§ 35-14-1003 — Amendment By Board Of Directors And Shareholders

35-14-1003 . Amendment by board of directors and shareholders. If a corporation has issued shares, an amendment to the articles of incorporation that be adopted in the following manner:
(1) The proposed amendment must first be adopted by the board of directors.
(2) (a) Except as provided in 35-14-1005 , 35-14-1007 , and 35-14-1008 , the amendment must then be approved by the shareholders. In submitting the proposed amendment to the shareholders for approval, the board of directors shall recommend that the shareholders approve the amendment unless:
(i) the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make the recommendation; or
(ii) 35-14-826 applies.
(b) If either subsection (2)(a)(i) or (2)(a)(ii) applies, the board shall inform the shareholders of the basis for its determination.
(3) The board of directors may set conditions for the approval of the amendment by the shareholders or for the effectiveness of the amendment.
(4) If the amendment is required to be approved by the shareholders and the approval is to be given at a meeting, the corporation shall notify each shareholder, regardless of whether entitled to vote, of the meeting of shareholders at which the amendment is to be submitted for approval. The notice must state that the purpose or one of the purposes of the meeting is to consider the amendment. The notice must contain or be accompanied by a copy of the amendment.
(5) Unless the articles of incorporation or the board of directors acting pursuant to subsection (3) requires a greater vote or a lesser vote, approval of the amendment requires the approval of a majority of the votes entitled to be cast on the amendment and, if any class or series of shares is entitled to vote as a separate group on the amendment, the approval of a majority of the votes entitled to be cast on the amendment by that voting group. The articles of incorporation may not provide a lower quorum for a voting group than shares representing a majority of the votes entitled to be cast on the matter by the voting group or a lesser vote for a voting group than is provided for in 35-14-725 (3).
(6) If as a result of an amendment of the articles of incorporation one or more shareholders of a domestic corporation would become subject to new interest holder liability, approval of the amendment requires the signing in connection with the amendment, by each affected shareholder, of a separate written consent to become subject to the new interest holder liability unless, in the case of a shareholder that already has interest holder liability, the terms and conditions of the new interest holder liability:
(a) are substantially identical to those of the existing interest holder liability; or
(b) are substantially identical to those of the existing interest holder liability other than changes that eliminate or reduce that interest holder liability.
(7) For purposes of 35-14-1009 and subsection (6) of this section, "new interest holder liability" means interest holder liability of a person resulting from an amendment of the articles of incorporation if:
(a) the person did not have interest holder liability before the amendment becomes effective; or
(b) the person had interest holder liability before the amendment becomes effective, the terms and conditions of which are changed when the amendment becomes effective.

Legislative History

En. Sec. 151, Ch. 271, L. 2019.