Current Status Bill Number:3917 Ratification Number:451 Act Number:328 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:19970410 Primary Sponsor:Klauber All Sponsors:Klauber Drafted Document Number:BBM\9345JM.97 Date Bill Passed both Bodies:19980603 Date of Last Amendment:19970520 Governor's Action:S Date of Governor's Action:19980609 Subject:Public corporation, voting shares, shareholders, articles of incorporation; owner rights, Businesses and Corporations
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
------ 19980617 Act No. A328
------ 19980609 Signed by Governor
------ 19980604 Ratified R451
Senate 19980603 Read third time, enrolled for
ratification
Senate 19980602 Read second time
Senate 19980602 Recalled from Committee 11 SJ
Senate 19970521 Introduced, read first time, 11 SJ
referred to Committee
House 19970521 Read third time, sent to Senate
House 19970520 Amended, read second time
House 19970514 Debate adjourned until
Tuesday, 19970520
House 19970508 Committee report: Favorable with 25 HJ
amendment
House 19970410 Introduced, read first time, 25 HJ
referred to Committee
View additional legislative information at the LPITS web site.
(A328, R451, H3917)
AN ACT TO AMEND SECTION 33-6-240, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE SOUTH CAROLINA BUSINESS CORPORATIONS ACT OF 1988 AND SHARE OPTIONS, SO AS TO PROVIDE THAT, IN THE CASE OF A PUBLIC CORPORATION, THE TERMS AND CONDITIONS OF RIGHTS, OPTIONS, OR WARRANTS MAY INCLUDE RESTRICTIONS OR CONDITIONS THAT PRECLUDE OR LIMIT THE EXERCISE, TRANSFER, OR RECEIPT OF THE RIGHTS, OPTIONS, OR WARRANTS BY THE HOLDER OR HOLDERS OR BENEFICIAL OWNER OR OWNERS OF A SPECIFIED NUMBER OR PERCENTAGE OF THE OUTSTANDING VOTING SHARES OF THE PUBLIC CORPORATION OR BY ANY TRANSFEREE OR ANY SUCH HOLDER OR OWNER, OR THAT INVALIDATE OR VOID THE RIGHTS, OPTIONS, OR WARRANTS HELD BY THE HOLDER OR OWNER OR BY THE TRANSFEREE; TO AMEND SECTION 33-7-102, RELATING TO THE "SOUTH CAROLINA BUSINESS CORPORATIONS ACT OF 1988", SHAREHOLDERS, AND SPECIAL MEETINGS, SO AS TO PROVIDE FOR THE CASE OF A CORPORATION WHICH IS NOT A PUBLIC CORPORATION OR OF A PUBLIC CORPORATION MAKING ELECTION IN ITS ARTICLES OF INCORPORATION; TO AMEND SECTION 33-7-200, RELATING TO THE "SOUTH CAROLINA BUSINESS CORPORATIONS ACT OF 1988", VOTING, AND SHAREHOLDERS' LIST FOR MEETING, SO AS TO PROVIDE THAT THE SHAREHOLDERS' LIST MUST BE AVAILABLE FOR INSPECTION BY ANY SHAREHOLDER, BEGINNING IN THE CASE OF CORPORATIONS WHICH ARE NOT PUBLIC CORPORATIONS, ON THE DATE ON WHICH NOTICE OF THE MEETING IS GIVEN FOR WHICH THE LIST WAS PREPARED AND, IN THE CASE OF PUBLIC CORPORATIONS, NOT LATER THAN THE FIFTH BUSINESS DAY FOLLOWING SUCH DATE, IN EITHER CASE, CONTINUING THROUGH THE MEETING; TO AMEND SECTION 33-8-103, RELATING TO THE "SOUTH CAROLINA BUSINESS CORPORATIONS ACT OF 1988" AND THE NUMBER AND ELECTION OF DIRECTORS, SO AS TO APPLY CERTAIN PROVISIONS TO A CORPORATION WHICH IS NOT A PUBLIC CORPORATION; TO AMEND SECTION 33-10-103, RELATING TO THE "SOUTH CAROLINA BUSINESS CORPORATIONS ACT OF 1988" AND AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS BY THE BOARD OF DIRECTORS AND THE SHAREHOLDERS, SO AS TO APPLY CERTAIN PROVISIONS TO A CORPORATION WHICH IS NOT A PUBLIC CORPORATION; TO AMEND SECTION 33-11-104, RELATING TO THE "SOUTH CAROLINA BUSINESS CORPORATIONS ACT OF 1988" AND THE MERGER OF A SUBSIDIARY, SO AS TO APPLY CERTAIN PROVISIONS TO A CORPORATION WHICH IS NOT A PUBLIC CORPORATION; TO AMEND SECTION 33-12-101, RELATING TO THE "SOUTH CAROLINA BUSINESS CORPORATIONS ACT OF 1988", THE SALE OF ASSETS IN THE REGULAR COURSE OF BUSINESS, AND THE MORTGAGE OF ASSETS, SO AS TO, AMONG OTHER THINGS, PROVIDE THAT A PUBLIC CORPORATION, ON THE TERMS AND CONDITIONS AND FOR THE CONSIDERATION DETERMINED BY THE BOARD OF DIRECTORS, MAY TRANSFER ANY OR ALL OF ITS PROPERTY TO A CORPORATION, ALL THE SHARES OF WHICH ARE OWNED BY THE PUBLIC CORPORATION; TO AMEND SECTION 33-13-102, RELATING TO THE "SOUTH CAROLINA BUSINESS CORPORATIONS ACT OF 1988", DISSENTERS' RIGHTS, AND THE RIGHT TO DISSENT, SO AS TO PROVIDE THAT A SHAREHOLDER IS ENTITLED TO DISSENT FROM, AND OBTAIN PAYMENT OF THE FAIR VALUE OF, HIS SHARES, UPON THE APPROVAL OF A CONTROL SHARE ACQUISITION, IN THE CASE OF A CORPORATION WHICH IS NOT A PUBLIC CORPORATION, AND TO PROVIDE THAT NO DISSENTERS' RIGHTS ARE AVAILABLE FOR SHARES OF ANY CLASS OR SERIES OF SHARES WHICH, AT THE RECORD DATE FIXED TO DETERMINE SHAREHOLDERS ENTITLED TO RECEIVE NOTICE OF A VOTE AT THE MEETING OF SHAREHOLDERS TO ACT UPON THE AGREEMENT OF MERGER OR EXCHANGE, WERE EITHER LISTED ON A NATIONAL SECURITIES EXCHANGE OR DESIGNATED AS A NATIONAL MARKET SYSTEM SECURITY ON AN INTERDEALER QUOTATION SYSTEM BY THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.; AND TO AMEND SECTION 33-1-400, RELATING TO DEFINITIONS FOR THE "SOUTH CAROLINA BUSINESS CORPORATIONS ACT OF 1988", SO AS TO PROVIDE A DEFINITION FOR "PUBLIC CORPORATION" AND DEFINE IT TO MEAN A CORPORATION, A CLASS OF WHOSE EQUITY SECURITIES ARE REGISTERED WITH A FEDERAL AGENCY UNDER THE SECURITIES EXCHANGE ACT OF 1934 OR A SUCCESSOR ACT.
Be it enacted by the General Assembly of the State of South Carolina:
Terms, conditions of rights, options, warrants; etc.
SECTION 1. Section 33-6-240 of the 1976 Code is amended to read:
"Section 33-6-240. (A) A corporation may issue rights, options, or warrants for the purchase of shares of the corporation. The board of directors shall determine the terms upon which the rights, options, or warrants are issued, their form and content, and the consideration for which the shares are to be issued.
(B) In the case of a public corporation, the terms and conditions of such rights, options, or warrants may include, without limitation, restrictions or conditions that preclude or limit the exercise, transfer, or receipt of the rights, options, or warrants by the holder or holders or beneficial owner or owners of a specified number or percentage of the outstanding voting shares of the public corporation or by any transferee or any such holder or owner, or that invalidate or void the rights, options, or warrants held by the holder or owner or by the transferee. Determinations by the board of directors whether to impose, enforce, waive, or otherwise render ineffective any such restrictions or conditions may be judicially reviewed in an appropriate proceeding."
Shareholders, special meetings; nonpublic corporation; etc.
SECTION 2. Section 33-7-102(a)(2) of the 1976 Code is amended to read:
"(2) in the case of a corporation which is not a public corporation or of a public corporation which elects in its articles of incorporation, if the holders of at least ten percent of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date, and deliver to the corporation's secretary one or more written demands for the meeting describing the purpose for which it is to be held."
Shareholders' list; nonpublic, public corporations
SECTION 3. Section 33-7-200(b) of the 1976 Code is amended to read:
"(b) The shareholders' list must be available for inspection by any shareholder, beginning, in the case of corporations which are not public corporations, on the date on which notice of the meeting is given for which the list was prepared and, in the case of public corporations, not later than the fifth business day following such date, in either case, continuing through the meeting, at the corporation's principal office or at place identified in the meeting notice in the city where the meeting is to be held. A shareholder, his agent, or attorney is entitled on written demand to inspect and, subject to the requirements of Section 33-16-102(c), to copy the list, during regular business hours and at his expense, during the period it is available for inspection."
Number, election of directors; nonpublic corporations
SECTION 4. Section 33-8-103(b) of the 1976 Code is amended to read:
"(b) In the case of a corporation which is not a public corporation, if a board of directors has power under the articles of incorporation or under a bylaw provision to fix or change the number of directors, the board may increase or decrease by thirty percent or less the number of directors last approved by the shareholders, but only the shareholders may increase or decrease by more than thirty percent the number of directors last approved by the shareholders."
Amendment of articles, bylaws; nonpublic corporations
SECTION 5. Section 33-10-103(d) of the 1976 Code is amended to read:
"(d) In the case of a corporation which is not a public corporation, if the holders of at least ten percent of any class of voting shares of the corporation propose amendments to the articles of incorporation, the board of directors shall submit the proposed amendments to the shareholders at the next possible special or annual meeting."
Merger of subsidiary; nonpublic corporations
SECTION 6. Section 33-11-104(d) of the 1976 Code is amended to read:
"(d) In the case of a corporation which is not a public corporation, the parent may not deliver articles of merger to the Secretary of State for filing until at least thirty days after the date it mailed a copy of the plan of merger to each shareholder of the subsidiary who did not waive the mailing requirement."
Sale, mortgage of assets; public corporation's transfer of its property; etc.
SECTION 7. Section 33-12-101 of the 1976 Code is amended to read:
"Section 33-12-101. (a) A corporation, on the terms and conditions and for the consideration determined by the board of directors, may:
(1) sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property in the usual and regular course of business; or
(2) mortgage, pledge, dedicate to the repayment of indebtedness (whether with or without recourse), or otherwise encumber all, or substantially all, of its property whether or not in the usual and regular course of business.
(b) A public corporation, on the terms and conditions and for the consideration determined by the board of directors, may transfer any or all of its property to a corporation, all the shares of which are owned by the public corporation.
(c) Unless the articles of incorporation require it, approval by the shareholders of a transaction described in subsection (a) or (b) is not required."
Dissenters' right to dissent; shareholder entitled to receive fair value of shares; etc.
SECTION 8. Section 33-13-102 of the 1976 Code is amended to read:
"Section 33-13-102. (A) A shareholder is entitled to dissent from, and obtain payment of the fair value of, his shares in the event of any of the following corporate actions:
(1) consummation of a plan of merger to which the corporation is a party (i) if shareholder approval is required for the merger by Section 33-11-103 or the articles of incorporation and the shareholder is entitled to vote on the merger or (ii) if the corporation is a subsidiary that is
merged with its parent under Section 33-11-104 or 33-11-108 or if the corporation is a parent that is merged with its subsidiary under Section 33-11-108;
(2) consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares are to be acquired, if the shareholder is entitled to vote on the plan;
(3) consummation of a sale or exchange of all, or substantially all, of the property of the corporation other than in the usual and regular course of business, if the shareholder is entitled to vote on the sale or exchange, including a sale in dissolution, but not including a sale pursuant to court order or a sale for cash pursuant to a plan by which all or substantially all of the net proceeds of the sale must be distributed to the shareholders within one year after the date of sale;
(4) an amendment of the articles of incorporation that materially and adversely affects rights in respect of a dissenter's shares because it:
(i) alters or abolishes a preferential right of the shares;
(ii) creates, alters, or abolishes a right in respect of redemption, including a provision respecting a sinking fund for the redemption or repurchase, of the shares;
(iii) alters or abolishes a preemptive right of the holder of the shares to acquire shares or other securities;
(iv) excludes or limits the right of the shares to vote on any matter, or to cumulate votes, other than a limitation by dilution through issuance of shares or other securities with similar voting rights; or
(v) reduces the number of shares owned by the shareholder to a fraction of a share if the fractional share so created is to be acquired for cash under Section 33-6-104; or
(5) in the case of corporations which are not public corporations, the approval of a control share acquisition under Article 1 of Chapter 2 of Title 35;
(6) any corporate action to the extent the articles of incorporation, bylaws, or a resolution of the board of directors provides that voting or nonvoting shareholders are entitled to dissent and obtain payment for their shares.
(B) Notwithstanding subsection (A), no dissenters' rights under this section are available for shares of any class or series of shares which, at the record date fixed to determine shareholders entitled to receive notice of a vote at the meeting of shareholders to act upon the agreement of merger or exchange, were either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc."
Definitions; Business Corporations Act; definition of "public corporation"
SECTION 9. Section 33-1-400 of the 1976 Code is amended by adding:
"(28) 'Public corporation' means a corporation, a class of whose equity securities are registered with a federal agency under the Securities Exchange Act of 1934 or a successor act to the Securities Exchange Act of 1934."
Time effective
SECTION 10. This act takes effect upon approval by the Governor.
Approved the 9th day of June, 1998.