SB423: Bill Text

SB423,88,10 (a) That the director engaged in fraudulent or dishonest conduct, or gross abuse of authority or a final judgment has been entered finding that the director has violated a fiduciary duty or a duty under ss. 181.0831 to 181.0833.

SB423,88,11 (b) That removal is in the best interest of the corporation.

SB423,88,13 (2) Bar from serving. A court that removes a director may bar the director from serving on the board for a period prescribed by the court.

SB423,88,15 (3) Corporation as defendant. If members commence a proceeding under sub. (1), the corporation shall be made a party defendant.

SB423,88,22 181.0811 Vacancies. (1) Filling of vacancies. Unless otherwise provided in the articles of incorporation or bylaws, any vacancy occurring on the board, including a vacancy created by an increase in the number of directors, may be filled until the next succeeding annual election by the affirmative vote of a majority of the directors then in office, although less than a quorum. In the event that the board ceases to exist, and there are no members having voting rights, the members without voting rights have the power to elect a new board.

SB423,88,25 (2) Appointed directors. Unless the articles of incorporation or bylaws provide otherwise, if a vacant office was held by an appointed director, only the person who appointed the director may fill the vacancy.

SB423,89,4 (3) Designated directors. If a vacant office was held by a designated director, the vacancy shall be filled as provided in the articles of incorporation or bylaws. In the absence of an applicable article of incorporation or bylaw provision, the vacancy may not be filled by the board.

SB423,89,8 (4) When vacancy filled. A vacancy that will occur at a specific later date, because of a resignation effective at a later date under s. 181.0807 (2) or otherwise, may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs.

SB423,89,11 181.0820 Regular and special meetings. (1) In general. If the time and place of a board meeting is fixed by the bylaws or the board, the meeting is a regular meeting. All other meetings are special meetings.

SB423,89,13 (2) Location. A board may hold regular or special meetings in or outside of this state.

SB423,89,18 (3) Methods of conducting meeting. (a) Unless the articles of incorporation or bylaws provide otherwise, the board may permit any or all directors to participate in a regular or special meeting or in a committee meeting of the board by, or to conduct the meeting through the use of, any means of communication by which any of the following occurs:

SB423,89,20 1. All participating directors may simultaneously hear each other during the meeting.

SB423,89,23 2. All communication during the meeting is immediately transmitted to each participating director, and each participating director is able to immediately send messages to all other participating directors.

SB423,90,4 (b) If a meeting will be conducted through the use of any means described in par. (a), all participating directors shall be informed that a meeting is taking place at which official business may be transacted. A director participating in a meeting by any means described in par. (a) is considered to be present in person at the meeting. If requested by a director, minutes of the meeting shall be prepared and distributed to each director.

SB423,90,10 181.0821 Action without meeting. (1) Method. An action required or permitted to be taken at a board meeting may be taken without a meeting if a consent in writing setting forth the action is signed by all of the directors then in office. If the articles of incorporation so provide, an action required or permitted to be taken at a board meeting may be taken by written action signed by two-thirds of the directors then in office.

SB423,90,18 (2) Effectiveness. A consent under this section has the same force and effect as a vote of the board of directors taken at a meeting and may be described as such in any articles or document filed with the department under this chapter. The written action is effective when signed by the required number of directors, unless a different effective date and time are specified in the written consent. If written notice is required under sub. (3), the written action shall be effective on the date specified in the written consent or on the 10th day after the date on which written notice under sub. (3) is given, whichever is later.

SB423,90,24 (3) Notice; liability. If written action is permitted to be taken by less than all directors, all directors must be noticed immediately of the text of the written consent and of its effective date and time. Failure to provide notice under this section does not invalidate the action taken by written consent under this section. A director who does not sign or consent to the action taken by written consent is not liable for the action.

SB423,91,3 181.0822 Call and notice of meetings. (1) Regular meetings. Unless the articles of incorporation, bylaws or sub. (3) provides otherwise, regular meetings of the board may be held without notice.

SB423,91,6 (2) Special meetings. Unless the articles of incorporation, bylaws or sub. (3) provides otherwise, special meetings of the board must be preceded by at least 2 days' notice to each director of the date, time and place, but not the purpose, of the meeting.

SB423,91,11 (3) Corporations without members. In corporations without members, any board action to remove a director or to approve a matter that would require approval by the members if the corporation had members, shall not be valid unless each director is given at least 7 days' written notice that the matter will be voted upon at a board meeting or unless notice is waived under s. 181.0823.

SB423,91,14 (4) Method of giving notice. Unless the articles of incorporation or bylaws provide otherwise, the presiding officer of the board, the president or 20% of the directors then in office may call and give notice of a meeting of the board.

SB423,91,19 181.0823 Waiver of notice. (1) Written waivers. A director may waive any notice required by this chapter, the articles of incorporation or the bylaws before or after the date and time stated in the notice. Except as provided in sub. (2), the waiver must be in writing, signed by the director entitled to the notice, and filed with the minutes or the corporate records.

SB423,91,24 (2) Effect of attendance or participation. A director's attendance at or participation in a meeting waives any required notice of the meeting unless the director upon arriving at the meeting or before the vote on a matter not noticed in conformity with this chapter, the articles of incorporation or the bylaws objects to lack of notice and does not thereafter vote for or assent to the objected to action.

SB423,92,3 181.0824 Quorum and voting. (1) Quorum. Except as otherwise provided in this chapter, the articles of incorporation or the bylaws, a quorum of a board consists of a majority of the directors in office immediately before a meeting begins.

SB423,92,7 (2) Voting. If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the board unless this chapter, the articles of incorporation or the bylaws require the vote of a greater number of directors.

SB423,92,19 181.0825 Committees of the board. If the articles of incorporation or bylaws so provide, the board may adopt a resolution designating one or more committees. Each committee shall consist of 3 or more directors elected by the board of directors. To the extent provided by the resolution or in the articles of incorporation or in the bylaws, the committee may exercise the powers of the board with respect to the management of the affairs of the corporation, when the board is not meeting, except for electing officers or the filling of vacancies on the board or on committees created under this section. The board may elect one or more of its members as alternate members of a committee created under this section, who may take the place of absent members at any meeting of the committee. The designation of a committee and the delegation of authority to it does not relieve the board or any director of any responsibility imposed upon the board or director by law.

SB423,93,2 181.0831 Director conflict of interest. (1) When contract or transaction is not void or voidable. No contract or other transaction between a corporation and a director, or any entity in which a director is a director or officer or has a material financial interest, is void or voidable because of the relationship or interest or because the director is present at the meeting of the board or a committee that authorizes, approves or ratifies the contract or transaction or because the director's vote is counted for that purpose, if any of the following applies:

SB423,93,6 (a) The relationship or interest is disclosed or known to the board or committee that authorizes, approves or ratifies the contract or transaction and the contract or transaction was authorized, approved or ratified by a vote or consent sufficient for the purpose without counting the votes or consents of interested directors.

SB423,93,9 (b) The fact of such relationship or interest is disclosed or known to the members entitled to vote and they authorize, approve or ratify that contract or transaction by vote or written consent.

SB423,93,10 (c) The contract or transaction is fair and reasonable to the corporation.

SB423,93,13 (2) Quorum requirements. Common and interested directors may be counted in determining the presence of a quorum at a meeting of the board or a committee that authorizes, approves or ratifies a contract or transaction under sub. (1).

SB423,93,16 (3) Additional requirements. The articles of incorporation, the bylaws or a resolution of the board may impose additional requirements on conflict of interest transactions.

SB423,93,20 181.0832 Loans to directors and officers. (1) Requirements for loan or guarantee. Except as provided in sub. (3), a corporation may not lend money to or guarantee the obligation of a director or officer of the corporation unless any of the following occurs:

SB423,93,21 (a) The particular loan or guarantee is approved by the members.

SB423,93,24 (b) The corporation's board determines that the loan or guarantee benefits the corporation and either approves the specific loan or guarantee or a general plan authorizing loans and guarantees.

SB423,94,2 (2) Effect of violations. A violation of this section does not affect the borrower's liability on the loan.

SB423,94,6 (3) Limited applicability. This section does not apply to an advance to a director or officer that is permitted by s. 181.0874 or 181.0877 (3) or that is made to defray expenses incurred by the director or officer in the ordinary course of the corporation's business.

SB423,94,14 181.0833 Liability for unlawful distributions. (1) When liable. Except as provided in sub. (3), a director who votes for or assents to a distribution made in violation of subch. XIII or the articles of incorporation is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating subch. XIII or the articles of incorporation, if it is established that the director's vote or assent constitutes conduct described by s. 181.0855 (1) (a), (b), (c) or (d). In any proceeding brought under this section, a director has all of the defenses ordinarily available to a director.

SB423,94,16 (2) Right to contribution. A director who is liable under sub. (1) for an unlawful distribution is entitled to contribution from all of the following persons:

SB423,94,18 (a) Every other director who could be held liable under sub. (1) for the unlawful distribution.

SB423,94,20 (b) Each member, for the amount that the member accepted knowing that the distribution was made in violation of subch. XIII or the articles of incorporation.

SB423,94,22 (3) When proceeding barred. A proceeding under this section is barred unless it is brought within 2 years after the date on which the distribution was made.

SB423,94,25 181.0840 Officers. (1) Principal officers. Unless otherwise provided in the articles of incorporation or bylaws, a corporation shall have a president, a secretary, a treasurer and such other officers as are appointed by the board.

SB423,95,2 (2) Assistant officers. A duly appointed officer may appoint one or more officers or assistant officers if authorized by the bylaws or the board.

SB423,95,4 (3) Multiple offices. The same individual may simultaneously hold more than one office in a corporation.

SB423,95,9 181.0841 Duties and authority of officers and agents. Each officer or agent has the authority and shall perform the duties set forth in the bylaws or, to the extent consistent with the bylaws, the duties and authority prescribed in a resolution of the board or by direction of an officer authorized by the board to prescribe the duties and authority of other officers.

SB423,95,17 181.0843 Resignation and removal of officers. (1) Resignation. An officer may resign at any time by delivering notice to the corporation that complies with s. 181.0141. The resignation is effective when the notice is delivered, unless the notice specifies a later effective date and the corporation accepts the later effective date. If a resignation is effective at a later date, the board, or the officer authorized by the bylaws or the board to appoint the resigning officer, may fill the pending vacancy before the effective date if the appointment provides that the successor may not take office until the effective date.

SB423,95,21 (2) Removal. The board may remove any officer and, unless restricted by the bylaws or by the board, an officer may remove any officer or assistant officer appointed by that officer under s. 181.0840 (2), at any time, with or without cause and notwithstanding the contract rights, if any, of the officer removed.

SB423,95,23 181.0844 Contract rights of officers. (1) Effect of appointment. The appointment of an officer does not itself create contract rights.

SB423,96,3 (2) Effect of removal or resignation. Except as provided in s. 181.0843 (2), an officer's resignation or removal is subject to any remedies provided by any contract between the officer and the corporation or otherwise provided by law.

SB423,96,9 181.0850 Reliance by directors or officers. Unless the director or officer has knowledge that makes reliance unwarranted, a director or officer, in discharging his or her duties to the corporation, may rely on information, opinions, reports or statements, any of which may be written or oral, formal or informal, including financial statements and other financial data, if prepared or presented by any of the following:

SB423,96,12 (1) Officers and employes. An officer or employe of the corporation whom the director or officer believes in good faith to be reliable and competent in the matters presented.

SB423,96,15 (2) Professionals and experts. Legal counsel, public accountants or other persons as to matters the director or officer believes in good faith are within the person's professional or expert competence.

SB423,96,18 (3) Committees. In the case of reliance by a director, a committee of the board of directors of which the director is not a member if the director believes in good faith that the committee merits confidence.

SB423,96,22 181.0853 Consideration of interests in addition to members' interests. In discharging his or her duties to the corporation and in determining what he or she believes to be in the best interests of the corporation, a director or officer may, in addition to considering the effects of any action on members, consider the following:

SB423,96,24 (1) Employes, suppliers and customers. The effects of the action on employes, suppliers and customers of the corporation.

SB423,97,2 (2) Communities. The effects of the action on communities in which the corporation operates.

SB423,97,3 (3) Other. Any other factors that the director or officer considers pertinent.

SB423,97,11 181.0855 Limited liability of directors and officers. (1) In general. Except as provided in subs. (2) and (3), a director or officer is not liable to the corporation, its members or creditors, or any person asserting rights on behalf of the corporation, its members or creditors, or any other person, for damages, settlements, fees, fines, penalties or other monetary liabilities arising from a breach of, or failure to perform, any duty resulting solely from his or her status as a director or officer, unless the person asserting liability proves that the breach or failure to perform constitutes any of the following:

SB423,97,14 (a) A wilful failure to deal fairly with the corporation or its members in connection with a matter in which the director or officer has a material conflict of interest.

SB423,97,17 (b) A violation of criminal law, unless the director or officer had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful.

SB423,97,19 (c) A transaction from which the director or officer derived an improper personal profit or benefit.

SB423,97,20 (d) Wilful misconduct.

SB423,97,22 (2) Exceptions. Except as provided in sub. (3), this section does not apply to any of the following:

SB423,97,24 (a) A civil, criminal, administrative or investigatory proceeding brought by or on behalf of any governmental unit, authority or agency.

SB423,98,3 (b) A proceeding brought by any person for a violation of state or federal law where the proceeding is brought pursuant to an express private right of action created by state or federal statute.

SB423,98,4 (c) The liability of a director under ss. 181.0832 and 181.0833.

SB423,98,7 (3) Governmental entity acting in capacity as private party. Subsection (2) (a) and (b) does not apply to a proceeding brought by a governmental unit, authority or agency in its capacity as a private party or contractor.

SB423,98,14 181.0860 Statements of changes in directors or principal officers. (1) Changes in directors or principal officers. Whenever initial directors and principal officers are selected, or changes are made in the directors or principal officers of a corporation, the corporation may file with the department a statement that includes the names and addresses of all of the directors or principal officers, or both if there have been changes in both. The information in the statement shall be current as of the date on which the statement is signed on behalf of the corporation.

SB423,98,17 (2) Resignation notices. A director who resigns under s. 181.0807 or a principal officer who resigns under s. 181.0843 (1) may file a copy of the resignation notice with the department.

SB423,98,19 181.0871 Definitions applicable to indemnification and insurance provisions. In ss. 181.0871 to 181.0883:

SB423,98,22 (1) "Corporation" means a domestic corporation and any domestic or foreign predecessor of a domestic corporation where the predecessor corporation's existence ceased upon the consummation of a merger or other transaction.

SB423,98,23 (2) "Director or officer" means any of the following:

SB423,98,24 (a) An individual who is or was a director or officer of a corporation.

SB423,99,5 (b) An individual who, while a director or officer of a corporation, is or was serving at the corporation's request as a director, officer, partner, trustee, member of any governing or decision-making committee, manager, employe or agent of another corporation or foreign corporation, limited liability company, partnership, joint venture, trust or other enterprise.

SB423,99,9 (c) An individual who, while a director or officer of a corporation, is or was serving an employe benefit plan because his or her duties to the corporation also impose duties on, or otherwise involve services by, the individual to the plan or to participants in or beneficiaries of the plan.

SB423,99,11 (d) Unless the context requires otherwise, the estate or personal representative of a director or officer.

SB423,99,13 (3) "Expenses" include fees, costs, charges, disbursements, attorney fees and any other expenses incurred in connection with a proceeding.

SB423,99,16 (4) "Liability" includes the obligation to pay a judgment, settlement, penalty, assessment, forfeiture or fine, including any excise tax assessed with respect to an employe benefit plan, and reasonable expenses.

SB423,99,18 (5) "Party" includes an individual who was or is, or who is threatened to be made, a named defendant or respondent in a proceeding.

SB423,99,22 (6) "Proceeding" means any threatened, pending or completed civil, criminal, administrative or investigative action, suit, arbitration or other proceeding, whether formal or informal, which involves foreign, federal, state or local law and which is brought by or in the right of the corporation or by any other person.

SB423,99,25 181.0872 Mandatory indemnification. (1) In general. A corporation shall indemnify a director or officer, to the extent that he or she has been successful on the merits or otherwise in the defense of a proceeding, for all reasonable expenses incurred in the proceeding if the director or officer was a party because he or she is a director or officer of the corporation.

SB423,100,8 (2) Exceptions. (a) In cases not included under sub. (1), a corporation shall indemnify a director or officer against liability incurred by the director or officer in a proceeding to which the director or officer was a party because he or she is a director or officer of the corporation, unless liability was incurred because the director or officer breached or failed to perform a duty that he or she owes to the corporation and the breach or failure to perform constitutes any of the following:

SB423,100,11 1. A wilful failure to deal fairly with the corporation or its members in connection with a matter in which the director or officer has a material conflict of interest.

SB423,100,14 2. A violation of the criminal law, unless the director or officer had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful.

SB423,100,16 3. A transaction from which the director or officer derived an improper personal profit or benefit.

SB423,100,17 4. Wilful misconduct.

SB423,100,19 (b) Determination of whether indemnification is required under this subsection shall be made under s. 181.0873.

SB423,100,23 (c) The termination of a proceeding by judgment, order, settlement or conviction, or upon a plea of no contest or an equivalent plea, does not, by itself, create a presumption that indemnification of the director or officer is not required under this subsection.