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.
