation.
(2) The period of
duration, which may be perpetual or for a stated number of years.
(3) The purpose or
purposes for which the corporation is organized.
(4) The qualifications
and the rights and responsibilities of the members and the manner of their
election, appointment or admission to membership and termination of membership;
and, if there is more than one class of members or if the members of any one
class are not equal, the relative rights and responsibilities of each class or
each member.
(5) If the corporation
is to have capital stock:
(a) The aggregate
number of shares which the corporation shall have authority to issue; if such
shares are to consist of one class only, the par value of each of such shares,
or a statement that all of such shares are without par value; or, if such
shares are to be divided into classes, the number of shares of each class, and
a statement of the par value of the shares of each such class or that such
shares are to be without par value;
(b) If the shares are
to be divided into classes, the designation of each class and a statement of
the preferences, limitations and relative rights in respect of the shares of
each class;
(c) If the corporation
is to issue the shares of any preferred or special class in series, then the
designation of each series and a statement of the variations in the relative
rights and preferences as between series insofar as the same are to be fixed in
the articles of incorporation, and a statement of any authority to be vested in
the board of directors to establish series and fix and determine the variations
in the relative rights and preferences as between series;
(d) Any provision
limiting or denying to shareholders the preemptive right to acquire additional
shares of the corporation.
(6) If the corporation
is to distribute surplus funds to its members, stockholders or other persons,
provisions for determining the amount and time of the distribution.
(7) Provisions for
distribution of assets on dissolution or final liquidation.
(8) Whether a
dissenting shareholder or member shall be limited to a return of less than the
fair value of his shares or membership.
(9) ((Any
provisions, not inconsistent with law, which the incorporators elect to set
forth in the articles of incorporation for the regulation of the internal
affairs of the corporation.
(10))) The address of its initial registered office,
including street and number, and the name of its initial registered agent at
such address.
(((11))) (10)
The number of directors constituting the initial board of directors, and the
names and addresses of the persons who are to serve as the initial directors.
(((12))) (11)
The name and address of each incorporator.
(((13))) (12)
Any provision, not inconsistent with law, ((which the incorporators elect to
set forth in the articles of incorporation)) for the regulation of the
internal affairs of the association, including ((provisions regarding)):
(a) ((Eliminating or
limiting the personal liability of a director to the association or its members
for monetary damages for conduct as a director: PROVIDED, That such provision
shall not eliminate or limit the liability of a director for acts or omissions
that involve intentional misconduct by a director or a knowing violation of law
by a director, or for any transaction from which the director will personally
receive a benefit in money, property, or services to which the director is not
legally entitled. No such provision may eliminate or limit the liability of a
director for any act or omission occurring before the date when such provision
becomes effective)) Overriding the release from liability provided in
RCW 24.06.035(2); and
(b) Any provision which
under this title is required or permitted to be set forth in the bylaws.
It shall not be
necessary to set forth in the articles of incorporation any of the corporate
powers enumerated in this chapter.
Unless the articles of
incorporation provide that a change in the number of directors shall be made
only by amendment to the articles of incorporation, a change in the number of
directors made by amendment to the bylaws shall be controlling. In all other
cases, whenever a provision of the articles of incorporation is inconsistent
with a bylaw, the provision of the articles of incorporation shall be
controlling.
Sec. 3. RCW 24.06.030 and 1969
ex.s. c 120 s 6 are each amended to read as follows:
Each corporation shall
have power:
(1) To have perpetual
succession by its corporate name unless a limited period of duration is stated
in its articles of incorporation.
(2) To sue and be sued,
complain and defend, in its corporate name.
(3) To have a corporate
seal which may be altered at pleasure, and to use the same by causing it, or a
facsimile thereof, to be impressed or affixed or in any other manner
reproduced.
(4) To purchase, take,
receive, lease, take by gift, devise or bequest, or otherwise acquire, own,
hold, be trustee of, improve, use and otherwise deal in and with real or
personal property, or any interest therein, wherever situated.
(5) To sell, convey,
mortgage, pledge, lease, exchange, transfer and otherwise dispose of all or any
part of its property and assets.
(6) To lend money to
its employees.
(7) To purchase, take,
receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ,
sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and
deal in and with, shares or other interests in, or obligations of, other
domestic or foreign corporations, whether for profit or not for profit,
associations, partnerships or individuals, or direct or indirect obligations of
the United States, or of any other government, state, territory, governmental
district or municipality or of any instrumentality thereof.
(8) To make contracts
and incur liabilities, borrow money at such rates of interest as the
corporation may determine, issue its notes, bonds, and other obligations, and
secure any of its obligations by mortgage or pledge of all or any of its
property, franchises and income.
(9) To lend money for
its corporate purposes, invest and reinvest its funds, and take and hold real
and personal property as security for the payment of funds so loaned or
invested.
(10) To conduct its
affairs, carry on its operations, and have offices and exercise the powers
granted by this chapter, in any state, territory, district, or possession of
the United States, or in any foreign country.
(11) To elect or
appoint officers and agents of the corporation, and define their duties and fix
their compensation.
(12) To make and alter
bylaws, not inconsistent with its articles of incorporation or with the laws of
this state, for the administration and regulation of the affairs of the
corporation.
(13) To establish and
maintain reserve, equity, surplus or other funds, and to provide for the time,
form and manner of distribution of such funds among members, shareholders or
other persons with interests therein in accordance with the articles of
incorporation.
(14) Unless otherwise
provided in the articles of incorporation, to make donations for the public
welfare or for charitable, scientific or educational purposes, and in time of
war to make donations in aid of the United States and its war activities.
(15) To indemnify any
director or officer or former director or officer of the corporation, or any
person who may have served at its request as a director or officer of another
corporation, against expenses actually and necessarily incurred by him or
her in connection with the defense of any action, suit or proceeding in
which he or she is made a party by reason of being or having been such
director or officer, except ((in relation to matters as to which he shall be
adjudged in such action, suit or proceeding to be liable for negligence or
misconduct in the performance of duty)) for acts or omissions that
involve intentional misconduct or a knowing violation of law by the director or
officer, or that involve a transaction from which the director or officer will
personally receive a benefit in money, property, or services to which the
director or officer is not legally entitled: PROVIDED, That such
indemnification shall not be deemed exclusive of any other rights to which such
director or officer may be entitled, under any bylaw, agreement, vote of board
of directors or members or shareholders, or otherwise.
(16) To cease its
corporate activities and surrender its corporate franchise.
(17) To have and
exercise all powers necessary or convenient to effect any or all of the
purposes for which the corporation is organized and not inconsistent with the
articles of incorporation or the provisions of this chapter.
Sec. 4. RCW 24.06.035 and 1987 c
212 s 709 are each amended to read as follows:
(1) A
corporation subject to the provisions of this chapter shall not engage in any
business, trade, a vocation or profession for profit: PROVIDED, That nothing
contained herein shall be construed to forbid such a corporation from
accumulating reserve, equity, surplus or other funds through subscriptions,
fees, dues or assessments, or from charges made its members or other persons
for services rendered or supplies or benefits furnished, or from distributing
its surplus funds to its members, stockholders or other persons in accordance
with the provisions of the articles of incorporation. A member of the board of
directors or an officer of such a corporation shall have the same immunity from
liability as is granted in RCW 4.24.264.
(2) Unless the
articles of incorporation provide otherwise, a member of the board of directors
or an officer of the corporation is not individually liable to the corporation
or its shareholders or members in their capacity as shareholders or members for
conduct within his or her official capacity as a director or officer after the
effective date of this subsection except for acts or omissions that involve
intentional misconduct or a knowing violation of the law, or that involve a
transaction from which the director or officer will personally receive a
benefit in money, property, or services to which the director or officer is not
legally entitled. Nothing in this subsection may be construed to limit or
modify in any manner the power of the attorney general to bring an action on
behalf of the public to enjoin, correct, or otherwise remedy a breach of a
charitable trust by a corporation or its directors or officers.
Sec. 5. RCW 24.06.100 and 1969
ex.s. c 120 s 20 are each amended to read as follows:
Meetings of members
and/or shareholders may be held at such place, either within or without this
state, as may be provided in the bylaws. In the absence of any such provision,
all meetings shall be held at the registered office of the corporation in this state.
An annual meeting of
the members and shareholders shall be held at such time as may be provided in
the bylaws. Failure to hold the annual meeting at the designated time shall
not work a forfeiture or dissolution of the corporation.
Special meetings of the
members or shareholders may be called by the president or by the board of
directors. Special meetings of the members or shareholders may also be called
by such other officers or persons or number or proportion of members or shareholders
as may be provided in the articles of incorporation or the bylaws. In the
absence of a provision fixing the number or proportion of members or
shareholders entitled to call a meeting, a special meeting of members or
shareholders may be called by persons having one-twentieth of the votes
entitled to be cast at such meeting. Only business within the purpose or
purposes described in the meeting notice required by RCW 24.06.105 may be
conducted at a special meeting.
If the articles of
incorporation or bylaws so provide, members or shareholders may participate in
any meeting of members or shareholders by any means of communication by which
all persons participating in the meeting can hear each other during the
meeting. A member or shareholder participating in a meeting by this means is
deemed to be present in person at the meeting.
Sec. 6. RCW 24.06.110 and 2000 c
167 s 4 are each amended to read as follows:
The right of a class or
classes of members or shareholders to vote may be limited, enlarged or denied
to the extent specified in the articles of incorporation. Unless so limited,
enlarged or denied, each member and each outstanding share of each class shall
be entitled to one vote on each matter submitted to a vote of members or
shareholders. No member of a class may acquire any interest which will entitle
him or her to a greater vote than any other member of the same class.
A member or shareholder
may vote in person or, unless the articles of incorporation or the bylaws
otherwise provide, may vote by mail, by electronic transmission, or by proxy
executed in writing by the member or shareholder or by his or her duly
authorized attorney-in-fact: PROVIDED, That no proxy shall be valid for more
than eleven months from the date of its execution unless otherwise specified in
the proxy.
If a member or
shareholder may vote by proxy, the proxy may be given by:
(1) Executing a writing
authorizing another person or persons to act for the member or shareholder as
proxy. Execution may be accomplished by the member or shareholder or the
member's or shareholder's authorized officer, director, employee, or agent
signing the writing or causing his or her signature to be affixed to the
writing by any reasonable means including, but not limited to, facsimile
signature; or
(2) Authorizing another
person or persons to act for the member or shareholder as proxy by transmitting
or authorizing the transmission of an electronic transmission to the person who
will be the holder of the proxy, or to a proxy solicitation firm, proxy support
service organization, or like agent duly authorized by the person who will be
the holder of the proxy to receive the transmission. If it is determined that
the electronic transmissions are valid, the inspector of election or, if there
are no inspectors, any other officer or agent of the corporation making that
determination on behalf of the corporation shall specify the information upon
which they relied. The corporation shall require the holders of proxies received
by electronic transmission to provide to the corporation copies of the
electronic transmission and the corporation shall retain copies of the
electronic transmission for a reasonable period of time.
If specifically
permitted by the articles of incorporation ((may provide that)) or
bylaws, whenever proposals or directors or officers are to be voted upon,
such vote may be taken by mail or by electronic transmission if the name of
each candidate and the text of each proposal to be so voted upon are set forth
in a writing accompanying or contained in the notice of meeting. Persons
voting by mail or by electronic transmission shall be deemed present for all
purposes of quorum, count of votes and percentages of total voting power
voting.
The articles of
incorporation or the bylaws may provide that in all elections for directors
every person entitled to vote shall have the right to cumulate his or her vote
and to give one candidate a number of votes equal to his or her vote multiplied
by the number of directors to be elected, or by distributing such votes on the
same principle among any number of such candidates.
Sec. 7. RCW 24.06.115 and 2000 c
167 s 5 are each amended to read as follows:
The articles of
incorporation or the bylaws may provide the number or percentage of votes which
members or shareholders are entitled to cast in person, by mail, by electronic
transmission, or by proxy, which shall constitute a quorum at meetings of
shareholders or members. However, in no event shall a quorum be less than
one-fourth, or in the case of consumer cooperatives, five percent, of
the votes which members or shareholders are entitled to cast in person, by
mail, by electronic transmission, or by proxy, at a meeting considering the adoption
of a proposal which is required by the provisions of this chapter to be adopted
by at least two-thirds of the votes which members or shareholders present at
the meeting in person or by mail, by electronic transmission, or represented by
proxy are entitled to cast. In all other matters and in the absence of any
provision in the articles of incorporation or bylaws, a quorum shall consist of
one-fourth, or in the case of consumer cooperatives, five percent, of
the votes which members or shareholders are entitled to cast in person, by
mail, by electronic transmission, or by proxy at the meeting. On any proposal
on which a class of shareholders or members is entitled to vote as a class, a
quorum of the class entitled to vote as such class must also be present in
person, by mail, by electronic transmission, or represented by proxy.
Sec. 8. RCW 24.06.150 and 1969
ex.s. c 120 s 30 are each amended to read as follows:
Meetings of the board
of directors, regular or special, may be held either within or without this
state, and upon such notice as the bylaws may prescribe. Attendance of a
director at any meeting shall constitute a waiver of notice of such meeting
except where a director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called
or convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
Unless the articles
of incorporation or bylaws provide otherwise, any or all directors may
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all directors participating can
hear each other during the meeting. A director participating in a meeting by
this means is deemed to be present in person at the meeting.
NEW SECTION. Sec.
9. A new section is added
to chapter 24.06 RCW to read as follows:
(1) A director shall
discharge the duties of a director, including duties as a member of a
committee, and an officer with discretionary authority shall discharge the
officer's duties under that authority:
(a) In good faith;
(b) With the care an
ordinarily prudent person in a like position would exercise under similar
circumstances; and
(c) In a manner the
director or officer reasonably believes to be in the best interests of the
corporation.
(2) In discharging the
duties of a director or an officer, a director or officer is entitled to rely
on information, opinions, reports, or statements, including financial
statements and other financial data, if prepared or presented by:
(a) One or more
officers or employees of the corporation whom the director or officer
reasonably believes to be reliable and competent in the matters presented; or
(b) Legal counsel,
public accountants, or other persons as to matters the director or officer
reasonably believes are within the person's professional or expert competence.
In addition, a director
is entitled to rely on a committee of the board of directors of which the
director is not a member if the director reasonably believes the committee merits
confidence.
(3) A director or an
officer is not acting in good faith if the director or officer has knowledge
concerning the matter in question that makes reliance otherwise permitted by
subsection (2) of this section unwarranted.
(4) A director or
officer is not liable for any action taken as a director or as an officer, or
any failure to take any action, if the director or officer performed the duties
of the director's or officer's office in compliance with this section.
Sec. 10. RCW 24.06.185 and 1969
ex.s. c 120 s 37 are each amended to read as follows:
A corporation may amend
its articles of incorporation from time to time in any and as many respects as
may be desired, so long as its articles of incorporation as amended contain
only such provisions as are lawful under this chapter. A member or
shareholder of a corporation does not have a vested property right resulting
from any provision in the articles of incorporation.
Sec. 11. RCW 24.06.190 and 2000 c
167 s 6 are each amended to read as follows:
Amendments to the
articles of incorporation shall be made in the following manner:
A corporation's
board of directors may amend the articles of incorporation to change the name
of the corporation, without seeking member or shareholder approval. With
respect to amendments other than to change the name of the corporation, the
board of directors shall adopt a resolution setting forth the proposed
amendment and directing that it be submitted to a vote at a meeting of members
and shareholders, which may be either an annual or a special meeting. Written
or printed notice or, if specifically permitted by the articles of
incorporation or bylaws of the corporation, notice by electronic transmission,
setting forth the proposed amendment or a summary of the changes to be effected
thereby shall be given to each member and shareholder entitled to vote at such
meeting within the time and in the manner provided in this chapter for the
giving of notice of meetings of members and shareholders. The proposed
amendment shall be adopted upon receiving at least two-thirds of the votes
which members or shareholders present in person or by mail or by electronic
transmission at such meeting or represented by proxy are entitled to cast:
PROVIDED, That when any class of shares or members is entitled to vote thereon
by class, the proposed amendment must receive at least two-thirds of the votes
of the members or shareholders of each class entitled to vote thereon as a class,
who are present in person, by mail, by electronic transmission, or represented
by proxy at such meeting.
Any number of
amendments may be submitted and voted upon at any one meeting.
Sec. 12. RCW 24.06.195 and 2000 c
167 s 7 are each amended to read as follows:
The articles of
amendment shall be executed in duplicate originals by the corporation by an
officer of the corporation, and shall set forth:
(1) The name of the
corporation.
(2) Any amendment so
adopted.
(3) If an amendment
was adopted by the board of directors without being submitted for member or
shareholder action, a statement to that effect and that member or shareholder
action was not required; or a statement setting forth the date of the
meeting of members and shareholders at which the amendment was adopted, that a
quorum was present at such meeting, and that such amendment received at least
two-thirds of the votes which members or shareholders of the corporation, and
of each class entitled to vote thereon as a class, present at such meeting in
person, by mail, by electronic transmission, or represented by proxy were
entitled to cast, or a statement that such amendment was adopted by a consent
in writing signed by all members and shareholders entitled to vote with respect
thereto.
Sec. 13. RCW 24.06.245 and 1969
ex.s. c 120 s 49 are each amended to read as follows:
Any member or
shareholder of a corporation shall have the right to dissent from any of the
following corporate actions:
(1) Any plan of merger
or consolidation to which the corporation is a party other than a merger or
consolidation in which all members or shareholders of the corporation have the
right to continue their membership or shareholder status in the surviving
corporation on substantially similar terms; or
(2) Any sale or
exchange of all or substantially all of the property and assets of the corporation
not made in the usual and regular course of its business, including a sale in
dissolution, but not including a sale pursuant to an order of a court having
jurisdiction in the premises or a sale for cash on terms requiring that all or
substantially all of the net proceeds of sale be distributed to the
shareholders in accordance with their respective interests within one year
after the date of sale; or
(3) Any amendment to
the articles of incorporation ((which changes voting or property rights of
members or shareholders other than by changing the number of memberships or
shares or classes of either thereof)) that materially reduces the number
of shares owned by a shareholder to a fraction of a share if the fractional
share is to be acquired by the corporation for cash; or
(4) ((Any amendment
to the articles of incorporation which reorganizes a corporation under the
provisions of this chapter)) Any corporate action taken pursuant to a
member or shareholder vote to the extent that the articles of incorporation,
bylaws, or a resolution of the board of directors provides that voting or
nonvoting members or shareholders are entitled to dissent and obtain payment
for their membership or shares.
A member or
shareholder entitled to dissent and obtain payment for the member's or
shareholder's membership interest or shares under this chapter may not
challenge the corporate action creating the member's or shareholder's
entitlement unless the action fails to comply with the procedural requirements
imposed by this title, the articles of incorporation, or the bylaws, or is
fraudulent with respect to the member or shareholder or the corporation.
The provisions of this
section shall not apply to the members or shareholders of the surviving
corporation in a merger if such corporation is on the date of the filing of the
articles of merger the owner of all the outstanding shares of the other
corporations, domestic or foreign, which are parties to the merger((, or if
a vote of the members and shareholders of such corporation is not necessary to
authorize such merger)).
The meeting notice
for any meeting at which a proposed corporate action creating dissenters' rights
is submitted to a vote must state that members or shareholders are or may be
entitled to assert dissenters' rights and be accompanied by a copy of RCW
24.06.250.
Sec. 14. RCW 24.06.250 and 2000 c
167 s 11 are each amended to read as follows:
Any member or
shareholder electing to exercise such right of dissent shall file with the
corporation, prior to or at the meeting of members and shareholders at which
such proposed corporate action is submitted to a vote, a written objection to
such proposed corporate action. If such proposed corporate action be approved
by the required vote and such member or shareholder shall not have voted in
favor thereof, such member or shareholder may, within ten days after the date
on which the vote was taken, ((or if a corporation is to be merged without a
vote of its members and shareholders into another corporation, any other
members or shareholders may, within fifteen days after the plan of such merger
shall have been mailed or sent by electronic transmission to such members and
shareholders,)) make written demand on the corporation, or, in the case of
a merger or consolidation, on the surviving or new corporation, domestic or
foreign, for payment of the fair value of such member's membership or of such
shareholder's shares, and, if such proposed corporate action is effected, such
corporation shall pay to such member, upon surrender of his or her membership
certificate, if any, or to such shareholder, upon surrender of the certificate
or certificates representing such shares, the fair value thereof as of the day
prior to the date on which the vote was taken approving the proposed corporate
action, excluding any appreciation or depreciation in anticipation of such
corporate action. Any member or shareholder failing to make demand within the
ten day period shall be bound by the terms of the proposed corporate action.
Any member or shareholder making such demand shall thereafter be entitled only
to payment as in this section provided and shall not be entitled to vote or to
exercise any other rights of a member or shareholder.
No such demand shall be
withdrawn unless the corporation shall consent thereto. The right of such
member or shareholder to be paid the fair value of his or her membership or
shares shall cease and his or her status as a member or shareholder shall be
restored, without prejudice to any corporate proceedings which may have been
taken during the interim, if:
(1) Such demand shall
be withdrawn upon consent; or
(2) The proposed corporate
action shall be abandoned or rescinded or the members or shareholders shall
revoke the authority to effect such action; or
(3) In the case of a
merger, on the date of the filing of the articles of merger the surviving
corporation is the owner of all the outstanding shares of the other
corporations, domestic and foreign, that are parties to the merger; or
(4) ((No demand or
petition for the determination of fair value by a court shall have been made or
filed within the time provided by this section; or
(5))) A court of competent jurisdiction shall
determine that such member or shareholder is not entitled to the relief
provided by this section.
Within ten days after
such corporate action is effected, the corporation, or, in the case of a merger
or consolidation, the surviving or new corporation, domestic or foreign, shall
give written notice thereof to each dissenting member or shareholder who has
made demand as herein provided, and shall make a written offer to each such
member or shareholder to pay for such shares or membership at a specified price
deemed by such corporation to be the fair value thereof. Except in cases
where the fair value payable to dissenters is fixed in the articles of
incorporation or pursuant to RCW 24.06.255, such notice and offer shall be
accompanied by a balance sheet of the corporation in which the member ((has))
holds his or her membership or ((the shares of which)) the
dissenting shareholder holds shares, as of the latest available date and
not more than twelve months prior to the making of such offer, and a profit and
loss statement of such corporation for the twelve months' period ended on the
date of such balance sheet.
If the fair value
payable to dissenting members or shareholders is fixed in the articles of
incorporation or pursuant to RCW 24.06.255, or if within thirty days after
the date on which such corporate action was effected the fair value of such
shares or membership is agreed upon between any such dissenting member or
shareholder and the corporation, payment therefor shall be made within ninety
days after the date on which such corporate action was effected, upon surrender
of the membership certificate, if any, or upon surrender of the certificate or
certificates representing such shares. Upon payment of the agreed value the
dissenting member or shareholder shall cease to have any interest in such
membership or shares.
If the fair value
payable to dissenting members or shareholders is not fixed in the articles of
incorporation or pursuant to RCW 24.06.025, and within such period of
thirty days a dissenting member or shareholder and the corporation do not so
agree, then the dissenting member or shareholder shall be entitled to make
written demand to the corporation, ((within thirty days after receipt of
written demand from any dissenting member or shareholder given)) within
sixty days after the date on which such corporate action was effected, requesting
that the corporation petition for a determination of the fair value by a
court. If such a demand is not timely made on the corporation, the right of
such member or shareholder to demand to be paid the fair value of his or her
membership or shares shall be forfeited. Within thirty days after receipt of
such a written demand from any dissenting member or shareholder, the
corporation shall, or at its election at any time within ((such period
of sixty)) ninety days after the date on which such corporate
action was effected may, file a petition in any court of competent
jurisdiction in the county in this state where the registered office of the
corporation is located praying that the fair value of such membership or shares
be found and determined. If, in the case of a merger or consolidation, the
surviving or new corporation is a foreign corporation without a registered
office in this state, such petition shall be filed in the county where the
registered office of the domestic corporation was last located. If the
corporation shall fail to institute the proceeding as herein provided, any
dissenting member or shareholder may do so in the name of the corporation. All
dissenting members and shareholders, wherever residing, shall be made parties
to the proceeding as an action against their memberships or shares quasi in
rem. A copy of the petition shall be served on each dissenting member and
shareholder who is a resident of this state and shall be served by registered
or certified mail on each dissenting member or shareholder who is a
nonresident. Service on nonresidents shall also be made by publication as
provided by law. The jurisdiction of the court shall be plenary and
exclusive. All members and shareholders who are parties to the proceeding
shall be entitled to judgment against the corporation for the amount of the
fair value of their shares. The court may, if it so elects, appoint one or
more persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers shall have such power and authority as
shall be specified in the order of their appointment or an amendment thereof.
The judgment shall be payable only upon and concurrently with the surrender to
the corporation of the membership certificate, if any, or of the certificate or
certificates representing such shares. Upon payment of the judgment, the
dissenting shareholder or member shall cease to have any interest in such
shares or membership.
The judgment shall
include an allowance for interest at such rate as the court may find to be fair
and equitable in all the circumstances, from the date on which the vote was
taken on the proposed corporate action to the date of payment.
The costs and expenses
of any such proceeding shall be determined by the court and shall be assessed
against the corporation, but all or any part of such costs and expenses may be
apportioned and assessed as the court may deem equitable against any or all of
the dissenting members and shareholders who are parties to the proceeding to
whom the corporation shall have made an offer to pay for membership or shares
if the court shall find that the action of such members or shareholders in
failing to accept such offer was arbitrary or vexatious or not in good faith.
Such expenses shall include reasonable compensation for and reasonable expenses
of the appraisers, but shall exclude the fees and expenses of counsel for and
experts employed by any party; but if the fair value of the memberships or
shares as determined materially exceeds the amount which the corporation
offered to pay therefor, or if no offer was made, the court in its discretion may
award to any member or shareholder who is a party to the proceeding such sum as
the court may determine to be reasonable compensation to any expert or experts
employed by the member or shareholder in the proceeding.
Within twenty days
after demanding payment for his or her shares or membership, each member and
shareholder demanding payment shall submit the certificate or certificates
representing his or her membership or shares to the corporation for notation
thereon that such demand has been made. His or her failure to do so shall, at
the option of the corporation, terminate his or her rights under this section
unless a court of competent jurisdiction, for good and sufficient cause shown,
shall otherwise direct. If membership or shares represented by a certificate
on which notation has been so made shall be transferred, each new certificate
issued therefor shall bear a similar notation, together with the name of the
original dissenting holder of such membership or shares, and a transferee of
such membership or shares shall acquire by such transfer no rights in the
corporation other than those which the original dissenting member or
shareholder had after making demand for payment of the fair value thereof.
Sec. 15. RCW 24.06.255 and 1969
ex.s. c 120 s 51 are each amended to read as follows:
Notwithstanding
any provision in this chapter for the payment of fair value to a dissenting
member or shareholder, (1) the articles of incorporation may provide
that a dissenting member or shareholder shall be limited to a return of a
lesser amount, but in no event shall a dissenting member or shareholder
be limited to a return of less than the consideration paid to the corporation
for the membership or shares which he or she holds unless the fair value
of the membership or shares is less than the consideration paid to the
corporation, and (2) the fair value payable to a dissenting member of a
consumer cooperative shall be a fixed amount equal to the consideration paid to
the corporation for the member's current membership unless the articles of
incorporation expressly provide for a greater or lesser amount.
