Operation without board of directors; elimination and reinstatement of board.
1. A close corporation may operate without a board of directors if the certificate of incorporation contains a statement to that effect.
2. An amendment to the certificate of incorporation eliminating a board of directors must be approved:
(a) By all the shareholders of the corporation, whether or not otherwise entitled to vote on amendments; or
(b) If no shares have been issued, by all subscribers for shares, if any, or if none, by the incorporators.
3. While a corporation is operating without a board of directors as authorized by subsection 1:
(a) All corporate powers must be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, the shareholders.
(b) Unless the articles of incorporation provide otherwise:
(1) Action requiring the approval of the board of directors or of both the board of directors and the shareholders is authorized if approved by the shareholders; and
(2) Action requiring a majority or greater percentage vote of the board of directors is authorized if approved by the majority or greater percentage of votes of the shareholders entitled to vote on the action.
(c) A requirement by a state or the United States that a record delivered for filing contain a statement that specified action has been taken by the board of directors is satisfied by a statement that the corporation is a close corporation without a board of directors and that the action was approved by the shareholders.
(d) The shareholders by resolution may appoint one or more shareholders to sign records as designated directors.
4. An amendment to the articles of incorporation that deletes the provision which eliminates a board of directors must be approved by the holders of at least two-thirds of the votes of each class or series of shares of the corporation, voting as separate voting groups, whether or not otherwise entitled to vote on amendments. The amendment must specify the number, names and mailing addresses of the directors of the corporation or describe who will perform the duties of the board of directors.
Last modified: February 26, 2006