Professor Andrej Thomas Starkis


§ 1.42. Number of Shareholders



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§ 1.42. Number of Shareholders
(a) For purposes of this chapter, except as provided in subsection (c), the following identified as a shareholder in a corporation's current record of shareholders constitutes one shareholder:

(1) three or fewer co-owners;

(2) a corporation, partnership, trust, estate, or other entity;

(3) the trustees, guardians, custodians, or other fiduciaries of a single trust, estate, or account.

(b) For purposes of this chapter, shareholders registered in substantially similar names constitute one shareholder if it is reasonable to believe that the names represent the same person.

(c) For purposes of this chapter, each beneficial owner of shares registered in the name of a nominee in a corporation's current record of shareholders constitutes one shareholder.


PART E. INTERPRETATION
§ 1.50. Interpretation of Chapter
In interpreting this chapter, in the absence of controlling Massachusetts precedent on any matter, consideration shall be given to the following:

Inasmuch as predictability is important in the conduct of the affairs of Massachusetts corporations and in their relations with corporations organized under the laws of other jurisdictions, significant weight shall be given to the interpretations of courts of other jurisdictions of substantially equivalent provisions of the corporate laws of such other jurisdictions.



ARTICLE 2
§ 2.01. Incorporators
One or more persons may act as the incorporator or incorporators of a corporation by signing articles of organization and delivering them to the secretary of state for filing. Before the initial issuance of shares by the corporation, the incorporators may exercise all powers of shareholders and take any action required or permitted by law, the articles of organization or the bylaws to be taken by shareholders.
§ 2.02. Articles of Organization
(a) The articles of organization shall set forth:

(1) a corporate name for the corporation that satisfies the requirements of section 4.01;

(2) the number of shares the corporation is authorized to issue, and any required description of additional classes or series of shares, in conformity with section 6.01; and

(3) the name and address of each incorporator.

(b) The articles of organization may set forth:

(1) provisions not inconsistent with law regarding:

(i) the purpose or purposes for which the corporation is organized;

(ii) managing the business and regulating the affairs of the corporation;

iii) defining, limiting, and regulating the powers of the corporation, its board of directors, and shareholders or any class thereof;

(iv) a par value for authorized shares or classes of shares;

(v) the imposition of personal liability on shareholders for the debts of the corporation to a specified extent and upon specified conditions; or

(vi) the voluntary dissolution of the corporation; and

(2) any provision that under this chapter is required to be set forth in the articles of organization in order for the subject matter of the provision to be effective or is permitted to be set forth in such articles;

(3) any provision that under this chapter is required or permitted to be set forth in the bylaws; and

(4) a provision eliminating or limiting the personal liability of a director to the corporation for monetary damages for breach of fiduciary duty as a director notwithstanding any provision of law imposing such liability; but the provision shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for improper distributions under section 6.40, or (iv) for any transaction from which the director derived an improper personal benefit.

(c) The articles of organization need not set forth any of the corporate powers enumerated in this chapter.

(d) The form on which articles of organization are filed shall also include the following supplemental information, which is not to be considered a part of the articles:

(1) the street address of the initial registered office of the corporation;

(2) the names and addresses of the individuals who will serve as the initial directors, president, treasurer and secretary of the corporation;

(3) the name of its initial registered agent at its registered office;

(4) the fiscal year of the corporation that is initially adopted; and

(5) such other supplemental information as the secretary of state may require, including (i) a brief description of the type of business in which the corporation intends to engage or its SIC code, and (ii) the federal tax identification number of the corporation.


§ 2.03. Incorporation
(a) Corporate existence begins when the articles of organization become effective pursuant to section 1.23.

(b) The filing of the articles of organization with the state secretary shall be conclusive evidence that the incorporators satisfied all conditions precedent to incorporation and that the corporation has been incorporated under this chapter, except in a proceeding by the commonwealth to challenge the validity of the corporation.


§ 2.04. Liability for Pre-Incorporation Transactions
All persons purporting to act as or on behalf of a corporation, knowing there was no incorporation under this chapter shall be jointly and severally liable for all liabilities created while so acting.
§ 2.05. Organization of Corporation
(a) The organization of the corporation shall be completed as follows:

(1) The incorporator or incorporators may hold an organizational meeting before or after incorporation at the call of a majority of the incorporators at which by-laws shall be adopted and the initial directors, a president, treasurer and secretary, shall be elected.

(2) If no organizational meeting of the incorporators is held, the initial directors named in the articles of organization shall hold an organizational meeting after incorporation at the call of a majority of the directors at which by-laws shall be adopted and a president, treasurer and secretary shall be elected.

(3) At the organization meeting of the incorporators or the directors, additional officers may be appointed and any other business may be transacted which is properly brought before the meeting.

(b) Action required or permitted by this chapter to be taken by incorporators at an organizational meeting may be taken without a meeting if the action taken is evidenced by one or more written consents describing the action taken and signed by each incorporator.

(c) An organizational meeting may be held within and without the commonwealth.


§ 2.06. Bylaws
(a) The incorporators or board of directors of a corporation shall adopt initial bylaws for the corporation.

(b) The bylaws of a corporation may contain any provision for managing the business and regulating the affairs of the corporation that is not inconsistent with law or the articles of organization.


§ 2.07. Emergency Bylaws
(a) Unless the articles of organization provide otherwise, the board of directors of a corporation may adopt bylaws to be effective only in an emergency defined in subsection (d). The emergency bylaws, which are subject to amendment or repeal by the shareholders, may make all provisions necessary for managing the corporation during the emergency, including:

(1) appointment of successors to any of the officers, directors, employees or agents;

(2) relocation of the principal office or designation of alternative officers;

(3) procedures for calling and giving notice of a meeting of the board of directors;

(4) quorum requirements for the meeting; and

(5) designation of additional or substitute directors.

(b) All provisions of the regular bylaws consistent with the emergency bylaws remain effective during the emergency. The emergency bylaws are not effective after the emergency ends.

(c) Corporate action taken in good faith in accordance with the emergency bylaws:

(1) binds the corporation; and

(2) may not be used to impose liability on a corporate director, officer, employee, or agent.

(d) An emergency exists for purposes of this section if a quorum of the corporation's directors cannot readily be assembled because of some catastrophic event.

ARTICLE 3
§ 3.01. Purposes
Every corporation incorporated under this chapter has the purpose of engaging in any lawful business unless a more limited purpose is set forth in its articles of organization.
§ 3.02. General Powers
(a) Unless its articles of organization provide otherwise, every corporation shall have perpetual duration and succession in its corporate name and has the same powers as an individual to do all things necessary or convenient to carry out its business and affairs, including without limitation power:

(1) to sue and be sued, complain and defend in its corporate name;

(2) to have a corporate seal, which may be altered at will, and to use it, or a facsimile of it, by impressing or affixing it or in any other manner reproducing it;

(3) to make and amend bylaws, not inconsistent with its articles of organization or with the laws of the commonwealth, for managing the business and regulating the affairs of the corporation;

(4) to purchase, receive, borrow, lease or otherwise acquire, to own, hold, lend, improve, use, transfer and otherwise deal with, and to sell, convey, mortgage, pledge, lease, exchange and otherwise dispose of, all or any part of its real or personal property, or any legal or equitable interest in such property, wherever located;

(5) to purchase, receive, borrow or otherwise acquire, to use, own, hold, sell, lend, transfer and otherwise dispose of, and to pledge, exchange and otherwise deal in and with, its own shares;

(6) to purchase, receive, subscribe for, or otherwise acquire, to own, hold, vote, use, sell, mortgage, lend, pledge, or otherwise dispose of; and deal in and with shares or other interests in, or obligations of, any other entity;

(7) to make contracts and guarantees, incur liabilities, borrow money, issue its notes, bonds, and other obligations, which may be convertible into or include the option to purchase other securities of the corporation, and secure any of its obligations by mortgage or pledge of any of its property, franchises, or income;

(8) to lend money, invest and reinvest its funds, and receive and hold real and personal property as security for repayment;

(9) to be a promoter, partner, member, associate, or manager of any partnership, joint venture, trust, or other entity;

(10) to conduct its business, locate offices, and exercise the powers granted by this chapter within or without the commonwealth or the United States;

(11) to elect directors and appoint officers, employees, and agents of the corporation, define their duties, fix their compensation, and lend them money and credit;

(12) to pay pensions and establish pension plans, pension trusts, profit sharing plans, share bonus plans, share option plans, and benefit or incentive plans for any or all of the current or former directors, officers, employees, and agents of the corporation or any other corporation or entity in which it has an interest;

(13) to make donations for the public welfare or for charitable, religious, scientific, civic or educational purposes;

(14) to transact any lawful business that will aid governmental policy; and

(15) to make payments or donations, or do any other act, not inconsistent with law, that furthers the business and affairs of the corporation.

(b) Unless its articles of organization provide otherwise, a contract of guarantee or suretyship made by a corporation with respect to the obligation of another entity, (i) all of the equity interest in which is owned, directly or indirectly, by the contracting corporation, or (ii) which owns, directly or indirectly, all of the outstanding stock of the contracting corporation, or (iii) all of the equity interest in which is owned, directly or indirectly, by an entity which owns, directly or indirectly, all of the outstanding stock of the contracting corporation, shall be deemed necessary or convenient to carry out the business and affairs of the contracting corporation.
§ 3.03. Emergency Powers
(a) In anticipation of or during an emergency defined in subsection (d), unless emergency bylaws or other bylaws that specifically refer to this section provide otherwise, the board of directors of a corporation may:

(1) modify lines of succession to accommodate the incapacity of any director, officer, employee, or agent; and

(2) relocate the principal office, designate alternative principal offices or regional offices, or authorize the officers to do so.

(b) During an emergency defined in subsection (d), unless emergency bylaws or other bylaws that specifically refer to this section provide otherwise:

(1) notice of a meeting of the board of directors need be given only to those directors whom it is practicable to reach and may be given in any practicable manner, including by publication and radio; and

(2) those directors present may reduce the quorum requirement and/or treat one or more officers of the corporation present at such a meeting as directors for the meeting, in order of rank and within the same rank in order of seniority, as necessary to achieve a quorum.

(c) Corporate action taken in good faith during an emergency under this section to further the ordinary business affairs of the corporation:

(1) binds the corporation; and

(2) may not be used to impose liability on a corporate director, officer, employee, or agent.

(d) An emergency exists for purposes of this section if a quorum of the corporation's directors cannot readily be assembled because of some catastrophic event.


§ 3.04. Ultra Vires
(a) Except as provided in subsection (b), the validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act.

(b) A corporation's power to act may be challenged:

(1) in a proceeding by a shareholder against the corporation to enjoin the act;

(2) in a proceeding by the corporation, directly, derivatively, or through a receiver, trustee, or other legal representative, against an incumbent or former director, officer, employee, or agent of the corporation; or

(3) in a proceeding by the attorney general under section 14.30.

ARTICLE 4
§ 4.01. Corporate Name
(a) A corporate name:

(1) shall contain the word “corporation, “incorporated,” “company,” or “limited” or the abbreviation “corp.,” “inc., or ltd.,” or words or abbreviations of like import in another language; and

(2) may not contain language stating or implying that the corporation is organized for a purpose other than that permitted by section 3.01. and its articles of organization.

(b) Except as authorized by subsections (c) and (d), a corporate name may not be the same as, or so similar that it is likely to be mistaken for:

(1) the corporate name or trade name of a corporation organized, authorized to transact business or otherwise lawfully conducting business in the commonwealth;

(2) a corporate name reserved under section 4.02;

(3) the fictitious name adopted by a foreign corporation or entity authorized to transact business or otherwise lawfully conducting business in the commonwealth because its real or trade name is unavailable;

(4) the corporate name or trade name of a not-for-profit corporation organized, authorized to conduct its activities or otherwise lawfully conducting its activities in the commonwealth;

(5) the name or trade name of a partnership, business trust or other entity organized, authorized to transact business or otherwise lawfully conducting business in the commonwealth; or

(6) a trademark or service mark registered with the secretary of state under chapter 110B or 110G.

(c) A person may apply to the secretary of state for authorization to use a corporate name that does not comply with the requirements of subsection (b). The secretary of state shall authorize use of the name applied for if:

(1) the other user consents to the use in writing and, if required by the secretary of state, submits an undertaking in form satisfactory to the secretary of state to change its name or mark to a name or mark that is not the same as or so similar that it is likely to be mistaken for the name of the applicant; or

(2) the applicant delivers to the secretary of state a certified copy of the final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in the commonwealth.

(d) A corporation may use the name, including the fictitious name, or mark of another entity that is used in the commonwealth if the other entity is organized, authorized to transact business or otherwise lawfully conducting business in the commonwealth and the proposed user corporation:

(1) has merged with the other entity; or

(2) has been formed by reorganization of the other entity; or

(3) has acquired all or substantially all of the assets, including the name and marks, of the other entity.

(e) Within 90 days after articles of organization or articles of amendment affecting a change in the name of a corporation are filed with the secretary of state, any person who is registered, qualified or carrying on business in the commonwealth at the time or who has reserved a name under section 4.02 may protest in writing to the secretary of state that the name assumed by the corporation is the same as or so similar that it is likely to be mistaken for the name of such person in violation of this section. In such event, if the secretary of state decides to conduct a hearing regarding the dispute, he shall give notice thereof as soon as possible to the protesting party and the corporation which assumed the name. If as a result of the hearing or otherwise, the secretary of state determines that the assumption of the corporate name violates this section, he shall file a statement withdrawing his approval of the articles of organization or articles of amendment insofar as they relate to the name assumed by the corporation and shall give written notice thereof to the protesting party and the corporation. The withdrawal of approval shall take effect on the date specified by the secretary of state, which shall be not later than 180 days after the filing which was protested. After the effective date of the withdrawal of approval, the corporation shall have no right to use its assumed name and may be enjoined from doing business under such name by the superior court upon application of any interested person.


§ 4.02. Reserved Name
(a) A person may reserve the exclusive use of a corporate name, including a fictitious name for a foreign corporation whose corporate name is not available, by delivering an application to the secretary of state for filing. The application shall set forth the name and address of the applicant and the name proposed to be reserved. If the secretary of state finds that the corporate name applied for is available, he shall reserve the name for the applicant's exclusive use for a 60-day period and, upon the applicant's written request within the 60-day period, extend the reservation for an additional 60-day period.

(b) The holder of a reserved corporate name may transfer the reservation to another person by delivering to the secretary of state a signed notice of the transfer that states the name and address of the transferee.



ARTICLE 5
§ 5.01. Registered Office and Registered Agent
Each corporation shall continuously maintain in the commonwealth:

(1) a registered office that may, but need not be, the same as any of its places of business; and

(2) a registered agent who may be any of the following individuals or entities whose business office is also the registered office of the corporation:

(i) an individual, including the secretary or another officer of the corporation;

(ii) a domestic corporation or not-for-profit domestic corporation; or

(iii) a foreign corporation or not-for-profit foreign corporation qualified to do business in this commonwealth.


§ 5.02. Change of Registered Office or Registered Agent
(a) A corporation may change its registered office or registered agent by delivering to the secretary of state for filing a statement of change that sets forth:

(1) the name of the corporation;

(2) the street address of its current registered office;

(3) if the current registered office is to be changed, the street address of the new registered office;

(4) the name of its current registered agent;

(5) if the current registered agent is to be changed, the name of the new registered agent and the new agent's written consent, either on the statement or attached to it, to the appointment; and

(6) that after the change or changes are made, the street addresses of its registered office and the business office of its registered agent will be identical.

(b) If a registered agent changes the street address of his business office, he may change the street address of the registered office of any corporation for which he is the registered agent by notifying the corporation in writing of the change and signing, either manually or in facsimile, and delivering to the state secretary for filing a statement of change that complies with the requirements of subsection (a) and recites that the corporation has been notified of the change. If the street addresses of more than one corporation are being changed at the same time, there may be included in a single statement the names of all corporations the street addresses of the registered office of which are being changed.


§ 5.03. Resignation of Registered Agent
(a) The registered agent of a corporation may resign his agency appointment by signing and delivering to the secretary of state for filing a statement of resignation. The registered agent shall furnish a copy of such statement to the corporation. The statement of resignation may include a statement that the registered office is also discontinued.

(b) The agency appointment is terminated, and the registered office discontinued if so provided, on the thirty-first day after the date on which the statement was filed.


§ 5.04. Service on Corporation
(a) A corporation's registered agent is the corporation's agent for service of process, notice, or demand required or permitted by law to be served on the corporation.

(b) Service on a corporation shall be effected and shall be perfected in accordance with the Massachusetts Rules of Civil Procedure and applicable provisions of the General Laws.



ARTICLE 6
PART A. SHARES
§ 6.01. Authorized Shares
(a) The articles of organization shall prescribe the total number of shares the corporation is authorized to issue. The articles of organization also shall, before the issuance of any shares of a class or series, prescribe the number of authorized shares of the class or series, the distinguishing designation thereof and the preferences, limitations and relative rights identical with those of other shares of the same class or series, except that if a class consists of more than 1 series, all shares of each series within the class shall have identical preferences, limitations and relative rights with those of other shares within such series and may, but need not, have some or all preferences, limitations and relative rights which are identical with those of shares of other series within the class or any other class.

(b) The articles of organization shall authorize 1 or more classes or series of shares that together have unlimited voting rights, and 1 or more classes or series of shares, which may be the same class or series or classes and series as those with voting rights, that together are entitled to receive the net assets of the corporation upon dissolution.

(c) The articles of organization may authorize 1 or more classes or series of shares that:

(1) have special, conditional, or limited voting rights, or no right to vote, except to the extent prohibited by this chapter;

(2) are redeemable or convertible as specified in the articles of organization (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; (iii) in a designated amount or in an amount determined in accordance with a designated formula or by reference to extrinsic data or events;

(3) entitle the holders to distributions calculated in any manner, including dividends that may be cumulative, noncumulative, or partially cumulative;

(4) have preference over any other class or series of shares with respect to distributions, including dividends and distributions upon the dissolution of the corporation.

(d) The description of the designations, preferences, limitations, and relative rights of share classes and series in subsection (c) is not exhaustive.




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