§ 3-104

Maryland § 3-104

• Jurisdiction: Maryland
• Article gca: Corporations and Associations
• Title: 3

Text

(a) Notwithstanding any other provision of this subtitle, unless the charter or bylaws of a corporation provide otherwise by reference to this section or the subject matter of this section, the approval of the stockholders is not required for any:

(1) Transfer of assets by a corporation in the ordinary course of business actually conducted by it or as a distribution as defined in § 2–301 of this article;

(2) Mortgage, pledge, or creation of any other security interest in any or all of the assets of a corporation, whether or not in the ordinary course of its business;

(3) Transfer of assets by a corporation to one or more persons if all of the equity interests of the person or persons are owned, directly or indirectly, by the corporation;

(4) Transfer of assets by a corporation registered as an open–end investment company under the Investment Company Act of 1940, including a transfer between or among classes or series of stock of a corporation; or

(5) Transfer of assets by a corporation that is dissolved.

(b) Notwithstanding any other provisions of this subtitle, unless the charter or bylaws of a corporation provide otherwise by reference to this section or the subject matter of this section, the approval of the stockholders and articles of share exchange are not required for an exchange of shares of stock through voluntary action or under an agreement with the stockholders participating in the exchange.

(c) Notwithstanding any other provision of this subtitle, unless the charter or bylaws of a corporation provide otherwise by reference to this section or the subject matter of this section, the approval of the stockholders is not required for a transfer of assets that is collateral for securing a mortgage, pledge, or security interest if:

(1) The mortgagee, pledgee, or secured party exercises its rights under:

(i) Title 9 of the Maryland Uniform Commercial Code;

(ii) The Real Property Article; or

(iii) Other applicable law to effect the transfer of assets without the consent of the corporation; or

(2) The board of directors of the corporation authorizes an alternative sale of assets with the mortgagee, the pledgee, a secured party, or another person:

(i) That results in the reduction or elimination of the liabilities or obligations secured by the assets; and

(ii) For which the value of the assets is less than or equal to the amount of the liabilities or obligations being reduced or eliminated.

(d) The receipt of consideration by the corporation or its stockholders in an alternative sale of assets in accordance with subsection (c)(2) of this section may not create a presumption that the value of the assets is greater than the amount of liabilities or obligations being eliminated or reduced for the purposes of this section.

(e) (1) This subsection does not apply to any proceeding against a corporation and another necessary party to enjoin a sale before the sale is completed.

(2) Subject to paragraph (3) of this subsection, failure to satisfy subsection (c)(2)(ii) of this section may not invalidate a sale if the transferee of the assets:

(i) Provided value for the assets, including the reduction or elimination of the liabilities or obligations secured by the assets; and

(ii) Acted in good faith.

(3) Paragraph (2) of this subsection may not be interpreted to eliminate any claim, including:

(i) A claim for monetary damages arising from the director failing to satisfy the standard of conduct for directors under § 2–405.1(c) of this article, including a claim by or in the right of the corporation; or

(ii) A claim for equitable relief.

(f) A transaction described in subsection (a), (b), or (c) of this section also may be effected as otherwise provided in this subtitle.