SB423: Bill Text

SB423,82,3 (4) Pleadings when demand rejected. If a derivative proceeding is commenced after a determination was made rejecting a demand by a member, the complaint shall allege with particularity facts establishing any of the following:

SB423,82,5 (a) That a majority of the board of directors did not consist of independent directors at the time that the determination was made.

SB423,82,6 (b) That the requirements of sub. (1) have not been met.

SB423,82,12 (5) Burden of proof. If a majority of the board of directors did not consist of independent directors at the time that the determination rejecting a demand was made, the corporation shall have the burden of proving that the requirements of sub. (1) have been met. If a majority of the board of directors consisted of independent directors at the time that the determination was made, the members shall have the burden of proving that the requirements of sub. (1) have not been met.

SB423,82,17 (6) Court-appointed panel. Upon motion by the corporation, the court may appoint a panel of one or more independent persons to determine whether maintenance of the derivative proceeding is in the best interests of the corporation. If a panel is appointed under this subsection, the members shall have the burden of proving that the requirements of sub. (1) have not been met.

SB423,82,20 181.0745 Derivative proceedings; discontinuance or settlement. A derivative proceeding may not be discontinued or settled without the court's approval.

SB423,82,23 181.0746 Derivative proceedings; payment of expenses. (1) Authority of court. On termination of the derivative proceeding, the court may do any of the following:

SB423,83,4 (a) Notwithstanding s. 814.04 (1), order the domestic corporation or foreign corporation to pay the plaintiff's reasonable expenses, including attorney fees, incurred in the derivative proceeding by the members who commenced or maintained the derivative proceeding if the court finds that the derivative proceeding has resulted in a substantial benefit to the domestic corporation or foreign corporation.

SB423,83,9 (b) Order the members who commenced or maintained the derivative proceeding to pay any defendant's reasonable expenses, including attorney fees, notwithstanding s. 814.04 (1), incurred in defending the derivative proceeding if the court finds that the derivative proceeding was commenced or maintained without reasonable cause or for an improper purpose.

SB423,83,15 (2) Security for expenses. In any action brought in the right of any corporation by fewer than 3% of the members, the defendants shall be entitled, upon application to the court, to require the plaintiffs to give security for the reasonable expenses, including attorney fees. The amount of the security may be increased or decreased by the court having jurisdiction over the action upon a showing that the security has or may become inadequate or excessive.

SB423,83,19 181.0747 Derivative proceedings; applicability. (1) To foreign corporations. In any derivative proceeding in the right of a foreign corporation, the matters covered by ss. 181.0741, 181.0742 and 181.0744 shall be governed by the laws of the jurisdiction of incorporation of the foreign corporation.

SB423,83,23 (2) To corporations without members. Unless the articles of incorporation or bylaws provided otherwise at the time of the act or omission complained of, ss. 181.0741 to 181.0746 apply to corporations without members, except that all references to "member" shall be read as "director".

SB423,83,25 Subchapter VIII Directors and officers

SB423,84,2 181.0801 Requirement for and duties of board. (1) Board required. A corporation shall have a board.

SB423,84,5 (2) Powers of board. Except as provided in this chapter or sub. (3), all corporate powers shall be exercised by or under the authority of, and the affairs of the corporation managed under the direction of, its board.

SB423,84,10 (3) Delegation. (a) The articles of incorporation or bylaws approved by the members, if any, may authorize a person to exercise some or all of the powers which would otherwise be exercised by a board. To the extent so authorized such a person shall have the duties and responsibilities of the board, and the directors shall be relieved to that extent from such duties and responsibilities.

SB423,84,12 (b) A person is not a member of the board solely because of powers delegated to that person under par. (a).

SB423,84,16 181.0802 Qualifications of directors. A director shall be an individual. The articles of incorporation or bylaws may prescribe other qualifications for directors. A director need not be a resident of this state or a member of the corporation unless the articles of incorporation or bylaws so prescribe.

SB423,84,19 181.0803 Number of directors. (1) Minimum number. A board shall consist of 3 or more individuals, with the number specified in or fixed in accordance with the articles of incorporation or bylaws.

SB423,84,22 (2) Changes in board size. The number of directors may be increased or, subject to sub. (1), decreased from time to time by amendment to, or in the manner provided in, the articles of incorporation or bylaws.

SB423,85,3 181.0804 Election, designation and appointment of directors. (1) Corporation with members. If the corporation has members, all of the directors except the initial directors shall be elected at the first annual meeting of members, and at each annual meeting thereafter, unless the articles of incorporation or bylaws provide some other time or method of election, or provide that some of the directors are appointed by some other person or are designated.

SB423,85,8 (2) Corporation without members. If the corporation does not have members, all of the directors except the initial directors shall be elected, appointed or designated as provided in the articles of incorporation or bylaws. If no method of designation or appointment is set forth in the articles of incorporation or bylaws, the directors other than the initial directors shall be elected by the board.

SB423,85,12 181.0805 Terms of directors generally. (1) In general. The articles of incorporation or bylaws shall specify the term of a director. In the absence of any term specified in the articles of incorporation or bylaws, the term of a director shall be one year. Directors may be elected for successive terms.

SB423,85,14 (2) Effect of changes on incumbent. A decrease in the number of directors or term of office does not shorten an incumbent director's term.

SB423,85,18 (3) Vacancies. Except as provided in the articles of incorporation or bylaws, the term of a director filling a vacancy in the office of a director elected by members expires at the next election of directors by members and the term of a director filling any other vacancy expires at the end of the unexpired term that the director is filling.

SB423,85,23 (4) Service after expiration of term. Except as provided in the articles of incorporation or bylaws, despite the expiration of a director's term, the director continues to serve, subject to ss. 181.0807 to 181.0810, until the director's successor is elected, designated or appointed and qualifies, or until there is a decrease in the number of directors.

SB423,85,25 181.0806 Staggered terms for directors. Directors may be divided into classes and the terms of office of the several classes need not be uniform.

SB423,86,3 181.0807 Resignation of directors. (1) Notice. A director may resign at any time by delivering written notice to the presiding officer of the board or to the president or secretary.

SB423,86,8 (2) When effective. A resignation is effective when the notice is received unless the notice specifies a later effective date. If a resignation is made effective at a later date, the board may make the effective date earlier and fill the pending vacancy before the effective date if the board provides that the successor does not take office until the effective date.

SB423,86,11 181.0808 Removal of directors elected by members or directors. Except as otherwise provided in the articles of incorporation or bylaws of a corporation, all of the following apply:

SB423,86,13 (1) Removal in general. The members may remove, with or without cause, one or more directors elected by them.

SB423,86,16 (2) Removal of directors elected by group. If a director is elected by a class, chapter or other organizational unit or by region or other geographic grouping, the director may be removed only by the members of that class, chapter, unit or grouping.

SB423,86,20 (3) Number of votes needed to remove. Except as provided in sub. (8), a director may be removed under sub. (1) or (2) only if the number of votes cast to remove the director would be sufficient to elect the director at a meeting to elect directors.

SB423,86,25 (4) Cumulative voting. If cumulative voting is authorized, a director may not be removed if the number of votes, or if the director was elected by a class, chapter, unit or grouping of members, the number of votes of that class, chapter, unit or grouping, sufficient to elect the director under cumulative voting is voted against the director's removal.

SB423,87,4 (5) Meeting. A director elected by members may be removed by the members only at a meeting called for the purpose of removing the director and the meeting notice must state that the purpose, or one of the purposes, of the meeting is removal of the director.

SB423,87,5 (6) Entire board. An entire board may be removed under subs. (1) to (5).

SB423,87,10 (7) Board-elected directors. A director elected by the board may be removed without cause by the vote of a majority of the directors then in office or such other number as is set forth in the articles of incorporation or bylaws. However, a director elected by the board to fill the vacancy of a director elected by the members may be removed without cause by the members, but not the board.

SB423,87,14 (8) Failure to attend meetings. If, at the beginning of a director's term on the board, the articles of incorporation or bylaws provide that the director may be removed for missing a specified number of board meetings, the board may remove the director for failing to attend the specified number of meetings.

SB423,87,19 181.0809 Removal of designated or appointed directors. (1) Designated directors. A designated director may be removed by an amendment to the articles of incorporation or bylaws deleting or changing the designation. The removal shall be effective on the effective date of the amendment to the articles of incorporation or bylaws, unless the amendment specifies a different date.

SB423,87,22 (2) Appointed directors. (a) Except as otherwise provided in the articles of incorporation or bylaws, an appointed director may be removed without cause by the person appointing the director.

SB423,87,25 (b) The person removing an appointed director shall do so by giving written notice of the removal to the appointed director and either the presiding officer of the board or the corporation's president or secretary.

SB423,88,2 (c) A removal under this subsection is effective when the notice under par. (b) is effective under s. 181.0141 unless the notice specifies a future effective date.

SB423,88,7 181.0810 Removal of directors by judicial proceeding. (1) Grounds for removal. The circuit court for the county where a corporation's principal office is located may remove a director of the corporation from office in a proceeding commenced either by the corporation or by its members holding at least 10% of the voting power of any class, if the court finds all of the following:

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.