selected statutes.

Colorado Statutes – Colorado Business Corporations Act; Article 101-121

Disclaimer: This page is for reference purposes only and is not the official version of the Colorado statutes. You should not rely on it for any reason. You can find the official statutes provided by LexisNexis here.

Colorado Business Corporations

ARTICLE 101 – General Provisions

Editor’s note: Provisions relating to corporations were contained in articles 1 to 10 of this title prior to July 1, 1994. A comparative table showing the relocation of subject matter from articles 1 through 10 to articles 101 through 117 as a result of the recodification of the Colorado Corporation Code in 1993, effective July 1, 1994, is found in the comparative tables located in the back of the index.

Cross references: For definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

PART 1 – SHORT TITLE AND RESERVATION OF POWER

7-101-101. Short title. Articles 101 to 117 of this title shall be known and may be cited as the “Colorado Business Corporation Act”.

Source: L. 93: Entire article added, p. 732, § 1, effective July 1, 1994.

7-101-102. Reservation of power to amend or repeal. The general assembly has the power to amend or repeal all or part of articles 101 to 117 of this title at any time, and all domestic and foreign corporations subject to said articles shall be governed by the amendment or repeal.

Source: L. 93: Entire article added, p. 732, § 1, effective July 1, 1994.

PART 2 – Filing documents

7-101-201. Filing requirements. (1) Part 3 of article 90 of this title, providing for the filing of documents, applies to any document filed or to be filed by the secretary of state pursuant to articles 101 to 117 of this title.

(2) to (11) (Deleted by amendment, L. 2002, p. 1845, § 103, effective July 1, 2002; p. 1709, § 101, effective October 1, 2002.)

Source: L. 93: Entire article added, p. 732, § 1, effective July 1, 1994. L. 96: (6)(c) and (11) amended, p. 1310, § 1, effective June 1. L. 2000: (5) and (11) amended, p. 976, § 48, effective July 1. L. 2002: Entire section amended, p. 1845, § 103, effective July 1; entire section amended, p. 1709, § 101, effective October 1. L. 2003: (1) amended, p. 2313, § 218, effective July 1, 2004.

7-101-202. Forms – secretary of state to furnish upon request – repeal. (Repealed)

Source: L. 93: Entire article added, p. 734, § 1, effective July 1, 1994. L. 2003: (2) added by revision, pp. 2356, 2357, §§ 347, 348.

Editor’s note: Subsection (2) provided for the repeal of this section, effective July 1, 2004. (See L. 2003, pp. 2356, 2357.)

7-101-203. Filing, service, and copying fees – subpoenas. (Repealed)

Source: L. 93: Entire article added, p. 734, § 1, effective July 1, 1994. L. 98: (2) amended, p. 1324, § 21, effective June 1. L. 2002: Entire section repealed, p. 1861, § 163, effective July 1; entire section repealed, p. 1728, § 163, effective October 1.

7-101-204. Effective time and date of document. (Repealed)

Source: L. 93: Entire article added, p. 735, § 1, effective July 1, 1994. L. 96: IP(3) amended, p. 1310, § 2, effective June 1. L. 2002: Entire section repealed, p. 1861, § 163, effective July 1; entire section repealed, p. 1728, § 163, effective October 1.

7-101-205. Correcting filed document. (Repealed)

Source: L. 93: Entire article added, p. 736, § 1, effective July 1, 1994. L. 2002: Entire section repealed, p. 1861, § 163, effective July 1; entire section repealed, p. 1728, § 163, effective October 1.

7-101-206. Filing duty of secretary of state – manner of filing. (Repealed)

Source: L. 93: Entire article added, p. 736, § 1, effective July 1, 1994. L. 96: (2) amended, p. 1311, § 3, effective June 1. L. 2000: (2) amended, p. 977, § 49, effective July 1. L. 2002: Entire section repealed, p. 1861, § 163, effective July 1; entire section repealed, p. 1728, § 163, effective October 1.

7-101-207. Appeal from secretary of state’s refusal to file document. (Repealed)

Source: L. 93: Entire article added, p. 737, § 1, effective July 1, 1994. L. 96: (1) amended, p. 1311, § 4, effective June 1. L. 2002: Entire section repealed, p. 1861, § 163, effective July 1; entire section repealed, p. 1728, § 163, effective October 1.

7-101-208. Evidentiary effect of copy of filed document. (Repealed)

Source: L. 93: Entire article added, p. 737, § 1, effective July 1, 1994. L. 2002: Entire section repealed, p. 1861, § 163, effective July 1; entire section repealed, p. 1728, § 163, effective October 1.

7-101-209. Certificates issued by secretary of state. (Repealed)

7-101-210. Proof of delivery for filing. (Repealed)

Source: L. 94: Entire section added, p. 91, § 17, effective July 1. L. 96: (2) amended, p. 1311, § 5, effective June 1. L. 2002: Entire section repealed, p. 1861, § 163, effective July 1; entire section repealed, p. 1728, § 163, effective October 1.

PART 3 – Secretary of State

7-101-301 and 7-101-302. (Repealed)

Editor’s note: (1) This article was added in 1993. This part 3 was subsequently repealed in 2003, effective July 1, 2004, and was not amended prior to its repeal. For the text of this part 3 prior to 2004, consult the 2003 Colorado Revised Statutes.

(2) Section 7-101-302 provided for the repeal of this part 3, effective July 1, 2004. (See L. 2003, pp. 2356, 2357.)

PART 4 – Definitions

7-101-401. General definitions. As used in articles 101 to 117 of this title, unless the context otherwise requires:

(1) Repealed.

(2) “Affiliate” means any person that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, the person specified.

(3) “Articles of incorporation” includes amended articles of incorporation, restated articles of incorporation, and other instruments, however designated, on file in the records of the secretary of state, which have the effect of amending or supplementing in some respect the original or amended articles of incorporation.

(4) Repealed.

(5) “Authorized shares” means the shares of all classes which a domestic or foreign corporation is authorized to issue.

(5.5) “BENEFICIAL OWNER” MEANS A PERSON THAT OWNS THE BENEFICIAL INTEREST IN SHARES. THE BENEFICIAL OWNER MAY BE A SHAREHOLDER INCLUDED IN THE RECORDS OF THE CORPORATION OR A PERSON ON WHOSE BEHALF SHARES ARE REGISTERED IN THE NAME OF AN INTERMEDIARY, A NOMINEE, OR A VOTING TRUST OF WHICH THE PERSON IS A BENEFICIARY. (Amended 2019)

(6) “Bylaws” includes amended bylaws and restated bylaws.

(7) “Cash” and “money” are used interchangeably in articles 101 to 117 of this title. Each of these terms includes:

(a) Legal tender;

(b) Negotiable instruments readily convertible into legal tender; and

(8) “Conspicuous” means so written that a reasonable person against whom the writing is to operate should have noticed it. For example, printing or typing in contrasting italics, boldface, color, capitals, or underlining is conspicuous.

(9) “Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting shares, by contract, or otherwise.

(10) (Deleted by amendment, L. 2000, p. 977, § 50, effective July 1, 2000.)

(11) “Corporation” or “domestic corporation” means a corporation for profit which is not a foreign corporation, incorporated under or subject to the provisions of articles 101 to 117 of this title.

(12) Repealed.

(13) “Distribution” means a direct or indirect transfer by a corporation of money or other property, except its own shares, or incurrence of indebtedness by a corporation, to or for the benefit of any of its shareholders in respect of any of its shares. A distribution may be in any form, including a declaration or payment of a dividend; a purchase, redemption, or other acquisition of shares; or distribution of indebtedness.

(14) Repealed.

(15) “Effective date of notice” has the meaning set forth in section 7-101-402.

(16) “Employee” includes an officer but not a director; except that a director may accept duties that make said director also an employee.

(17) and (18) Repealed.

(19) “Governmental subdivision” includes an authority, county, district, subdistrict, municipality, and any other political subdivision.

(20) to (26) Repealed.

(27) “Receive”, when used in reference to receipt of a writing or other document by a domestic or foreign corporation, means that the writing or other document is actually received:

(a) By the corporation at its registered office or at its principal office;

(b) By the secretary of the corporation, wherever the secretary is found; or

(c) By any other person authorized by the bylaws or the board of directors to receive such writings, wherever such person is found.

(28) “Record date” means the date, established under article 106 or 107 of this title, on which a corporation determines the identity of its shareholders and their shareholdings. The determination shall be made as of the close of business on the record date unless another time for doing so is stated when the record date is fixed.

(28.3) and (28.5) Repealed.

(28.6) “Related person” means, with respect to an individual:

(a) the individual’s spouse;
(b) a child, stepchild, grandchild, parent, stepparent, grandparent, sibling, stepsibling, half-sibling, aunt, uncle, niece, or nephew, or spouse of any of them, of the individual or of the individual’s spouse;
(c) an individual living in the same home as the individual;
(d) an entity, other than a corporation or an entity controlled by the corporation, controlled by the individual, or any person specified in this subsection (28.6);
(e) a domestic or foreign:

(i) business or nonprofit corporation, other than a corporation or an entity controlled by the corporation, of which the individual is a director;

(ii) unincorporated entity of which the individual is a general partner or a member of the governing body; or

(iii) individual, trust, or estate for whom or of which the individual is a trustee, guardian, personal representative, or similar fiduciary; or

(f) a person that is, or an entity that is controlled by, an employer of the individual. (Amended 2019)

(29) “Secretary” means the corporate officer to whom the bylaws or the board of directors has delegated responsibility under section 7-108-301 (3) for the preparation and maintenance of minutes of the meetings of the board of directors and of the shareholders and of the other records and information required to be kept by the corporation under section 7-116-101 and for authenticating records of the corporation.

(30) “Shareholder” means either the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent recognized pursuant to section 7-107-204 of the rights granted by a beneficial ownership certificate that meets the requirements of section 7-107-204 and is on file with the corporation. (Amended 2019)

(31) “Shares” means the units into which the proprietary interests in a corporation are divided.

(32) to (33) Repealed.

(34) “Subscriber” means a person who subscribes for shares in a corporation, whether before or after incorporation.

(35) Repealed.

(36) “Voting group” means all the shares of one or more classes or series that, under articles 101 to 117 of this title or under the articles of incorporation, are entitled to vote and be counted together collectively on a matter at a meeting of shareholders. All shares entitled by articles 101 to 117 of this title or the articles of incorporation to vote generally on the matter are for that purpose a single voting group.

Source: L. 93: Entire article added, p. 738, § 1, effective July 1, 1994. L. 96: (27)(a) and (36) amended and (28.3) and (28.5) added, p. 1311, § 6, effective June 1. L. 97: (4) amended, p. 760, § 25, effective July 1, 1998. L. 2000: (4) and (10) amended, p. 977, § 50, effective July 1. L. 2002: (14) amended, p. 1859, § 156, effective July 1; (14) amended, p. 1711, § 102, effective October 1. L. 2003: (1)(b), (4)(b), (12)(b), (14)(b), (17)(b), (18)(b), (20)(b), (21)(b), (22)(b), (23)(b), (24)(b), (25)(b), (26)(b), (28.3)(b), (28.5)(b), (32.1), (33)(b), and (35)(b) added by revision, pp. 2356, 2357, §§ 347, 348. L. 2004: (3) and (28) amended, p. 1495, § 246, effective July 1. L. 2005: (30) and (31) amended, p. 760, § 10, effective June 1. L. 2006: (3) amended, p. 879, § 67, effective July 1.

Editor’s note: Subsections (1)(b), (4)(b), (12)(b), (14)(b), (17)(b), (18)(b), (20)(b), (21)(b), (22)(b), (23)(b), (24)(b), (25)(b), (26)(b), (28.3)(b), (28.5)(b), (32.1), (33)(b), and (35)(b) provided for the repeal of subsections (1), (4), (12), (14), (17), (18), (20), (21), (22), (23), (24), (25), (26), (28.3), (28.5), (32), (32.1), (33), and (35), respectively, effective July 1, 2004. (See L. 2003, pp. 2356, 2357.)

Cross references: For additional definitions applicable to this article, see § 7-90-102.

7-101-402. Notice. (1) Notice given pursuant to articles 101 to 117 of this title shall be in writing unless oral notice is reasonable under the circumstances.

(2) Notice may be given in person; by telephone, telegraph, teletype, electronically transmitted facsimile, or other form of wire or wireless communication; or by mail or private carrier.

(3) Written notice by a corporation to its shareholders, if in a comprehensible form, is effective as to each shareholder when mailed, if mailed addressed to the shareholder’s address shown in the corporation’s current record of shareholders. If three successive notices given to a shareholder pursuant to this subsection (3) have been returned as undeliverable, no further notices to such shareholder shall be necessary until another address for the shareholder is made known to the corporation.

(4) Written notice to a domestic corporation or to a foreign corporation authorized to transact business or conduct activities in this state may be mailed to the registered agent address of its registered agent or to the corporation or its secretary at its principal office.

(5) Except as provided in subsection (3) of this section, written notice, if in a comprehensible form, is effective at the earliest of:

(a) The date received;

(b) Five days after mailing; or

(c) The date shown on the return receipt, if mailed by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee.

(6) Oral notice is effective when communicated if communicated in a comprehensible manner.

(7) Repealed.

(8) If articles 101 to 117 of this title prescribe notice requirements for particular circumstances, those requirements govern. If the articles of incorporation or bylaws prescribe notice requirements not inconsistent with this section or other provisions of articles 101 to 117 of this title, those requirements govern.

Source: L. 93: Entire article added, p. 741, § 1, effective July 1, 1994. L. 96: (7) repealed, p. 1312, § 7, effective June 1. L. 2003: (4) amended, p. 2314, § 219, effective July 1, 2004.

PART 5 – PUBLIC BENEFIT CORPORATIONS

Law reviews: For article, “The Long and Winding Road to Public Benefit Corporations in Colorado”, see 43 Colo. Law. 39 (Jan. 2014).

7-101-501. Short title. This part 5 shall be known and may be cited as the “Public Benefit Corporation Act of Colorado”.

Source: L. 2013: Entire part added, (HB 13-1138), ch. 230, p. 1099, § 1, effective April 1, 2014.

7-101-502. Law applicable to public benefit corporations – how formed. This part 5 applies to all public benefit corporations. If a corporation elects to become a public benefit corporation under this part 5 in the manner prescribed in this part 5, it is subject in all respects to the “Colorado Business Corporation Act”, articles 101 to 117 of this title, and the “Colorado Corporations and Associations Act”, article 90 of this title, except to the extent this part 5 imposes additional or different requirements, in which case such additional or different requirements apply.

Source: L. 2013: Entire part added, (HB 13-1138), ch. 230, p. 1099, § 1, effective April 1, 2014.

7-101-503. Public benefit corporation – definitions – contents of articles of incorporation. (1) A public benefit corporation is a for-profit corporation organized under and subject to the requirements of the “Colorado Business Corporation Act”, articles 101 to 117 of this title 7, or a domestic cooperative organized under article 55, 56, or 58 of this title 7 that is subject to the “Colorado Business Corporation Act”, that is intended to produce a public benefit or public benefits and to operate in a responsible and sustainable manner. To that end, a public benefit corporation shall be managed in a manner that balances the shareholders’ pecuniary interests, the best interest of those materially affected by the corporation’s conduct, and the public benefit identified in its articles of incorporation. In its articles of incorporation, a public benefit corporation shall:

(a) Identify within its statement of business or purpose pursuant to section 7-103-101 (1) one or more specific public benefits to be promoted by the public benefit corporation; and

(b) State at the beginning of the articles of incorporation that it is a public benefit corporation.

(2) “Public benefit” means one or more positive effects or reduction of negative effects on one or more categories of persons, entities, communities, or interests other than shareholders in their capacities as shareholders, including effects of an artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific, or technological nature.

(3) “Public benefit provisions” means the provisions of articles of incorporation contemplated by this part 5.

(4) The domestic entity name of a public benefit corporation may contain the words “public benefit corporation”, the abbreviation “P.B.C.” or “Pub. Ben. Corp.”, or the designation “PBC”, which shall be deemed to satisfy the requirements of section 7-90-601 (3)(a), and must otherwise satisfy the requirements of section 7-102-102 (1)(a). If the name does not contain the language specified in this subsection (4), the public benefit corporation shall, before issuing unissued shares of stock or disposing of treasury shares, provide notice to any person to whom the stock is issued or who acquires the treasury shares that it is a public benefit corporation; except that the notice need not be provided if the issuance or disposal is pursuant to an offering registered under the federal “Securities Act of 1933”, 15 U.S.C. sec. 77a et seq., as amended, or if, at the time of issuance or disposal, the public benefit corporation has a class of securities that is registered under the federal “Securities Exchange Act of 1934”, 15 U.S.C. sec. 78b et seq., as amended.

Source: L. 2013: Entire part added, (HB 13-1138), ch. 230, p. 1099, § 1, effective April 1, 2014. L. 2017: IP(1), (1)(a), and 4 amended, (HB 17-1200), ch. 386, p. 1999, § 1, effective August 9.

Editor’s note: Section 8(2) of chapter 386 (HB 17-1200), Session Laws of Colorado 2017, provides that the act changing this section applies to conduct occurring on or after August 9, 2017.

7-101-504. Certain amendments and mergers – votes required – dissenter’s rights. (1) Notwithstanding any other provisions of this part 5 other than subsection (2) of this section, a corporation that is not a public benefit corporation shall not, without the approval of two-thirds of the outstanding shares of each class of shares of the corporation of which there are outstanding shares, whether voting or nonvoting:

(a) Amend its articles of incorporation to include a provision authorized by section 7-101-503 (1)(a);

(b) Convert into a domestic or foreign public benefit corporation or similar entity; or

(c) Merge with or into another entity if, as a result of the merger, the shares in such corporation would become, or be converted into or exchanged for the right to receive, shares or other equity interests in a domestic or foreign public benefit corporation or similar entity.

(2) The restrictions of this section do not apply before the corporation has received payment for any of its capital stock. In the case of a domestic cooperative formed under article 55, 56, or 58 of this title 7 that is subject to the “Colorado Business Corporation Act”, articles 101 to 117 of this title 7, an action described in subsection (1) or (4) of this section must be approved by vote or consent of the holders of every class or series of equity interest in the entity that are entitled to vote on the action by at least two-thirds of the votes or consents that all of those holders are entitled to cast on the action.

(3) A shareholder of a corporation that is not a public benefit corporation is entitled to exercise the right to dissent pursuant to article 113 of this title if the shareholder has neither voted in favor of an amendment, merger, or conversion specified in this subsection (3) nor consented thereto in writing pursuant to section 7-107-104 and holds shares of such corporation immediately before the effective time of:

(a) An amendment to the corporation’s articles of incorporation to include a provision authorized by section 7-101-503 (1)(a);

(b) A conversion into a domestic or foreign public benefit corporation or similar entity; or

(c) A merger that would result in the conversion of the corporation’s shares into, or exchange of the corporation’s shares for, the right to receive shares or other equity interests in a domestic or foreign public benefit corporation or similar entity.

(4) Notwithstanding any other provision of this part 5, a corporation that is a public benefit corporation shall not, without the approval of two-thirds of the outstanding shares of each class of shares of the corporation of which there are outstanding shares, whether voting or nonvoting:

(a) Amend its articles of incorporation to delete or amend a provision authorized by section 7-101-503 (1)(a);

(b) Convert into another domestic or foreign entity that is not a public benefit corporation or similar entity;

(c) Merge with or into another entity if, as a result of the merger, the shares in the public benefit corporation would become, be converted into, or be exchanged for the right to receive:

(I) Cash;

(II) Shares or other equity interests in a domestic or foreign corporation that is not a public benefit corporation or similar entity; or

(III) Shares or other equity interests in a domestic or foreign public benefit corporation or similar entity, the articles of incorporation or similar governing instrument of which do not contain the identical provisions identifying the public benefit pursuant to section 7-101-503 (1); or

(d) Sell, lease, exchange, or otherwise dispose of all, or substantially all, of the property of the public benefit corporation in a transaction for which a shareholder vote is required under section 7-112-102 (1).

(5) A nonprofit corporation cannot be a constituent entity in connection with a merger or conversion governed by this section.

Source: L. 2013: Entire part added, (HB 13-1138), ch. 230, p. 1100, § 1, effective April 1, 2014. L. 2017: (2), (4)(b), and (4)(c) amended and (4)(d) added, (HB 17-1200), ch. 386, p. 2000, § 2, effective August 9.

Editor’s note: Section 8(2) of chapter 386 (HB 17-1200), Session Laws of Colorado 2017, provides that the act changing this section applies to conduct occurring on or after August 9, 2017.

7-101-505. Share certificates – notices regarding uncertificated shares. A share certificate issued by a public benefit corporation must note conspicuously that the corporation is a public benefit corporation formed pursuant to this part 5. A statement sent by a public benefit corporation pursuant to section 7-106-207 must state conspicuously that the corporation is a public benefit corporation formed pursuant to this part 5.

Source: L. 2013: Entire part added, (HB 13-1138), ch. 230, p. 1102, § 1, effective April 1, 2014.

7-101-506. Duties of directors. (1) The board of directors shall manage or direct the business and affairs of a public benefit corporation in a manner that balances the pecuniary interests of the shareholders, the best interests of those materially affected by the corporation’s conduct, and the specific public benefit identified in its articles of incorporation.

(2) A director of a public benefit corporation:

(a) Does not, by virtue of the public benefit provisions of section 7-101-503 (1), have a duty to any person on account of an interest of the person in the public benefit identified in the articles of incorporation or on account of an interest materially affected by the corporation’s conduct; and

(b) With respect to a decision implicating the balance requirement in subsection (1) of this section, will be deemed to satisfy the director’s fiduciary duties to shareholders and the corporation if the director’s decision is both informed and disinterested and not such that no person of ordinary, sound judgment would approve.

(3) The articles of incorporation of a public benefit corporation may include a provision that a disinterested director’s failure to satisfy this section does not, for the purposes of section 7-108-401 or 7-108-402 or article 109 of this title 7, constitute an act or omission not in good faith or a breach of the duty of loyalty.

Source: L. 2013: Entire part added, (HB 13-1138), ch. 230, p. 1102, § 1, effective April 1, 2014. L. 2017: (3) amended, (HB 17-1200), ch. 386, p. 2001, § 3, effective August 9.

Editor’s note: Section 8(2) of chapter 386 (HB 17-1200), Session Laws of Colorado 2017, provides that the act changing this section applies to conduct occurring on or after August 9, 2017.

7-101-507. Benefit report – definition. (1) A public benefit corporation shall prepare an annual report that includes:

(a) A narrative description of:

(I) The ways in which the public benefit corporation promoted the public benefit identified in the articles of incorporation and the best interests of those materially affected by the public benefit corporation’s conduct;

(II) Any circumstances that have hindered the public benefit corporation’s promotion of the identified public benefit and the best interests of those materially affected by the public benefit corporation’s conduct; and

(III) The process and rationale for selecting or changing the third-party standard used to complete the assessment pursuant to subsection (1)(b) of this section; and

(b) An assessment of the overall social and environmental performance of the public benefit corporation against a third-party standard:

(I) Applied consistently with any application of that standard in prior benefit reports; or

(II) Accompanied by an explanation of the reasons for any inconsistent application. The assessment does not need to be performed, audited, or certified by a third party.

(2) For purposes of subsection (1) of this section, “third-party standard” means a standard for defining, reporting, and assessing the overall corporate social and environmental performance, which standard is developed by an organization that is not controlled by the public benefit corporation or any of its affiliates and that makes publicly available the following information:

(a) The criteria considered when measuring the social and environmental performance of a business, the relative weightings of those criteria, if any, and the process for development and revision of the standard; and

(b) Any material owners of the organization that developed the third-party standard, the members of its governing body and how they are selected, and the sources of financial support for the organization, in sufficient detail to disclose any relationships that could reasonably be considered to compromise its independence.

(3) A public benefit corporation that prepares a report pursuant to this section shall send it to each shareholder.

(4) A public benefit corporation shall post all of its reports prepared pursuant to this section on the public portion of its website, if any, but the public benefit corporation may omit from the posted reports any financial or proprietary information included in the reports.

(5) If a public benefit corporation does not have a website, the public benefit corporation shall provide a copy of its most recent report, without charge, to a person that requests a copy, but the public benefit corporation may omit any financial or proprietary information from the copy of the benefit report so provided.

Source: L. 2013: Entire part added, (HB 13-1138), ch. 230, p. 1102, § 1, effective April 1, 2014. L. 2014: IP(1) amended, (SB 14-156), ch. 192, p. 713, § 1, effective May 15. L. 2017: (1)(a) amended, (HB 17-1200), ch. 386, p. 2001, § 4, effective August 9.

Editor’s note: Section 8(2) of chapter 386 (HB 17-1200), Session Laws of Colorado 2017, provides that the act changing this section applies to conduct occurring on or after August 9, 2017.

7-101-508. Derivative suits. (1) Shareholders of a public benefit corporation may maintain a derivative lawsuit to enforce the requirements of section 7-101-506 (1) if the shareholders own, individually or collectively, as of the date of instituting a derivative suit, either:

(a) At least two percent of the corporation’s outstanding shares; or

(b) In the case of a corporation with shares listed on a national securities exchange, the lesser of two percent of the corporation’s outstanding shares or shares of at least two million dollars in market value.

Source: L. 2013: Entire part added, (HB 13-1138), ch. 230, p. 1103, § 1, effective April 1, 2014.

7-101-509. No effect on other corporations. (1) Except as provided in section 7-101-504:

(a) The existence of a provision of this part 5 does not of itself create an implication that a contrary or different rule of law is or would be applicable to a corporation or other entity that is not a public benefit corporation.

(b) This part 5 does not affect a statute or rule of law that applies to a corporation that is not a public benefit corporation.

Source: L. 2013: Entire part added, (HB 13-1138), ch. 230, p. 1103, § 1, effective April 1, 2014. L. 2017: Entire section amended, (HB 17-1200), ch. 386, p. 2001, § 5, effective August 9.

Editor’s note: Section 8(2) of chapter 386 (HB 17-1200), Session Laws of Colorado 2017, provides that the act changing this section applies to conduct occurring on or after August 9, 2017.

ARTICLE 102

ARTICLE 102 – INCORPORATION

Cross references: (1) For definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

(2) For recording certificates of incorporation and other recording requirements, see §§ 38-30-144 and 38-35-109.

Law reviews: For article, “Choice of Entities in Colorado”, see 23 Colo. Law. 293 (1994); for article, “Choice of Entity in Colorado: An Update”, see 25 Colo. Law. 3 (Oct. 1996).

7-102-101. Incorporators. One or more persons may act as the incorporator or incorporators of a corporation by delivering articles of incorporation to the secretary of state, for filing pursuant to part 3 of article 90 of this title. An incorporator who is an individual shall be of the age of eighteen years or older.

Source: L. 93: Entire article added, p. 742, § 1, effective July 1, 1994. L. 2002: Entire section amended, p. 1846, § 104, effective July 1; entire section amended, p. 1711, § 103, effective October 1. L. 2004: Entire section amended, p. 1496, § 247, effective July 1.

7-102-102. Articles of incorporation. (1) The articles of incorporation shall state:

(a) The domestic entity name for the corporation, which domestic entity name shall comply with part 6 of article 90 of this title;

(b) The information regarding shares required by section 7-106-101;

(d) The principal office address of the corporation’s initial principal office;

(e) The true name and mailing address of each incorporator.

(f) Repealed.

(2) The articles of incorporation may but need not state:

(a) The names and addresses of the individuals who are elected to serve as the initial directors;

(b) Provisions not inconsistent with law regarding:

(I) The purpose or purposes for which the corporation is incorporated;

(II) Managing the business of the corporation and regulating its affairs;

(III) Defining, limiting, and regulating the powers of the corporation, its board of directors, and its shareholders;

(IV) A par value for authorized shares or classes of shares;

(V) The imposition of personal liability on shareholders for the debts of the corporation to a stated extent and upon stated conditions; and

(3) For corporations incorporated after December 31, 1958, if cumulative voting is not desired in the election of directors, a statement to that effect shall be made in the articles of incorporation. If no such statement is made, cumulative voting shall be mandatory in the election of directors, subject to the provisions of section 7-107-209. For corporations incorporated before January 1, 1959, the articles of incorporation shall state whether cumulative voting shall be allowed in the election of directors; and, if the articles of incorporation allow cumulative voting, shareholders shall be permitted to cumulate their shares in the election of directors as provided in section 7-107-209.

(4) The articles of incorporation need not state any of the corporate powers enumerated in articles 101 to 117 of this title.

(5) If articles 101 to 117 of this title condition any matter upon the presence of a provision in the bylaws, the condition is satisfied if such provision is present either in the articles of incorporation or the bylaws. If articles 101 to 117 of this title condition any matter upon the absence of a provision in the bylaws, the condition is satisfied only if the provision is absent from both the articles of incorporation and the bylaws.

Source: L. 93: Entire article added, p. 743, § 1, effective July 1, 1994. L. 2000: (1)(a) amended, p. 977, § 51, effective July 1. L. 2002: (1)(f) repealed, p. 1846, § 105, effective July 1; (1)(f) repealed, p. 1711, § 104, effective October 1. L. 2003: IP(1), (1)(a), (1)(c), (1)(d), IP(2), (2)(b)(V), (2)(c), and (4) amended, p. 2314, § 220, effective July 1, 2004. L. 2004: (1)(e) and (2)(a) amended, p. 1496, § 248, effective July 1. L. 2006: (2)(a) amended, p. 879, § 68, effective July 1. L. 2008: (1)(e) amended, p. 24, § 18, effective August 5.

7-102-103. Incorporation. (1) A corporation is incorporated when the articles of incorporation are filed by the secretary of state or, if a delayed effective date is stated pursuant to section 7-90-304 in the articles of incorporation as filed by the secretary of state and if a statement of change revoking the articles of incorporation is not filed before such effective date, on such delayed effective date. The corporate existence begins upon incorporation.

(2) The secretary of state’s filing of the articles of incorporation is conclusive that all conditions precedent to incorporation have been met.

Source: L. 93: Entire article added, p. 744, § 1, effective July 1, 1994. L. 96: (2) amended, p. 1312, § 8, effective June 1. L. 2002: (1) amended, p. 1859, § 157, effective July 1; (1) amended, p. 1711, § 105, effective October 1. L. 2003: (1) amended, p. 2314, § 221, effective July 1, 2004. L. 2004: (1) amended, p. 1496, § 249, effective July 1.

7-102-104. Unauthorized assumption of corporate powers. All persons purporting to act as or on behalf of a corporation without authority to do so and without good faith belief that they have such authority shall be jointly and severally liable for all liabilities incurred or arising as a result thereof.

Source: L. 93: Entire article added, p. 744, § 1, effective July 1, 1994.

7-102-105. Organization of corporation.

(1) After incorporation:

(a) If initial directors are not elected in the articles of incorporation, the incorporators may hold a meeting, at the call of a majority of the incorporators, to adopt initial bylaws, if desired, and to elect a board of directors; and

(b) The initial directors may hold a meeting, at the call of a majority of the directors, to adopt bylaws, if desired, to appoint officers, and to carry on any other business.

(2) Action required or permitted by articles 101 to 117 of this title to be taken by incorporators at an organizational meeting may be taken without a meeting if the action is taken in the manner provided in section 7-108-202 for action by directors without a meeting.

(3) An organizational meeting may be held in or out of this state.

Source: L. 93: Entire article added, p. 744, § 1, effective July 1, 1994.

7-102-106. Bylaws. (1) The board of directors or, if no directors have been elected, the incorporators may adopt initial bylaws. If neither the incorporators nor the board of directors have adopted initial bylaws, the shareholders may do so.

(2) The bylaws of a corporation may contain any provision for managing the business and regulating the affairs of the corporation that is not inconsistent with law or with the articles of incorporation.

Source: L. 93: Entire article added, p. 745, § 1, effective July 1, 1994.

7-102-107. Emergency bylaws. (1) Unless otherwise provided in the articles of incorporation, the board of directors may adopt bylaws to be effective only in an emergency as defined in subsection (4) of this section. The emergency bylaws, which are subject to amendment or repeal by the shareholders, may include all provisions necessary for managing the corporation during the emergency, including:

(a) Procedures for calling a meeting of the board of directors;

(b) Quorum requirements for the meeting; and

(2) All provisions of the regular bylaws consistent with the emergency bylaws shall remain in effect during the emergency. The emergency bylaws shall not be effective after the emergency ends.

(3) Corporate action taken in good faith in accordance with the emergency bylaws:

(a) Binds the corporation; and

(b) May not be the basis for imposition of liability on any director, officer, employee, or agent of the corporation on the ground that the action was not authorized corporate action.

(4) An emergency exists for the purposes of this section if a quorum of the directors cannot readily be obtained because of some catastrophic event.

Source: L. 93: Entire article added, p. 745, § 1, effective July 1, 1994.

ARTICLE 103 – PURPOSES AND POWERS

Cross references:

(1) For definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

(2) For conveyance of real estate by corporations, see § 38-30-144.

7-103-101. Purposes and applicability. (1) Every corporation incorporated under articles 101 to 117 of this title has the purpose of engaging in any lawful business unless a more limited purpose is stated in the articles of incorporation.

(2) Where another statute of this state requires that corporations of a particular class shall be formed or incorporated exclusively thereunder, corporations of that class shall be formed or incorporated under such other statute.

(3) Where another statute of this state requires corporations of a particular class to be formed or incorporated under that other statute and also under general corporation law, such corporations shall be formed or incorporated under such other law and, in addition thereto, under articles 101 to 117 of this title to the extent general corporation law is applicable.

(4) Where another statute of this state permits corporations of a particular class to be formed or incorporated either under such statute or under the general corporation law, a corporation of that class may at the election of its incorporators be formed or incorporated under articles 101 to 117 of this title. Unless the articles of incorporation of such corporation indicate that it is formed or incorporated under such other alternate statute, the corporation shall for all purposes be considered as formed and incorporated under articles 101 to 117 of this title.

(5) Articles 101 to 117 of this title shall apply to corporations of every class, whether or not included in the term “corporation” as defined in section 7-101-401 (11), that are formed or incorporated under and governed by other statutes of this state, to the extent that said articles are not inconsistent with such other statutes. Notwithstanding the foregoing, except as permitted by section 7-123-101 (8), articles 101 to 117 of this title shall not apply to nonprofit corporations:

(a) Formed under articles 121 to 137 of this title;

(b) Governed by articles 121 to 137 of this title pursuant to section 7-137-101 (2); or

Source: L. 93: Entire article added, p. 745, § 1, effective July 1, 1994. L. 96: (5) amended, p. 1312, § 9, effective June 1. L. 97: (5) amended, p. 761, § 26, effective July 1, 1998. L. 2003: Entire section amended, p. 2314, § 222, effective July 1, 2004. L. 2006: (5) amended, p. 879, § 69, effective July 1.

7-103-102. General powers. (1) Unless otherwise provided in the articles of incorporation, every corporation has perpetual duration and succession in its domestic entity name and has the same powers as an individual to do all things necessary or convenient to carry out its business and affairs, including the power:

(a) To sue and be sued, complain, and defend in its entity name;

(b) To have a corporate seal, which may be altered at will, and to use such seal, or a facsimile thereof, including a rubber stamp, by impressing or affixing it or by reproducing it in any other manner;

(d) To purchase, receive, lease, and otherwise acquire, and to own, hold, improve, use, and otherwise deal with, real or personal property or any legal or equitable interest in property, wherever located;

(e) To sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of all or any part of its property;

(f) To purchase, receive, subscribe for, and otherwise acquire shares and other interests in, and obligations of, any other entity; and to own, hold, vote, use, sell, mortgage, lend, pledge, and otherwise dispose of, and deal in and with, the same;

(g) To make contracts and guarantees, incur liabilities, borrow money, issue notes, bonds, and other obligations (which may be convertible into or include the option to purchase other securities of the corporation), and secure any of its obligations by mortgage or pledge of any of its property, franchises, or income;

(h) To lend money, invest and reinvest its funds, and receive and hold real and personal property as security for repayment;

(i) To be an agent, an associate, a fiduciary, a manager, a member, a partner, a promoter, or a trustee of, or to hold any similar position with, any entity;

(j) To conduct its business, locate offices, and exercise the powers granted by articles 101 to 117 of this title within or without this state;

(k) To elect directors and appoint officers, employees, and agents of the corporation, define their duties, fix their compensation, and lend them money and credit;

(l) To pay pensions and establish pension plans, pension trusts, profit sharing plans, share bonus plans, share options and rights plans, and benefit or incentive plans for any of its current or former directors, officers, employees, and agents;

(m) To make donations for the public welfare or for charitable, scientific, or educational purposes;

(n) To make payments or donations and to do any other act, not inconsistent with law, that furthers the business and affairs of the corporation;

(o) To indemnify current or former directors, officers, employees, fiduciaries, or agents as provided in article 109 of this title;

(p) To limit the liability of its directors as provided in section 7-108-402 (1);

(q) To cease its corporate activities and dissolve; and

(r) To impose restrictions on the transfer of its shares.

Source: L. 93: Entire article added, p. 746, § 1, effective July 1, 1994. L. 96: (1)(i) amended, p. 1313, § 10, effective June 1. L. 2000: IP(1) and (1)(a) amended, p. 977, § 52, effective July 1. L. 2003: IP(1) amended, p. 2315, § 223, effective July 1, 2004.

7-103-103. Emergency powers. (1) In anticipation of or during an emergency defined in subsection (4) of this section, the board of directors may:

(a) Modify lines of succession to accommodate the incapacity of any director, officer, employee, or agent; and

(b) Relocate the principal office or additional offices or regional offices, or authorize the officers to do so.

(2) During an emergency as contemplated in subsection (4) of this section, unless emergency bylaws provide otherwise:

(a) Notice of a meeting of the board of directors need be given only to those directors whom it is practicable to reach and may be given in any practicable manner, including by publication or radio; and

(b) One or more officers of the corporation present at a meeting of the board of directors may be deemed to be directors for the meeting, in order of rank and within the same rank in order of seniority, as necessary to achieve a quorum.

(3) Corporate action taken in good faith during an emergency under this section to further the ordinary business affairs of the corporation:

(a) Binds the corporation; and

(b) May not be the basis for the imposition of liability on any director, officer, employee, or agent of the corporation on the ground that the action was not authorized corporate action.

(4) An emergency exists for purposes of this section if a quorum of the directors cannot readily be obtained because of some catastrophic event.

Source: L. 93: Entire article added, p. 747, § 1, effective July 1, 1994. L. 2003: (1)(b) amended, p. 2315, § 224, effective July 1, 2004.

7-103-104. Ultra vires. (1) Except as provided in subsection (2) of this section, the validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act.

(2) A corporation’s power to act may be challenged:

(a) In a proceeding by a shareholder against the corporation to enjoin the act;

(b) In a proceeding by or in the right of the corporation, whether directly, derivatively, or through a receiver, trustee, or other legal representative, against an incumbent or former director, officer, employee, or agent of the corporation; or

(3) In a shareholder’s proceeding under paragraph (a) of subsection (2) of this section to enjoin an unauthorized corporate act, the court may enjoin or set aside the act, if it would be equitable to do so and if all affected persons are parties to the proceeding, and may award damages for loss, other than anticipated profits, suffered by the corporation or another party because of the injunction.

Source: L. 93: Entire article added, p. 748, § 1, effective July 1, 1994. L. 96: (3) amended, p. 1313, § 11, effective June 1.

7-103-105. Agent may convey real estate – repeal. (Repealed)

Source: L. 93: Entire article added, p. 749, § 1, effective July 1, 1994. L. 2003: (2) added by revision, pp. 2356, 2357, §§ 347, 348.

Editor’s note: Subsection (2) provided for the repeal of this section, effective July 1, 2004. (See L. 2003, pp. 2356, 2357.)

ARTICLE 104

Name

7-104-101. Corporate name. (Repealed)

Source: L. 93: Entire article added, p. 749, § 1, effective July 1, 1994. L. 94: (2)(i) added, p. 87, § 13, effective July 1. L. 96: (2) amended, p. 1313, § 12, effective June 1. L. 2000: Entire section repealed, p. 990, § 109, effective July 1.

7-104-102. Reserved name. (Repealed)

Source: L. 93: Entire article added, p. 750, § 1, effective July 1, 1994. L. 2000: Entire section repealed, p. 990, § 109, effective July 1.

ARTICLE 105

Office and Agent

Cross references: For definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

7-105-101. Registered office and registered agent. (1) Part 7 of article 90 of this title, providing for registered agents and service of process, applies to corporations incorporated under or subject to articles 101 to 117 of this title.

(2) (Deleted by amendment, L. 2003, p. 2315, § 225, effective July 1, 2004.)

Source: L. 93: Entire article added, p. 751, § 1, effective July 1, 1994. L. 2003: Entire section amended, p. 2315, § 225, effective July 1, 2004.

7-105-102. Change of registered office or registered agent – repeal. (Repealed)

Source: L. 93: Entire article added, p. 751, § 1, effective July 1, 1994. L. 2000: (1)(a) amended, p. 978, § 54, effective July 1. L. 2002: IP(1), (1)(e), and (2) amended, p. 1847, § 106, effective July 1; IP(1), (1)(e), and (2) amended, p. 1711, § 106, effective October 1. L. 2003: (3) added by revision, pp. 2356, 2357, §§ 347, 348.

Editor’s note: Subsection (3) provided for the repeal of this section, effective July 1, 2004. (See L. 2003, pp. 2356, 2357.)

7-105-103. Resignation of registered agent – repeal. (Repealed)

Source: L. 93: Entire article added, p. 752, § 1, effective July 1, 1994. L. 96: (2) amended, p. 1314, § 13, effective June 1. L. 2002: (1) and (2) amended, p. 1847, § 107, effective July 1; (1) and (2) amended, p. 1712, § 107, effective October 1. L. 2003: (4) added by revision, pp. 2356, 2357, §§ 347, 348.

Editor’s note: Subsection (4) provided for the repeal of this section, effective July 1, 2004. (See L. 2003, pp. 2356, 2357.)

7-105-104. Service on corporation – repeal. (Repealed)

Source: L. 93: Entire article added, p. 752, § 1, effective July 1, 1994. L. 2003: (4) added by revision, pp. 2356, 2357, §§ 347, 348.

Editor’s note: Subsection (4) provided for the repeal of this section, effective July 1, 2004. (See L. 2003, pp. 2356, 2357.)

ARTICLE 106

Shares and Distributions

Cross references: For definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

Law reviews: For article, “Valuation of Stock in Closely Held Corporations”, see 18 Colo. Law. 1731 (1989).

PART 1

7-106-101. Authorized shares. (1) The articles of incorporation shall state the classes of shares and the number of shares of each class that the corporation is authorized to issue. If more than one class of shares is authorized, the articles of incorporation shall state a distinguishing designation for each class, and, before the issuance of shares of any class, the preferences, limitations, and relative rights of that class shall be stated in the articles of incorporation. All shares of a class shall have preferences, limitations, and relative rights identical with those of other shares of the same class except to the extent otherwise permitted by section 7-106-102.

(2) The articles of incorporation shall authorize:

(a) One or more classes of shares that together have unlimited voting rights; and

(b) One or more classes of shares, which may be the same class or classes as those with voting rights, that together are entitled to receive the net assets of the corporation upon dissolution.

(3) The articles of incorporation may authorize one or more classes of shares that:

(a) Have special, conditional, or limited voting rights, or no right to vote; except that no condition, limitation, or prohibition on voting shall eliminate any right to vote provided by section 7-110-104;

(b) Are redeemable or convertible as stated in the articles of incorporation:

(I) At the option of the corporation, the shareholder, or another person or upon the occurrence of a designated event;

(II) For money, indebtedness, securities, or other property; or

(III) In a designated amount or in an amount determined in accordance with a designated formula or by reference to extrinsic facts or events;

(c) Entitle the holders to distributions calculated in any manner, including dividends that may be cumulative, noncumulative, or partially cumulative; or

(d) Have preference over any other class of shares with respect to distributions, including dividends and distributions upon the dissolution of the corporation.

(4) The description of the preferences, limitations, and relative rights of classes of shares in subsection (3) of this section is not exhaustive.

Source: L. 93: Entire article added, p. 753, § 1, effective July 1, 1994. L. 2003: IP(3)(b) amended, p. 2316, § 226, effective July 1, 2004. L. 2006: (1) amended, p. 880, § 70, effective July 1.

7-106-102. Terms of class or series determined by board of directors. (1) If the articles of incorporation so provide, the board of directors may determine, in whole or in part, the preferences, limitations, and relative rights, within the limits set forth in section 7-106-101, of:

(a) Any class of shares before the issuance of any shares of that class; or

(b) One or more series within a class before the issuance of any shares of that series.

(2) Each series of a class shall be given a distinguishing designation.

(3) All shares of a series shall have preferences, limitations, and relative rights identical with those of other shares of the same series and, except to the extent otherwise provided in the description of the series, with those of other series of the same class.

(4) Before issuing any shares of a class or series, the preferences, limitations, and relative rights of which are determined by the board of directors under this section, the corporation shall deliver to the secretary of state, for filing pursuant to part 3 of article 90 of this title, articles of amendment to the articles of incorporation, which are effective without shareholder action, that state:

(a) The domestic entity name of the corporation;

(b) The text of the amendment determining the designations, preferences, limitations, and relative rights of the class or series of shares;

(d) A statement that the amendment was duly adopted by the board of directors.

Source: L. 93: Entire article added, p. 754, § 1, effective July 1, 1994. L. 2002: IP(4) amended, p. 1847, § 108, effective July 1; IP(4) amended, p. 1712, § 108, effective October 1. L. 2003: IP(4) and (4)(a) amended, p. 2316, § 227, effective July 1, 2004.

7-106-103. Issued and outstanding shares. (1) A corporation may issue the number of shares of each class or series authorized by the articles of incorporation. Shares that are issued are outstanding shares until they are reacquired, redeemed, converted, or cancelled.

(2) The reacquisition, redemption, or conversion of outstanding shares is subject to the limitations contained in subsection (3) of this section and is subject to section 7-106-401.

(3) At all times that shares of the corporation are outstanding, one or more shares that together have unlimited voting rights and one or more shares that together are entitled to receive the net assets of the corporation upon dissolution shall be outstanding.

Source: L. 93: Entire article added, p. 754, § 1, effective July 1, 1994.

7-106-104. Fractional shares. (1) A corporation may:

(a) Issue fractions of a share or pay in cash the value of fractions of a share;

(b) Arrange for disposition of fractional shares by the shareholders; or

(c) Issue scrip in registered or bearer form entitling the holder to receive a full share upon surrendering enough scrip to equal a full share.

(2) Each certificate representing scrip shall be conspicuously labeled “scrip” and shall contain the information required to be included in a share certificate by sections 7-106-206 (2)(a), (2)(c), and (4) and 7-106-208 (2).

(3) The holder of a fractional share is entitled to exercise the rights of a shareholder, including the right to vote, to receive dividends, and to participate in the assets of the corporation upon liquidation. The holder of scrip is not entitled to any of these rights unless the scrip provides for them.

(4) The board of directors may authorize the issuance of scrip subject to any condition considered desirable, including:

(a) That the scrip will become void if not exchanged for full shares before a stated date; and

(b) That the shares for which the scrip is exchangeable may be sold and the proceeds paid to the scripholders.

Source: L. 93: Entire article added, p. 755, § 1, effective July 1, 1994. L. 2003: (4)(a) amended, p. 2316, § 228, effective July 1, 2004.

7-106-105. Reverse split. (1) Unless otherwise provided in the articles of incorporation, the outstanding shares of a class or series may be reduced to a lesser number of shares by a reverse split made on the terms set forth in this section.

(2) To effect the reverse split, each outstanding share of the class or series shall be divided by the same divisor as is every other such share.

(3) Each share of the class or series shall have, after the reverse split, such par value, if any, as may be stated in the articles of incorporation.

(4) If the articles of incorporation are to be amended in connection with the reverse split, whether to change the number of authorized shares of such class or series or the par value, if any, of the shares of such class or series or for any other reason, such amendment shall be effected pursuant to article 110 of this title.

(5) In lieu of issuing fractional shares upon such reverse split, the corporation may take any of the actions provided for in section 7-106-104.

(6) For the reverse split to be effected:

(a) The board of directors shall recommend the reverse split to the holders of shares of the class or series that is to be reverse split and to each other voting group that is entitled, by reason of any provision in the articles of incorporation, to vote on the reverse split, unless the board of directors determines that, because of conflict of interest or other special circumstances, it should make no recommendation and communicates the basis for its determination to the shareholders with the submission of the reverse split; and

(b) The holders of shares of the class or series that is to be reverse split, and each other voting group that is entitled, by reason of any provision in the articles of incorporation, to vote on the reverse split, shall approve the reverse split.

(7) The board of directors may condition the effectiveness of the reverse split on any basis.

(8) The corporation shall give notice, in accordance with section 7-107-105, to each shareholder entitled to vote on the reverse split, of the shareholders’ meeting at which the reverse split will be voted upon. The notice of the meeting shall state that the purpose, or one of the purposes, of the meeting is to consider the reverse split, and the notice shall contain or be accompanied by a copy or a summary of the reverse split.

(9) Unless articles 101 to 117 of this title, the articles of incorporation, bylaws adopted by the shareholders, or the proposing board of directors require a greater vote, the reverse split shall be approved by the votes required by sections 7-107-206 and 7-107-207 by every voting group entitled to vote on the reverse split.

Source: L. 96: Entire section added, p. 1314, § 14, effective June 1.

PART 2 Issuance of shares

7-106-201. Subscription for shares. (1) A subscription for shares entered into before incorporation is irrevocable for six months unless the subscription agreement provides a longer or shorter period or all the subscribers agree to revocation before the time the corporation is incorporated and accepts the subscription.

(2) The acceptance by the corporation of a subscription entered into before incorporation and the authorization of the issuance of shares pursuant thereto are subject to section 7-106-202.

(3) The board of directors may determine the payment terms of subscriptions for shares that were entered into before incorporation, unless the subscription agreement states them. A call for payment by the board of directors shall be uniform so far as practicable as to all shares of the same class or series, unless the subscription agreement states otherwise.

(4) Shares issued pursuant to subscriptions entered into before incorporation are fully paid and nonassessable when the corporation receives the consideration stated in the subscription agreement.

(5) If a subscriber defaults in payment of money or other property under a subscription agreement entered into before incorporation, the corporation may collect the amount owed as it might collect any other debt. Alternatively, unless the subscription agreement provides otherwise, the corporation may rescind the agreement and may sell the shares if the debt remains unpaid more than twenty days after the corporation sends written demand for payment to the subscriber.

(6) A subscription agreement entered into after incorporation is a contract between the subscriber and the corporation subject to section 7-106-202.

Source: L. 93: Entire article added, p. 755, § 1, effective July 1, 1994. L. 2003: (3) and (4) amended, p. 2316, § 229, effective July 1, 2004.

7-106-202. Issuance of shares.

(1) The powers granted in this section to the board of directors may be reserved to the shareholders by the articles of incorporation.

(2) Subject to the limitations set forth in subsection (5) of this section, the board of directors may authorize the issuance of shares for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, and other securities of the corporation.

(3) Before the corporation issues shares, the board of directors shall determine that the consideration received or to be received for the shares to be issued is adequate. In the absence of fraud in the transaction, that determination by the board of directors is conclusive insofar as the adequacy of such consideration relates to whether the shares are validly issued, fully paid, and nonassessable.

(4) When the corporation receives the consideration for which the board of directors has authorized the issuance of shares, the shares issued therefor are fully paid and nonassessable.

(5) The promissory note of a subscriber or an affiliate of the subscriber for shares shall not constitute consideration for the shares unless the note is negotiable and is secured by collateral, other than the shares, having a fair market value at least equal to the principal amount of the note. For the purposes of this subsection (5), “promissory note” means a negotiable instrument on which there is an obligation to pay independent of collateral and does not include a nonrecourse note.

(6) Unless otherwise expressly provided in the articles of incorporation or bylaws, shares having a par value may be issued for less than the par value.

Source: L. 93: Entire article added, p. 756, § 1, effective July 1, 1994.

7-106-203. Liability of shareholders.

(1) A purchaser from a corporation of shares issued by the corporation is not liable to the corporation or its creditors with respect to the shares except to pay the consideration for which the shares were authorized to be issued under section 7-106-202 or stated in a subscription agreement under section 7-106-201.

(2) Unless otherwise provided in the articles of incorporation, a shareholder or a subscriber for shares of a corporation is not personally liable for the acts or debts of the corporation; except that such person may become personally liable by reason of the person’s own acts or conduct.

(3) Any person becoming an assignee or transferee of shares or of a subscription for shares in good faith and without knowledge or notice that the full consideration therefor has not been paid shall not be personally liable to the corporation or its creditors for any unpaid portion of such consideration.

Source: L. 93: Entire article added, p. 757, § 1, effective July 1, 1994. L. 2003: (1) amended, p. 2317, § 230, effective July 1, 2004.

7-106-204. Share dividends. (1) Unless otherwise provided in the articles of incorporation, shares may be issued pro rata and without consideration to the shareholders or to the shareholders of one or more classes or series of its shares. An issuance of shares pursuant to this subsection (1) is a share dividend.

(2) Shares of one class or series may not be issued as a share dividend in respect of shares of another class or series unless:

(a) The articles of incorporation so authorize;

(b) Such issuance is approved by a majority of the votes entitled to be cast by the class or series to be issued; or

(3) The bylaws or, in the absence of an applicable bylaw, the board of directors may fix a future date as the record date for determining shareholders entitled to a share dividend. If no future record date is so fixed, the record date is the date the board of directors authorizes the share dividend.

Source: L. 93: Entire article added, p. 757, § 1, effective July 1, 1994.

7-106-205. Share options and other rights – definitions.

(1) For purposes of this section:

(a) “Rights” means rights, options, warrants, or convertible securities entitling the holders thereof to purchase, receive, or acquire shares or fractions of shares of the corporation or assets or debts or other obligations of the corporation.

(b) “Significant shareholder” means any person owning, or offering to acquire, directly or indirectly, a number or percentage, as stated by the board of directors, of the outstanding voting shares of a corporation, or any transferee of such person.

(2) A corporation may create and issue rights, except as precluded or limited by provisions contained in the articles of incorporation at the time of such creation or issuance. The board of directors shall determine the terms upon which the rights are issued, their form and content, and the consideration, if any, for which shares or fractions of shares, assets, or debts or other obligations of the corporation are to be issued pursuant to the rights. In the absence of fraud in the transaction, the judgment of the board of directors as to the adequacy of consideration received for such rights shall be conclusive.

(3) Notwithstanding any other provision of articles 101 to 117 of this title, the terms determined by the board of directors pursuant to subsection (2) of this section for rights issued before, on, or after January 1, 1994, to any shareholders, by way of distribution or otherwise, may, without limitation:

(a) Preclude or limit any significant shareholder from exercising, converting, transferring, or receiving rights;

(b) Impose conditions upon the exercise, conversion, transfer, or receipt of rights by any significant shareholder that differ from those imposed on other holders of the same class of rights; or

(c) Provide that, upon exercise or conversion, any significant shareholder shall be entitled to receive securities, obligations, or assets, the terms or nature of which may differ from the securities, obligations, or assets to be received by the other holders of the same class of rights.

(4) Nothing contained in this section shall be construed to effect a change in the fiduciary duties of directors.

Source: L. 93: Entire article added, p. 757, § 1, effective July 1, 1994. L. 2003: (1)(b) amended, p. 2317, § 231, effective July 1, 2004.

7-106-206. Form and content of certificates.

(1) Shares may, but need not, be represented by certificates. Unless articles 101 to 117 of this title or another statute expressly provide otherwise, the rights and obligations of shareholders are not affected by the fact that their shares are not represented by certificates.

(2) Each share certificate shall state on its face:

(a) The domestic entity name of the issuing corporation and that the corporation is incorporated under the law of this state;

(b) The name of the person to whom the certificate is issued; and

(3) Each share certificate:

(a) Shall be signed, either manually or in facsimile, by one or more officers designated in the bylaws or by the board of directors;

(b) May bear the corporate seal or its facsimile; and

(4) If the issuing corporation is authorized to issue different classes of shares or different series within a class, the share certificate shall contain a summary, on the front or the back, of the designations, preferences, limitations, and relative rights applicable to each class, the variations in preferences, limitations, and rights determined for each series, and the authority of the board of directors to determine variations for future classes or series. Alternatively, each certificate may state conspicuously on its front or back that the corporation will furnish to the shareholder this information on request in writing and without charge.

(5) If the person who signed, either manually or in facsimile, a share certificate no longer holds office when the certificate is issued, the certificate is nevertheless valid.

Source: L. 93: Entire article added, p. 758, § 1, effective July 1, 1994. L. 2003: (2)(a) amended, p. 2317, § 232, effective July 1, 2004.

7-106-207. Shares without certificates. (1) Unless otherwise provided by the bylaws, the board of directors may authorize the issuance by the corporation of some or all of the shares of any or all of its classes or series without certificates. The authorization does not affect shares already represented by certificates until they are surrendered to the corporation.

(2) Within a reasonable time after the issuance or transfer of shares without certificates, the corporation shall send to the shareholder a written statement of the information required on certificates by subsections (2) and (4) of section 7-106-206 and section 7-106-208.

Source: L. 93: Entire article added, p. 759, § 1, effective July 1, 1994.

7-106-208. Restriction on transfer of shares and other securities. (1) The articles of incorporation, the bylaws, an agreement among shareholders, or an agreement among shareholders and the corporation may impose restrictions on the transfer or registration of transfer of shares of the corporation. A restriction does not affect shares issued before the restriction became effective unless the holder of such shares acquired such shares with knowledge of the restriction, is a party to the agreement containing the restriction, or voted in favor of the restriction or otherwise consented to the restriction.

(2) A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this section and its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by section 7-106-207 (2). Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction.

(3) A restriction on the transfer or registration of transfer of shares is authorized:

(a) To maintain the corporation’s status when it is dependent on the number or identity of its shareholders;

(b) To preserve entitlements, benefits, or exemptions under federal, state, or local laws; and

(4) A restriction on the transfer or registration of transfer of shares may:

(a) Obligate the shareholder first to offer to the corporation or other persons, separately, consecutively, or simultaneously, an opportunity to acquire the restricted shares;

(b) Obligate the corporation or other persons, separately, consecutively, or simultaneously, to acquire the restricted shares;

(c) Require, as a condition to such a transfer or registration, that any one or more persons, including the corporation or the holders of any of its shares, approve the transfer or registration, if the requirement is not manifestly unreasonable; or

(d) Prohibit the transfer or the registration of a transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable.

(5) For purposes of this section, “shares” includes a security convertible into or carrying a right to subscribe for or acquire shares.

Source: L. 93: Entire article added, p. 759, § 1, effective July 1, 1994.

7-106-209. Expense of issue. A corporation may pay the expenses of selling or underwriting its shares, and of incorporating, organizing, or reorganizing the corporation, from the consideration received for shares.

Source: L. 93: Entire article added, p. 760, § 1, effective July 1, 1994.

PART 3

SUBSEQUENT ACQUISITION OF SHARES

BY SHAREHOLDERS AND CORPORATION

7-106-301. Shareholders’ preemptive rights. (1) The shareholders of a corporation do not have a preemptive right to acquire unissued shares except to the extent provided by subsections (3) to (6) of section 7-117-101 or the articles of incorporation.

(2) A statement included in the articles of incorporation that “the corporation elects to have preemptive rights”, or words of similar import, means that the following principles apply, except to the extent otherwise provided by subsections (3) to (6) of section 7-117-101 or the articles of incorporation:

(a) The shareholders have a preemptive right, subject to any uniform terms and conditions prescribed by the board of directors to provide a fair and reasonable opportunity to exercise the right, to acquire proportional amounts of the unissued shares upon the decision of the board of directors to issue them.

(b) A shareholder may waive the shareholder’s preemptive right, and such waiver, if evidenced by a writing, is irrevocable even though it is not supported by consideration.

(I) Shares issued as compensation to directors, officers, agents, or employees of the corporation or its subsidiaries or affiliates;

(II) Shares issued to satisfy conversion or option rights created to provide compensation to directors, officers, agents, or employees of the corporation or its subsidiaries or affiliates;

(III) Shares that are issued within six months after the effective date of incorporation; or

(IV) Shares sold otherwise than for cash.

(d) Holders of shares of any class without general voting rights but with preferential rights to distributions or assets have no preemptive rights with respect to shares of any class.

(e) Holders of shares of any class with general voting rights but without preferential rights to distributions or assets have no preemptive rights with respect to shares of any class with preferential rights to distributions or assets unless the shares with preferential rights are convertible into or carry a right to subscribe for or acquire shares without preferential rights.

(f) Shares subject to preemptive rights that are not acquired by shareholders may be issued to any person, for a period of one year after being offered to shareholders pursuant to such preemptive rights, at a consideration set by the board of directors that is not lower than the consideration set for the exercise of preemptive rights. An offer at a lower consideration or after the expiration of such one-year period is subject to the shareholders’ preemptive rights.

(3) For purposes of this section, “shares” includes a security convertible into or carrying a right to subscribe for or acquire shares.

Source: L. 93: Entire article added, p. 761, § 1, effective July 1, 1994.

7-106-302. Corporation’s acquisition of its own shares. (1) A corporation may acquire its own shares, and, except as provided by section 7-117-101 (6), shares so acquired constitute authorized but unissued shares.

(2) If the articles of incorporation prohibit the reissuance of acquired shares:

(a) The number of authorized shares is reduced by the number of shares acquired by the corporation, effective upon amendment to the articles of incorporation; and

(b) The corporation shall deliver to the secretary of state, for filing pursuant to part 3 of article 90 of this title, articles of amendment to the articles of incorporation, which are effective without shareholder action, that state:

(I) The domestic entity name of the corporation;

(II) The reduction in the number of authorized shares, itemized by class and series; and

(III) The total number of authorized shares, itemized by class and series, remaining after reduction of the shares.

Source: L. 93: Entire article added, p. 762, § 1, effective July 1, 1994. L. 2002: IP(2)(b) amended, p. 1847, § 109, effective July 1; IP(2)(b) amended, p. 1712, § 109, effective October 1. L. 2003: IP(2)(b) and (2)(b)(I) amended, p. 2317, § 233, effective July 1, 2004.

PART 4

DISTRIBUTIONS

7-106-401. Distributions to shareholders. (1) A board of directors may authorize, and the corporation may make, distributions to its shareholders subject to any restriction in the articles of incorporation and subject to the limitations set forth in subsection (3) of this section.

(2) The bylaws or, in the absence of an applicable bylaw, the board of directors may fix a future date as the record date for determining shareholders entitled to a distribution, other than one involving a purchase, redemption, or other acquisition of the corporation’s shares. If a record date is necessary but no future record date is so fixed, the record date is the date the board of directors authorizes the distribution.

(3) No distribution may be made if, after giving it effect:

(a) The corporation would not be able to pay its debts as they become due in the usual course of business; or

(b) The corporation’s total assets would be less than the sum of its total liabilities plus (unless the articles of incorporation permit otherwise) the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution.

(4) The board of directors may base a determination that a distribution is not prohibited under subsection (3) of this section either on financial statements prepared on the basis of accounting practices and principles that are reasonable under the circumstances or on a fair valuation or other method that is reasonable under the circumstances.

(5) Except as provided in subsection (6) of this section, the time for measuring the effect of a distribution under subsection (3) of this section is:

(a) In the case of distribution by purchase, redemption, or other acquisition of the corporation’s shares, as of the earlier of:

(I) The date money or other property is transferred or debt is incurred by the corporation; or

(II) The date the shareholder ceases to be a shareholder with respect to the acquired shares;

(b) In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed; and

(I) The date the distribution is authorized, if the payment occurs within one hundred twenty days after the date of authorization; or

(II) The date the payment is made, if it occurs more than one hundred twenty days after the date of authorization.

(6) Indebtedness of a corporation, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations under subsection (3) of this section if its terms provide that payment of principal and interest thereon are made only if and to the extent that payment of a distribution to shareholders could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest thereon is treated as a distribution the effect of which is measured on the date the payment is actually made.

(7) Unless otherwise expressly provided in the articles of incorporation or bylaws, a statement of par value for shares shall not impose any limitation on distributions and shall not require any separate designation, restriction, reservation, or other segregation of any capital account of a corporation.

Source: L. 93: Entire article added, p. 762, § 1, effective July 1, 1994.

7-106-402. Unclaimed distributions. If a corporation has mailed three successive distributions to a shareholder addressed to the shareholder’s address shown on the corporation’s current record of shareholders and the distributions have been returned as undeliverable, no further attempt to deliver distributions to the shareholder need be made until another address for the shareholder is made known to the corporation, at which time all distributions accumulated by reason of this section shall, except as otherwise provided by law, be mailed to the shareholder at such other address.

Source: L. 93: Entire article added, p. 764, § 1, effective July 1, 1994.

ARTICLE 107 – Shareholders

Cross references: For definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

Law reviews: For article, “Valuation of Stock in Closely Held Corporations”, see 18 Colo. Law. 1731 (1989).

PART 1

MEETINGS

7-107-101. Annual meeting. (1) A corporation shall hold a meeting of shareholders annually at a time and date stated in or fixed in accordance with the bylaws, or, if not so stated or fixed, at a time and date stated in or fixed in accordance with a resolution of the board of directors.

(2) Annual shareholders’ meetings may be held in or out of this state at the place stated in or fixed in accordance with the bylaws, or, if not so stated or fixed, at a place stated in or fixed in accordance with a resolution of the board of directors. If no place is so stated or fixed, annual meetings shall be held at the corporation’s principal office.

(3) The failure to hold an annual meeting at the time determined pursuant to subsection (1) of this section does not affect the validity of any corporate action and does not work a forfeiture or dissolution of the corporation.

Source: L. 93: Entire article added, p. 764, § 1, effective July 1, 1994. L. 96: Entire section amended, p. 1315, § 15, effective June 1.

7-107-102. Special meeting. (1) A corporation shall hold a special meeting of shareholders:

(a) On call of its board of directors or the person or persons authorized by the bylaws or resolution of the board of directors to call such a meeting; or

(b) If the corporation receives one or more written demands for the meeting, stating the purpose or purposes for which it is to be held, signed and dated by the holders of shares representing at least ten percent of all the votes entitled to be cast on any issue proposed to be considered at the meeting.

(2) If not otherwise fixed under section 7-107-103 or 7-107-107, the record date for determining shareholders entitled to demand a special meeting pursuant to paragraph (b) of subsection (1) of this section is the date of the earliest of any of the demands pursuant to which the meeting is called, or the date that is sixty days before the date the first of such demands is received by the corporation, whichever is later.

(3) Special shareholders’ meetings may be held in or out of this state at the place stated in or fixed in accordance with the bylaws, or, if not so stated or fixed, at a place stated in or fixed in accordance with a resolution of the board of directors. If no place is so stated or fixed, special meetings shall be held at the corporation’s principal office.

(4) Only business within the purpose or purposes described in the notice of the meeting required by section 7-107-105 (3) may be conducted at a special shareholders’ meeting.

Source: L. 93: Entire article added, p. 764, § 1, effective July 1, 1994. L. 96: (1)(a), (2), and (3) amended, p. 1316, § 16, effective June 1.

7-107-103. Court-ordered meeting. (1) The holding of a meeting of the shareholders may be summarily ordered by the district court for the county in this state in which the street address of the corporation’s principal office is located or, if the corporation has no principal office in this state, by the district court for the county in which the street address of its registered agent is located or, if the corporation has no registered agent, by the district court for the city and county of Denver:

(a) On application of any shareholder entitled to participate in an annual meeting if an annual meeting was not held within the earlier of six months after the close of the corporation’s most recently ended fiscal year or fifteen months after its last annual meeting; or

(b) On application of any person who participated in a call of or demand for a special meeting effective under section 7-107-102 (1), if:

(I) Notice of the special meeting was not given within thirty days after the date of the call or the date the last of the demands necessary to require the calling of the meeting was received by the corporation pursuant to section 7-107-102 (1)(b), as the case may be; or

(II) The special meeting was not held in accordance with the notice.

(2) The court may fix the time and place of the meeting, determine the shares entitled to participate in the meeting, fix a record date for determining shareholders entitled to notice of and to vote at the meeting, prescribe the form and content of the notice of the meeting, fix the quorum required for specific matters to be considered at the meeting or direct that the votes represented at the meeting constitute a quorum for action on those matters, and enter other orders necessary or appropriate to accomplish the holding of the meeting.

Source: L. 93: Entire article added, p. 765, § 1, effective July 1, 1994. L. 96: IP(1) amended, p. 1316, § 17, effective June 1. L. 2003: IP(1) and (2) amended, p. 2317, § 234, effective July 1, 2004.

7-107-104. Action without meeting. (1) Unless the articles of incorporation require that such action be taken at a shareholders’ meeting, any action required or permitted by articles 101 to 117 of this title to be taken at a shareholders’ meeting may be taken without a meeting if:

(a) All of the shareholders entitled to vote thereon consent to such action in writing; or

(b) Except as otherwise provided in subsection (1.5) of this section and if expressly provided for in the articles of incorporation, the shareholders holding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all of the shares entitled to vote thereon were present and voted consent to such action in writing.

(1.5) If shares are entitled to be voted cumulatively in the election of directors, shareholders may take action under this section to elect or remove directors only if:

(a) The articles of incorporation do not require that such action be taken at a shareholders’ meeting; and

(b) All of the shareholders entitled to vote in the election or removal sign writings describing and consenting to the election or removal of the same directors and the writings are received by the corporation in accordance with subsection (2) of this section.

(2) (a) No action taken pursuant to this section shall be effective unless, within sixty days after the date the corporation first receives a writing describing and consenting to the action and signed by a shareholder, the corporation has received writings that describe and consent to the action, signed by shareholders holding at least the number of shares entitled to vote on the action as required by subsection (1) or (1.5) of this section, as the case may be, disregarding any such writing that has been revoked pursuant to subsection (3) of this section. The bylaws may provide for the receipt of any such writing by the corporation by electronically transmitted facsimile or other form of wire or wireless communication providing the corporation with a complete copy thereof, including a copy of the signature thereto.

(b) Action taken pursuant to this section shall be effective as of the date the corporation receives the last writing necessary to effect the action unless all of the writings necessary to effect the action state another date as the effective date of the action, in which case such stated date shall be the effective date of the action.

(3) Any shareholder who has signed a writing describing and consenting to action taken pursuant to this section may revoke such consent by a writing signed and dated by the shareholder describing the action and stating that the shareholder’s prior consent thereto is revoked, if such writing is received by the corporation prior to the effectiveness of the action.

(4) If not otherwise fixed under subsection (7) of this section or section 7-107-107, the record date for determining shareholders entitled to take action pursuant to this section or entitled to be given notice under subsection (5.5) of this section of action taken pursuant to this section is the date the corporation first receives a writing upon which the action is taken pursuant to this section.

(5) Action taken under this section has the same effect as action taken at a meeting of shareholders and may be described as such in any document.

(5.5) If action is taken under subsection (1) of this section with less than unanimous consent of all shareholders entitled to vote upon the action, the corporation or shareholders taking the action shall, upon receipt by the corporation of all writings necessary to effect the action, give notice of the action to all shareholders who were entitled to vote upon the action but who have not consented to the action in the manner provided in subsection (1) of this section. The notice shall contain or be accompanied by the same material, if any, that would have been required under articles 101 to 117 of this title to be given to shareholders in or with a notice of the meeting at which the action would have been submitted to the shareholders.

(6) (Deleted by amendment, L. 96, p. 1316, § 18, effective June 1, 1996.)

(7) The district court for the county in this state in which the street address of the corporation’s principal office is located or, if the corporation has no principal office in this state, the district court for the county in which the street address of its registered agent is located, or, if the corporation has no registered agent, the district court for the city and county of Denver may, upon application of the corporation or any shareholder who would be entitled to vote on the action at a shareholders’ meeting, summarily state a record date for determining shareholders entitled to sign writings consenting to an action under this section and may enter other orders necessary or appropriate to effect the purposes of this section.

Source: L. 93: Entire article added, p. 766, § 1, effective July 1, 1994. L. 96: (2), (3), and (6) amended, p. 1316, § 18, effective June 1. L. 2003: (2) and (7) amended, p. 2318, § 235, effective July 1, 2004. L. 2005: (1), (2), (3), (4), and (7) amended and (1.5) and (5.5) added, p. 369, § 1, effective April 22.

7-107-105. Notice of meeting. (1) A corporation shall give notice to shareholders of the date, time, and place of each annual and special shareholders’ meeting no fewer than ten nor more than sixty days before the date of the meeting; except that, if the number of authorized shares is to be increased, at least thirty days’ notice shall be given. Unless articles 101 to 117 of this title or the articles of incorporation require otherwise, the corporation is required to give notice only to shareholders entitled to vote at the meeting.

(2) Unless articles 101 to 117 of this title or the articles of incorporation require otherwise, notice of an annual meeting need not include a description of the purpose or purposes for which the meeting is called.

(3) Notice of a special meeting shall include a description of the purpose or purposes for which the meeting is called.

(4) If not otherwise fixed under section 7-107-103 or 7-107-107, the record date for determining shareholders entitled to be given notice of and to vote at an annual or special shareholders’ meeting is the day before the first notice is given to shareholders.

(5) Subject to the next sentence of this subsection (5) and unless otherwise required by the bylaws, if an annual or special shareholders’ meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time, or place if the new date, time, or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed under section 7-107-107, notice of the adjourned meeting shall be given under this section to persons who are shareholders as of the new record date.

Source: L. 93: Entire article added, p. 767, § 1, effective July 1, 1994.

7-107-106. Waiver of notice. (1) A shareholder may waive any notice required by articles 101 to 117 of this title or by the articles of incorporation or the bylaws, whether before or after the date or time stated in the notice as the date or time when any action will occur or has occurred. The waiver shall be in writing, be signed by the shareholder entitled to the notice, and be delivered to the corporation for inclusion in the minutes or filing with the corporate records, but such delivery and filing shall not be conditions of the effectiveness of the waiver.

(2) A shareholder’s attendance at a meeting:

(a) Waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice; and

(b) Waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.

Source: L. 93: Entire article added, p. 767, § 1, effective July 1, 1994.

7-107-107. Record date. (1) The bylaws may fix or provide the manner of fixing a future date as the record date for one or more voting groups in order to determine the shareholders entitled to be given notice of a shareholders’ meeting, to demand a special meeting, to vote, or to take any other action, and if the bylaws do not fix or provide for fixing a record date, the board of directors may fix a future date as the record date; except that the record date for determining the shareholders entitled to take action without a meeting or entitled to be given notice of action so taken shall be determined as provided in section 7-107-104 (4).

(2) A record date fixed under this section shall not be more than seventy days before the meeting or action requiring a determination of shareholders.

(3) A determination of shareholders entitled to be given notice of or to vote at a shareholders’ meeting is effective for any adjournment of the meeting unless the board of directors fixes a new record date, which it shall do if the meeting is adjourned to a date more than one hundred twenty days after the date fixed for the original meeting.

(4) If a court orders a meeting adjourned to a date more than one hundred twenty days after the date fixed for the original meeting, it may provide that the original record date continues in effect or it may fix a new record date.

Source: L. 93: Entire article added, p. 768, § 1, effective July 1, 1994.

7-107-108. Meetings by telecommunication. Unless otherwise provided in the bylaws, any or all of the shareholders may participate in an annual or special shareholders’ meeting by, or the meeting may be conducted through the use of, any means of communication by which all persons participating in the meeting may hear each other during the meeting. A shareholder participating in a meeting by this means is deemed to be present in person at the meeting.

Source: L. 93: Entire article added, p. 768, § 1, effective July 1, 1994.

PART 2 – VOTING

7-107-201. Shareholders’ list for meeting. (1) After fixing a record date for a shareholders’ meeting, the corporation shall prepare a list of the names of all its shareholders who are entitled to be given notice of the meeting. The list shall be arranged by voting groups and within each voting group by class or series of shares, shall be alphabetical within each class or series, and shall show the address of, and the number of shares of each such class and series that are held by, each shareholder.

(2) The shareholders’ list shall be available for inspection by any shareholder, beginning the earlier of ten days before the meeting for which the list was prepared or two business days after notice of the meeting is given and continuing through the meeting, and any adjournment thereof, at the corporation’s principal office or at a place identified in the notice of the meeting in the city in which the meeting will be held. A shareholder or an agent or attorney of the shareholder is entitled on written demand to inspect and, subject to the requirements of section 7-116-102 (3) and the provisions of subsections (2) and (3) of section 7-116-103, to copy the list during regular business hours and during the period it is available for inspection.

(3) The corporation shall make the shareholders’ list available at the meeting, and any shareholder or an agent or attorney of the shareholder is entitled to inspect the list at any time during the meeting or any adjournment.

(4) If the corporation refuses to allow a shareholder or an agent or attorney of the shareholder to inspect the shareholders’ list before or at the meeting or to copy the list, as permitted by subsection (2) or (3) of this section, the district court for the county in this state in which the street address of the corporation’s principal office is located or, if the corporation has no principal office in this state, the district court for the county in which the street address of its registered agent is located or, if the corporation has no registered agent, the district court for the city and county of Denver may, on application of the shareholder, summarily order the inspection or copying of the list at the corporation’s expense and may postpone or adjourn the meeting for which the list was prepared until the inspection or copying is complete.

(5) If a court orders inspection or copying of the shareholders’ list pursuant to subsection (4) of this section, unless the corporation proves that it refused inspection or copying of the list in good faith because it had a reasonable basis for doubt about the right of the shareholder or the agent or attorney of the shareholder to inspect or copy the shareholders’ list:

(a) The court shall also order the corporation to pay the shareholder’s costs, including reasonable counsel fees, incurred in obtaining the order;

(b) The court may order the corporation to pay the shareholder for any damages the shareholder incurred; and

(6) If a court orders inspection or copying of the shareholders’ list pursuant to subsection (4) of this section, the court may impose reasonable restrictions on the use or distribution of the list by the shareholder.

(7) Failure to prepare or make available the shareholders’ list does not affect the validity of action taken at the meeting.

Source: L. 93: Entire article added, p. 769, § 1, effective July 1, 1994. L. 96: (2), (3), and (4) amended, p. 1317, § 19, effective June 1. L. 2003: (2) and (4) amended, p. 2318, § 236, effective July 1, 2004.

7-107-202. Voting entitlement of shares. (1) Except as otherwise provided in subsections (2) and (4) of this section or in the articles of incorporation, each outstanding share, regardless of class, is entitled to one vote, and each fractional share is entitled to a corresponding fractional vote, on each matter voted on at a shareholders’ meeting. Only shares are entitled to vote.

(2) Except as otherwise ordered by a court of competent jurisdiction upon a finding that the purpose of this subsection (2) would not be violated in the circumstances presented to the court, the shares of a corporation are not entitled to be voted if they are owned, directly or indirectly, by a second corporation, domestic or foreign, and the first corporation owns, directly or indirectly, a majority of the shares entitled to vote for directors of the second corporation.

(3) Subsection (2) of this section does not limit the power of a corporation to vote any shares, including its own shares, held by it in a fiduciary capacity.

(4) Redeemable shares are not entitled to be voted after notice of redemption is mailed to the holders and a sum sufficient to redeem the shares has been deposited with a bank, trust company, or other financial institution under an irrevocable obligation to pay the holders the redemption price on surrender of the shares.

Source: L. 93: Entire article added, p. 770, § 1, effective July 1, 1994.

7-107-203. Proxies.

(1) A shareholder may vote the shareholder’s shares in person or by proxy.

(2) Without limiting the manner in which a shareholder may appoint a proxy to vote or otherwise act for the shareholder, the following shall constitute valid means of such appointment:

(a) A shareholder may appoint a proxy by signing an appointment form, either personally or by the shareholder’s attorney-in-fact.

(b) A shareholder may appoint a proxy by transmitting or authorizing the transmission of a telegram, teletype, or other electronic transmission providing a written statement of the appointment to the proxy, to a proxy solicitor, proxy support service organization, or other person duly authorized by the proxy to receive appointments as agent for the proxy, or to the corporation; except that the transmitted appointment shall set forth or be transmitted with written evidence from which it can be determined that the shareholder transmitted or authorized the transmission of the appointment.

(3) An appointment of a proxy is effective against the corporation when received by the corporation, including receipt by the corporation of an appointment transmitted pursuant to paragraph (b) of subsection (2) of this section. An appointment is valid for eleven months unless a different period is expressly provided in the appointment form.

(4) Any complete copy, including an electronically transmitted facsimile, of an appointment of a proxy may be substituted for or used in lieu of the original appointment for any purpose for which the original appointment could be used.

(5) An appointment of a proxy is revocable by the shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest. Appointments coupled with an interest include the appointment of any of the following persons or their designees:

(a) A pledgee;

(b) A person who purchased or agreed to purchase the shares;

(d) An employee of the corporation whose employment contract requires the appointment; or

(e) A party to a voting agreement created under section 7-107-302.

(6) The death or incapacity of the shareholder appointing a proxy does not affect the right of the corporation to accept the proxy’s authority unless notice of the death or incapacity is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises the proxy’s authority under the appointment.

(7) An appointment made irrevocable under subsection (5) of this section is revoked when the interest with which it is coupled is extinguished, but such revocation does not affect the right of the corporation to accept the proxy’s authority unless:

(a) The corporation had notice that the appointment was coupled with that interest and notice that the interest is extinguished is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises the proxy’s authority under the appointment; or

(b) Other notice of the revocation of the appointment is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises the proxy’s authority under the appointment.

(8) The corporation shall not be required to recognize an appointment made irrevocable under subsection (5) of this section if it has received a writing revoking the appointment signed by the shareholder either personally or by the shareholder’s attorney-in-fact, notwithstanding that the revocation may be a breach of an obligation of the shareholder to another person not to revoke the appointment. This provision shall not affect any claim such other person may have against the shareholder with respect to the revocation.

(9) A transferee for value of shares subject to an irrevocable appointment may revoke the appointment if the transferee did not know of its existence when the transferee acquired the shares and the existence of the irrevocable appointment was not noted on the certificate representing the shares or on the information statement for shares without certificates.

(10) Subject to section 7-107-205 and to any express limitation on the proxy’s authority appearing on the appointment form, a corporation is entitled to accept the proxy’s vote or other action as that of the shareholder making the appointment.

Source: L. 93: Entire article added, p. 770, § 1, effective July 1, 1994. L. 96: (3) amended, p. 1318, § 20, effective June 1. L. 2004: (6), (7)(a), (7)(b), and (9) amended, p. 1496, § 250, effective July 1.

7-107-204. Shares held by nominees.

(1) A corporation may establish a procedure by which the beneficial owner of shares that are registered in the name of a nominee is recognized by the corporation as the shareholder. The extent of this recognition may be determined in the procedure thus established.

(2) The procedure described in subsection (1) of this section may state:

(a) The types of nominees to which it applies;

(b) The rights or privileges that the corporation recognizes in a beneficial owner, which may include rights or privileges other than voting;

(d) The information that shall be provided by the nominee when the procedure is used;

(e) The period for which the nominee’s use of the procedure is effective; and

(f) Other aspects of the rights and duties thereby created.

Source: L. 93: Entire article added, p. 772, § 1, effective July 1, 1994. L. 2003: IP(2) amended, p. 2319, § 237, effective July 1, 2004.

7-107-205. Corporation’s acceptance of votes. (1) If the name signed on a vote, consent, waiver, proxy appointment, or proxy appointment revocation corresponds to the name of a shareholder, the corporation, if acting in good faith, is entitled to accept the vote, consent, waiver, proxy appointment, or proxy appointment revocation and to give it effect as the act of the shareholder.

(2) If the name signed on a vote, consent, waiver, proxy appointment, or proxy appointment revocation does not correspond to the name of a shareholder, the corporation, if acting in good faith, is nevertheless entitled to accept the vote, consent, waiver, proxy appointment, or proxy appointment revocation and to give it effect as the act of the shareholder if:

(a) The shareholder is an entity and the name signed purports to be that of an officer or agent of the entity;

(b) The name signed purports to be that of an administrator, executor, guardian, or conservator representing the shareholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the vote, consent, waiver, proxy appointment, or proxy appointment revocation;

(c) The name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the vote, consent, waiver, proxy appointment, or proxy appointment revocation;

(d) The name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation of the signatory’s authority to sign for the shareholder has been presented with respect to the vote, consent, waiver, proxy appointment, or proxy appointment revocation;

(e) Two or more persons are the shareholder as cotenants or fiduciaries and the name signed purports to be the name of at least one of the cotenants or fiduciaries and the person signing appears to be acting on behalf of all the cotenants or fiduciaries; or

(f) The acceptance of the vote, consent, waiver, proxy appointment, or proxy appointment revocation is otherwise proper under rules established by the corporation that are not inconsistent with the provisions of this subsection (2).

(3) The corporation is entitled to reject a vote, consent, waiver, proxy appointment, or proxy appointment revocation if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory’s authority to sign for the shareholder.

(4) The corporation and its officer or agent who accepts or rejects a vote, consent, waiver, proxy appointment, or proxy appointment revocation in good faith and in accordance with the standards of this section are not liable in damages for the consequences of the acceptance or rejection.

(5) Corporate action based on the acceptance or rejection of a vote, consent, waiver, proxy appointment, or proxy appointment revocation under this section is valid unless a court of competent jurisdiction determines otherwise.

Source: L. 93: Entire article added, p. 773, § 1, effective July 1, 1994.

7-107-206. Quorum and voting requirements for voting groups.

(1) Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Unless otherwise provided in articles 101 to 117 of this title or in the articles of incorporation, a majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter, but a quorum shall not consist of fewer than one-third of the votes entitled to be cast on the matter by the voting group.

(2) Once a share is represented for any purpose at a meeting, including the purpose of determining that a quorum exists, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting, unless otherwise provided in the articles of incorporation or unless a new record date is or shall be set for that adjourned meeting.

(3) If a quorum exists, action on a matter other than the election of directors by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast within the voting group opposing the action, unless a greater number of affirmative votes is required by articles 101 to 117 of this title or the articles of incorporation.

(4) An amendment to the articles of incorporation adding, changing, or deleting a quorum or voting requirement for a voting group greater than that specified in subsection (1) or (3) of this section is governed by section 7-107-208 (2).

(5) The election of directors is governed by section 7-107-209.

Source: L. 93: Entire article added, p. 774, § 1, effective July 1, 1994.

7-107-207. Action by single and multiple voting groups. (1) If articles 101 to 117 of this title or the articles of incorporation provide for voting by a single voting group on a matter, action on that matter is taken when voted upon by that voting group as provided in section 7-107-206.

(2) If articles 101 to 117 of this title or the articles of incorporation provide for voting by two or more voting groups on a matter, action on that matter is taken only when voted upon by each of those voting groups counted separately as provided in section 7-107-206. One voting group may vote on a matter even though no action is taken by another voting group entitled to vote on the matter.

Source: L. 93: Entire article added, p. 774, § 1, effective July 1, 1994.

7-107-208. Greater quorum or voting requirements.

(1) The articles of incorporation or, if authorized by the articles of incorporation, bylaws adopted by the shareholders may provide for a greater quorum or voting requirement for shareholders or voting groups than is provided for by articles 101 to 117 of this title.

(2) An amendment to the articles of incorporation that adds, changes, or deletes a greater quorum or voting requirement shall meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirements then in effect or proposed to be adopted, whichever is greater.

Source: L. 93: Entire article added, p. 775, § 1, effective July 1, 1994.

7-107-209. Voting for directors – cumulative voting.

(1) At each election for directors, every shareholder entitled to vote at such election has the right:

(a) To vote, in person or by proxy, all of the shareholder’s votes for as many persons as there are directors to be elected and for whose election the shareholder has a right to vote unless the articles of incorporation provide otherwise; or

(b) To the extent that the privilege of cumulative voting in the election of directors is in effect pursuant to the provisions of section 7-102-102 (3), to cumulate votes by multiplying the number of votes the shareholder is entitled to cast by the number of directors for whom the shareholder is entitled to vote and casting the product for a single candidate or distributing the product among two or more candidates.

(2) The articles of incorporation may provide that shares otherwise entitled to vote cumulatively may not be voted cumulatively at a meeting unless:

(a) The notice of the meeting or the proxy statement accompanying the notice states conspicuously that cumulative voting is authorized; or

(b) A shareholder who has the right to cumulate votes gives notice to the corporation not less than forty-eight hours before the time set for the meeting of the shareholder’s intent to cumulate votes during the meeting. If one shareholder gives the notice provided for in this paragraph (b), all other shareholders in the same voting group participating in the election shall be entitled to cumulate their votes without giving further notice.

(3) If, before a meeting of shareholders at which directors are to be elected, the corporation receives notice pursuant to paragraph (b) of subsection (2) of this section with respect to that meeting, then:

(a) If such notice is received sufficiently early that the information required by paragraph (a) of subsection (2) of this section can be included, without significant additional expense, in the notice of the meeting or in a proxy statement accompanying the notice, the corporation shall include such information in that notice or proxy statement; or

(b) If such notice is received later than contemplated in paragraph (a) of this subsection (3), the corporation may take such other action as it may deem appropriate to provide notice, to the voting group or groups that are affected by the shareholder’s notice, that cumulative voting is authorized at the meeting for such voting group or groups; and, in any event, the corporation shall cause an announcement to be made at the meeting, before the taking of any vote with respect to which cumulative voting is in effect, that cumulative voting is authorized at the meeting.

(4) In an election of directors, that number of candidates equaling the number of directors to be elected, having the highest number of votes cast in favor of their election, are elected to the board of directors.

Source: L. 93: Entire article added, p. 775, § 1, effective July 1, 1994.

PART 3 – VOTING TRUSTS AND AGREEMENTS –

7-107-301. Voting trusts. (1) One or more shareholders may create a voting trust, conferring on a trustee the right to vote or otherwise act for them, by signing an agreement setting out the provisions of the trust and by transferring their shares to the trustee. When a voting trust agreement is signed, the trustee shall prepare a list of the names and addresses of all owners of beneficial interests in the trust, together with the number and class of shares each transferred to the trust, and promptly cause the corporation to receive copies of the list and agreement. Thereafter, the trustee shall cause the corporation to receive changes to the list promptly as they occur and amendments to the agreement promptly as they are made.

(2) A voting trust becomes effective on the date the first shares subject to the trust are registered in the trustee’s name. A voting trust is valid for not more than ten years after its effective date unless extended under subsection (3) of this section.

(3) All or some of the parties to a voting trust may extend it for additional terms of not more than ten years each by signing an extension agreement and obtaining the trustee’s written consent to the extension. An extension is valid for not more than ten years after the date the first shareholder signs the extension agreement, unless such signing occurs within two years before the expiration date of the voting trust as originally fixed or as last extended, in which case the extension is valid for not more than ten years after the expiration date of the voting trust as originally fixed or last extended. The trustee shall cause the corporation to receive copies of the extension agreement. An extension agreement binds only those parties signing it.

Source: L. 93: Entire article added, p. 776, § 1, effective July 1, 1994.

7-107-302. Voting agreements.

(1) Two or more shareholders may provide for the manner in which they will vote their shares by signing an agreement for that purpose. A voting agreement created under this section is not subject to the provisions of section 7-107-301.

(2) A voting agreement created under this section is specifically enforceable.

Source: L. 93: Entire article added, p. 777, § 1, effective July 1, 1994.

PART 4 – ACTIONS BY SHAREHOLDERS

7-107-401. Definition of “shareholder”. As used in this part 4, “shareholder” includes a beneficial owner whose shares are held in a voting trust or held by a nominee on the beneficial owner’s behalf.

Source: L. 93: Entire article added, p. 777, § 1, effective July 1, 1994.

Cross references: For additional definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

7-107-402. Actions by shareholders. (1) No action shall be commenced by a shareholder in the right of a domestic corporation, and no action shall be commenced in this state by a shareholder in the right of a foreign corporation, unless the plaintiff was a shareholder of the corporation at the time of the transaction of which the plaintiff complains or the plaintiff is a person upon whom shares or voting trust certificates thereafter devolved by operation of law from a person who was a shareholder at such time.

(2) In any action instituted on or after January 1, 1959, in the right of any domestic or foreign corporation by a shareholder, the court having jurisdiction, upon final judgment and a finding that the action was commenced without reasonable cause, shall require the plaintiff to pay to the parties named as defendants the costs and reasonable expenses directly attributable to the defense of such action, but not including fees of attorneys.

(3) In any action pending, instituted, or maintained on or after January 1, 1959, in the right of any domestic or foreign corporation by a shareholder holding less than five percent of the outstanding shares of any class of such corporation or of voting trust certificates therefor, unless the shares or voting trust certificates so held have a market value in excess of twenty-five thousand dollars, the corporation in whose right such action is commenced shall be entitled, at any time before final judgment, to require the plaintiff to give security for the costs and reasonable expenses which may be directly attributable to and incurred by it in the defense of such action or may be incurred by other parties named as defendant for which it may become legally liable, but not including fees of attorneys. Market value shall be determined as of the date that the plaintiff institutes the action or, in the case of an intervenor, as of the date that the plaintiff becomes a party to the action. The amount of such security may from time to time be increased or decreased, in the discretion of the court, upon showing that the security provided has or may become inadequate or is excessive. If the court finds that the action was commenced without reasonable cause, the corporation shall have recourse to such security in such amount as the court shall determine upon the termination of such action.

Source: L. 93: Entire article added, p. 777, § 1, effective July 1, 1994.

Article 108 – Directors and Officers

Cross references: For definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

Law reviews: For article, “Commercial and Corporate Law”, which discusses a Tenth Circuit decision dealing with parent company liability for breaching subsidiary-employee contract, see 65 Den. U.L. Rev. 492 (1988); for article, “Risk and Risk Takers: Protecting Corporate Executives With D&O Insurance Policies”, see 43 Colo. Law. 39 (Nov. 2014).

PART 1 BOARD OF DIRECTORS

7-108-101. Requirement for board of directors. (1) Except as otherwise provided in its articles of incorporation, each corporation shall have a board of directors.

(2) Subject to any provision stated in the articles of incorporation, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, the board of directors or such other persons as the articles of incorporation provide shall have the authority and perform the duties of a board of directors.

Source: L. 93: Entire article added, p. 778, § 1, effective July 1, 1994. L. 2003: (2) amended, p. 2319, § 238, effective July 1, 2004.

7-108-102. Qualifications of directors. A director shall be an individual who is eighteen years of age or older. The bylaws may prescribe other qualifications for directors. A director need not be a resident of this state or a shareholder unless the bylaws so prescribe.

Source: L. 93: Entire article added, p. 778, § 1, effective July 1, 1994. L. 2004: Entire section amended, p. 1497, § 251, effective July 1.

7-108-103. Number and election of directors. (1) A board of directors shall consist of one or more members, with the number stated in or fixed in accordance with the bylaws.

(2) The bylaws may establish a range for the size of the board of directors by fixing a minimum and maximum number of directors. If a range is established, the number of directors may be fixed or changed from time to time within the range by the shareholders or the board of directors.

(3) Directors are elected at each annual meeting of the shareholders except as provided in section 7-108-106.

Source: L. 93: Entire article added, p. 778, § 1, effective July 1, 1994. L. 2003: (1) amended, p. 2319, § 239, effective July 1, 2004.

7-108-104. Election of directors by certain classes of shareholders. If the articles of incorporation authorize dividing the shares of the corporation into classes or series, the articles of incorporation may authorize the election of all or a stated number or portion of directors by the holders of one or more authorized classes or series of shares. A class or series of shares entitled to elect one or more directors is a separate voting group for purposes of the election of directors.

Source: L. 93: Entire article added, p. 779, § 1, effective July 1, 1994. L. 2003: Entire section amended, p. 2319, § 240, effective July 1, 2004.

7-108-105. Terms of directors generally. (1) Except as provided in section 7-108-106, the terms of the initial directors of a corporation expire at the first shareholders’ meeting at which directors are elected.

(2) Except as provided in section 7-108-106, the terms of all other directors expire at the next annual shareholders’ meeting following their election.

(3) A decrease in the number of directors does not shorten an incumbent director’s term.

(4) The term of a director elected to fill a vacancy pursuant to section 7-108-110 (1)(b) or 7-108-110 (1)(c) expires at the next annual shareholders’ meeting at which directors are elected. The term of a director elected to fill a vacancy pursuant to section 7-108-110 (1)(a) shall be the unexpired term of the director’s predecessor in office; except that, if the director’s predecessor had been elected to fill a vacancy pursuant to section 7-108-110 (1)(b) or 7-108-110 (1)(c), the term of a director elected pursuant to section 7-108-110 (1)(a) shall be the unexpired term of the last predecessor elected by the shareholders.

(5) Despite the expiration of the director’s term, a director continues to serve until the director’s successor is elected and qualifies.

(6) (Deleted by amendment, L. 2004, p. 1497, § 252, effective July 1, 2004.)

Source: L. 93: Entire article added, p. 779, § 1, effective July 1, 1994. L. 2000: (6) amended, p. 978, § 55, effective July 1. L. 2002: (6) amended, p. 1848, § 110, effective July 1; (6) amended, p. 1712, § 110, effective October 1. L. 2004: (4), (5), and (6) amended, p. 1497, § 252, effective July 1.

7-108-106. Staggered terms for directors. The articles of incorporation may provide for staggering the terms of directors by dividing the total number of directors into two or three groups, with each group containing one-half or one-third of the total, as near as may be. In that event, the terms of directors in the first group expire at the first annual shareholders’ meeting after their election, the terms of directors in the second group expire at the second annual shareholders’ meeting after their election, and the terms of directors in the third group, if any, expire at the third annual shareholders’ meeting after their election. Upon the expiration of the initial staggered terms, directors shall be elected for terms of two years or three years, as the case may be, to succeed those whose terms expire.

Source: L. 93: Entire article added, p. 779, § 1, effective July 1, 1994.

7-108-107. Resignation of directors. (1) A director may resign at any time by giving written notice of resignation to the corporation.

(2) A resignation of a director is effective when the notice is received by the corporation unless the notice states a later effective date.

(3) Repealed.

Source: L. 93: Entire article added, p. 780, § 1, effective July 1, 1994. L. 2000: (3) amended, p. 978, § 56, effective July 1. L. 2002: (3) amended, p. 1848, § 111, effective July 1; (3) amended, p. 1713, § 111, effective October 1. L. 2003: (2) amended, p. 2319, § 241, effective July 1, 2004. L. 2004: (3) repealed, p. 1498, § 253, effective July 1.

7-108-108. Removal of directors by shareholders. (1) The shareholders may remove one or more directors with or without cause unless the articles of incorporation provide that directors may be removed only for cause.

(2) If a director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove that director.

(3) A director may be removed only if the number of votes cast in favor of removal exceeds the number of votes cast against removal; except that, if cumulative voting is in effect, a director may not be removed if the number of votes sufficient to elect the director under cumulative voting is voted against such removal.

(4) A director may be removed by the shareholders only at a meeting called for the purpose of removing the director, and the meeting notice shall state that the purpose, or one of the purposes, of the meeting is removal of the director.

(5) (Deleted by amendment, L. 2004, p. 1498, § 254, effective July 1, 2004.)

Source: L. 93: Entire article added, p. 780, § 1, effective July 1, 1994. L. 2000: (5) amended, p. 978, § 57, effective July 1. L. 2002: (5) amended, p. 1848, § 112, effective July 1; (5) amended, p. 1713, § 112, effective October 1. L. 2004: (4) and (5) amended, p. 1498, § 254, effective July 1.

7-108-109. Removal of directors by judicial proceeding. (1) A director may be removed by the district court for the county in this state in which the street address of the corporation’s principal office is located or, if the corporation has no principal office in this state, by the district court for the county in which the street address of its registered agent is located or, if the corporation has no registered agent, by the district court for the city and county of Denver, in a proceeding commenced either by the corporation or by shareholders holding at least ten percent of the outstanding shares of any class, if the court finds that the director engaged in fraudulent or dishonest conduct or gross abuse of authority or discretion with respect to the corporation and that removal is in the best interests of the corporation.

(2) The court that removes a director may bar the director from reelection for a period prescribed by the court.

(3) If shareholders commence a proceeding under subsection (1) of this section, they shall make the corporation a party defendant.

(4) Repealed.

Source: L. 93: Entire article added, p. 780, § 1, effective July 1, 1994. L. 96: (1) amended, p. 1318, § 21, effective June 1. L. 2000: (4) amended, p. 978, § 58, effective July 1. L. 2002: (4) amended, p. 1848, § 113, effective July 1; (4) amended, p. 1713, § 113, effective October 1. L. 2003: (1) amended, p. 2319, § 242, effective July 1, 2004. L. 2004: (4) repealed, p. 1498, § 255, effective July 1.

7-108-110. Vacancy on board. (1) Unless otherwise provided in the articles of incorporation, if a vacancy occurs on a board of directors, including a vacancy resulting from an increase in the number of directors:

(a) The shareholders may fill the vacancy;

(b) The board of directors may fill the vacancy; or

(c) If the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.

(2) Notwithstanding subsection (1) of this section, unless otherwise provided in the articles of incorporation, if the vacant office was held by a director elected by a voting group of shareholders:

(a) If one or more of the remaining directors were elected by the same voting group, only such directors are entitled to vote to fill the vacancy if it is filled by directors, and they may do so by the affirmative vote of a majority of such directors remaining in office; and

(b) Only the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the shareholders.

(3) A vacancy that will occur at a specific later date, by reason of a resignation effective at a later date under section 7-108-107 (2) or otherwise, may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs.

Source: L. 93: Entire article added, p. 781, § 1, effective July 1, 1994.

7-108-111. Compensation of directors. Unless otherwise provided in the bylaws, the board of directors may fix the compensation of directors.

Source: L. 93: Entire article added, p. 781, § 1, effective July 1, 1994.

PART 2 MEETINGS AND ACTION OF THE DIRECTORS

Law reviews: For article, “Contractually Binding Colorado Entities”, see 28 Colo. Law. 33 (Dec. 1999).

7-108-201. Meetings. (1) The board of directors may hold regular or special meetings in or out of this state.

(2) Unless otherwise provided in the bylaws, the board of directors may permit any director to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.

Source: L. 93: Entire article added, p. 782, § 1, effective July 1, 1994.

7-108-202. Action without meeting. (1) Unless the bylaws require that the action be taken at a meeting, any action required or permitted by articles 101 to 117 of this title to be taken at a board of directors’ meeting may be taken without a meeting if all members of the board consent to such action in writing.

(2) Action is taken under this section at the time the last director signs a writing describing the action taken, unless, before such time, any director has revoked the director’s consent by a writing signed by the director and received by the secretary or any other person authorized by the bylaws or the board of directors to receive such a revocation.

(3) Action under this section is effective at the time it is taken as provided by subsection (2) of this section, unless the directors establish a different effective date.

(4) Action taken pursuant to this section has the same effect as action taken at a meeting of directors and may be described as such in any document.

Source: L. 93: Entire article added, p. 782, § 1, effective July 1, 1994. L. 2004: (2) amended, p. 1498, § 256, effective July 1.

7-108-203. Notice of meeting. (1) Unless otherwise provided in the bylaws, regular meetings of the board of directors may be held without notice of the date, time, place, or purpose of the meeting.

(2) Unless the bylaws provide for a longer or shorter period, special meetings of the board of directors shall be preceded by at least two days’ notice of the date, time, and place of the meeting. The notice need not describe the purpose of the special meeting unless required by the bylaws.

Source: L. 93: Entire article added, p. 782, § 1, effective July 1, 1994.

7-108-204. Waiver of notice. (1) A director may waive any notice of a meeting before or after the time and date of the meeting stated in the notice. Except as provided by subsection (2) of this section, the waiver shall be in writing and signed by the director entitled to the notice. Such waiver shall be delivered to the corporation for filing with the corporate records, but such delivery and filing shall not be conditions of the effectiveness of the waiver.

(2) A director’s attendance at or participation in a meeting waives any required notice to the director of the meeting unless:

(a) At the beginning of the meeting or promptly upon the director’s later arrival, the director objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice and does not thereafter vote for or assent to action taken at the meeting; or

(b) If special notice was required of a particular purpose pursuant to section 7-108-203 (2), the director objects to transacting business with respect to the purpose for which such special notice was required and does not thereafter vote for or assent to action taken at the meeting with respect to such purpose.

Source: L. 93: Entire article added, p. 782, § 1, effective July 1, 1994. L. 2004: IP(2) and (2)(a) amended, p. 1498, § 257, effective July 1.

7-108-205. Quorum and voting. (1) Unless a greater number is required by the bylaws, a quorum of a board of directors consists of:

(a) A majority of the number of directors fixed if the corporation has a fixed board size; or

(b) A majority of the number of directors fixed or, if no number is fixed, of the number in office immediately before the meeting begins, if a range for the size of the board is established pursuant to section 7-108-103 (2).

(2) The bylaws may authorize a quorum of a board of directors to consist of:

(a) No fewer than a majority of the number of directors fixed if the corporation has a fixed board size; or

(b) No fewer than a majority of the number of directors fixed or, if no number is fixed, of the number in office immediately before the meeting begins, if a range for the size of the board is established pursuant to section 7-108-103 (2).

(3) 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 of directors unless the vote of a greater number of directors is required by articles 101 to 117 of this title or the bylaws.

(4) A director who is present at a meeting of the board of directors when corporate action is taken is deemed to have assented to all action taken at the meeting unless:

(a) The director objects at the beginning of the meeting, or promptly upon the director’s arrival, to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to any action taken at the meeting;

(b) The director contemporaneously requests that the director’s dissent or abstention as to any specific action taken be entered in the minutes of the meeting; or

(c) The director causes written notice of the director’s dissent or abstention as to any specific action to be received by the presiding officer of the meeting before adjournment of the meeting or by the corporation promptly after adjournment of the meeting.

(5) The right of dissent or abstention pursuant to subsection (4) of this section as to a specific action is not available to a director who votes in favor of the action taken.

Source: L. 93: Entire article added, p. 783, § 1, effective July 1, 1994. L. 96: (1) amended, p. 1318, § 22, effective June 1. L. 2004: (4) amended, p. 1498, § 258, effective July 1.

7-108-206. Committees.

(1) Except as otherwise provided in the bylaws and subject to the provisions of section 7-109-106, the board of directors may create one or more committees and appoint one or more members of the board of directors to serve on them.

(2) The creation of a committee and appointment of members to it shall be approved by the greater of a majority of all the directors in office when the action is taken or the number of directors required by the bylaws to take action under section 7-108-205.

(3) Sections 7-108-201 to 7-108-205, which govern meetings, action without meeting, notice, waiver of notice, and quorum and voting requirements of the board of directors, apply to committees and their members as well.

(4) To the extent stated in the bylaws or by the board of directors, each committee shall have the authority of the board of directors under section 7-108-101; except that a committee shall not:

(a) Authorize distributions;

(b) Approve or propose to shareholders action that articles 101 to 117 of this title require to be approved by shareholders;

(d) Amend articles of incorporation pursuant to section 7-110-102;

(e) Adopt, amend, or repeal bylaws;

(f) Approve a plan of conversion or plan of merger not requiring shareholder approval;

(g) Authorize or approve reacquisition of shares, except according to a formula or method prescribed by the board of directors; or

(h) Authorize or approve the issuance or sale of shares, or a contract for the sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares; except that the board of directors may authorize a committee or an officer to do so within limits specifically prescribed by the board of directors.

(5) The creation of, delegation of authority to, or action by a committee does not alone constitute compliance by a director with the standards of conduct described in section 7-108-401.

Source: L. 93: Entire article added, p. 784, § 1, effective July 1, 1994. L. 96: IP(4) amended, p. 1318, § 23, effective June 1. L. 2003: IP(4) amended, p. 2320, § 243, effective July 1, 2004. L. 2007: (4)(f) amended, p. 245, § 42, effective May 29.

PART 3 OFFICERS

7-108-301. Officers. (1) A corporation shall have the officers designated in its bylaws or by the board of directors. An officer shall be an individual who is eighteen years of age or older.

(2) Officers may be appointed by the board of directors or in such other manner as the board of directors or bylaws may provide. A duly appointed officer may appoint one or more officers or assistant officers if authorized by the bylaws or the board of directors.

(3) The bylaws or the board of directors shall delegate to one or more of the officers responsibility for the preparation and maintenance of minutes of the directors’ and shareholders’ meetings and other records and information required to be kept by the corporation under section 7-116-101 and for authenticating records of the corporation.

(4) The same individual may simultaneously hold more than one office in the corporation.

Source: L. 93: Entire article added, p. 785, § 1, effective July 1, 1994. L. 2004: (1) amended, p. 1499, § 259, effective July 1.

7-108-302. Duties of officers. Each officer shall have the authority and shall perform the duties stated with respect to the officer’s office in the bylaws or, to the extent not inconsistent with the bylaws, prescribed with respect to that office by the board of directors or by an officer authorized by the board of directors.

Source: L. 93: Entire article added, p. 785, § 1, effective July 1, 1994. L. 2003: Entire section amended, p. 2320, § 244, effective July 1, 2004. L. 2004: Entire section amended, p. 1499, § 260, effective July 1.

7-108-303. Resignation and removal of officers. (1) An officer may resign at any time by giving written notice of resignation to the corporation.

(2) A resignation of an officer is effective when the notice is received by the corporation unless the notice states a later effective date.

(3) If a resignation is made effective at a later date, the board of directors may permit the officer to remain in office until the effective date and may fill the pending vacancy before the effective date if the board of directors provides that the successor does not take office until the effective date, or the board of directors may remove the officer at any time before the effective date and may fill the resulting vacancy.

(4) Unless otherwise provided in the bylaws, the board of directors may remove any officer at any time with or without cause. The bylaws or the board of directors may make provision for the removal of officers by other officers or by the shareholders.

(5) Repealed.

Source: L. 93: Entire article added, p. 785, § 1, effective July 1, 1994. L. 2000: (5) amended, p. 978, § 59, effective July 1. L. 2002: (5) amended, p. 1848, § 114, effective July 1; (5) amended, p. 1713, § 114, effective October 1. L. 2003: (2) amended, p. 2320, § 245, effective July 1, 2004. L. 2004: (5) repealed, p. 1499, § 261, effective July 1.

7-108-304. Contract rights with respect to officers. (1) The appointment of an officer does not itself create contract rights.

(2) An officer’s removal does not affect the officer’s contract rights, if any, with the corporation. An officer’s resignation does not affect the corporation’s contract rights, if any, with the officer.

Source: L. 93: Entire article added, p. 786, § 1, effective July 1, 1994.

PART 4 STANDARDS OF CONDUCT

Law reviews: For article, “The Long and Winding Road to Public Benefit Corporations in Colorado”, see 43 Colo. Law. 39 (Jan. 2014).

7-108-401. General standards of conduct for directors and officers.

(1) Each director shall discharge the director’s duties as a director, including the director’s duties as a member of a committee, and each officer with discretionary authority shall discharge the officer’s duties under that authority:

(a) In good faith;

(b) With the care an ordinarily prudent person in a like position would exercise under similar circumstances; and

(2) In discharging duties, a director or officer is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by:

(a) One or more officers or employees of the corporation whom the director or officer reasonably believes to be reliable and competent in the matters presented;

(b) Legal counsel, a public accountant, or another person as to matters the director or officer reasonably believes are within such person’s professional or expert competence; or

(c) In the case of a director, a committee of the board of directors of which the director is not a member if the director reasonably believes the committee merits confidence.

(3) A director or officer is not acting in good faith if the director or officer has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (2) of this section unwarranted.

(4) A director or officer is not liable as such to the corporation or its shareholders for any action the director or officer takes or omits to take as a director or officer, as the case may be, if, in connection with such action or omission, the director or officer performed the duties of the position in compliance with this section.

(5) A director or officer of a corporation, in the performance of duties in that capacity, shall not have any fiduciary duty to any creditor of the corporation arising only from the status as a creditor.

Source: L. 93: Entire article added, p. 786, § 1, effective July 1, 1994. L. 2004: IP(1), (1)(c), IP(2), (3), and (4) amended, p. 1499, § 262, effective July 1. L. 2006: (5) added, p. 880, § 71, effective July 1.

7-108-402. Limitation of certain liabilities of directors and officers.

(1) If so provided in the articles of incorporation, the corporation shall eliminate or limit the personal liability of a director to the corporation or to its shareholders for monetary damages for breach of fiduciary duty as a director; except that any such provision shall not eliminate or limit the liability of a director to the corporation or to its shareholders for monetary damages for any breach of the director’s duty of loyalty to the corporation or to its shareholders, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, acts specified in section 7-108-403, or any transaction from which the director directly or indirectly derived an improper personal benefit. No such provision shall eliminate or limit the liability of a director to the corporation or to its shareholders for monetary damages for any act or omission occurring before the date when such provision becomes effective.

(2) No director or officer shall be personally liable for any injury to person or property arising out of a tort committed by an employee unless such director or officer was personally involved in the situation giving rise to the litigation or unless such director or officer committed a criminal offense in connection with such situation. The protection afforded in this subsection (2) shall not restrict other common-law protections and rights that a director or officer may have. This subsection (2) shall not restrict the corporation’s right to eliminate or limit the personal liability of a director to the corporation or to its shareholders for monetary damages for breach of fiduciary duty as a director as provided in subsection (1) of this section.

Source: L. 93: Entire article added, p. 787, § 1, effective July 1, 1994.

7-108-403. Liability of directors for unlawful distributions.

(1) A director who votes for or assents to a distribution made in violation of section 7-106-401 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 said section or the articles of incorporation if it is established that the director did not perform the director’s duties in compliance with section 7-108-401. In any proceeding commenced under this section, a director shall have all of the defenses ordinarily available to a director.

(2) A director held liable under subsection (1) of this section for an unlawful distribution is entitled to contribution:

(a) From every other director who could be held liable under subsection (1) of this section for the unlawful distribution; and

(b) From each shareholder who accepted the distribution knowing the distribution was made in violation of section 7-106-401 or the articles of incorporation, the amount of the contribution from such shareholder being the amount of the distribution to that shareholder that exceeds what could have been distributed to that shareholder without violating said section or the articles of incorporation.

Source: L. 93: Entire article added, p. 787, § 1, effective July 1, 1994.

PART 5 – DIRECTOR – CONFLICTS OF INTEREST

7-108-501. Conflicting interest transaction – repeal.

(1) (a) As used in this section, “conflicting interest transaction” means any of the following:

(I) A loan or other assistance by a corporation to a director of the corporation or to an entity in which a director of the corporation is a director or officer or has a financial interest;

(II) A guaranty by a corporation of an obligation of a director of the corporation or of an obligation of an entity in which a director of the corporation is a director or officer or has a financial interest; or

(III) A contract or transaction between a corporation and a director of the corporation or between the corporation and an entity in which a director of the corporation is a director or officer or has a financial interest.

(b) “Conflicting interest transaction” shall not include any transaction between a corporation and another entity that owns, directly or indirectly, all of the outstanding shares of the corporation or all of the outstanding shares or other equity interests of which are owned, directly or indirectly, by the corporation.

(2) No conflicting interest transaction shall be void or voidable or be enjoined, set aside, or give rise to an award of damages or other sanctions in a proceeding by a shareholder or by or in the right of the corporation, solely because the conflicting interest transaction involves a director of the corporation or an entity in which a director of the corporation is a director or officer or has a financial interest or solely because the director is present at or participates in the meeting of the corporation’s board of directors or of the committee of the board of directors which authorizes, approves, or ratifies the conflicting interest transaction or solely because the director’s vote is counted for such purpose if:

(a) The material facts as to the director’s relationship or interest and as to the conflicting interest transaction are disclosed or are known to the board of directors or the committee, and the board of directors or committee in good faith authorizes, approves, or ratifies the conflicting interest transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or

(b) The material facts as to the director’s relationship or interest and as to the conflicting interest transaction are disclosed or are known to the shareholders entitled to vote thereon, and the conflicting interest transaction is specifically authorized, approved, or ratified in good faith by a vote of the shareholders; or

(3) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes, approves, or ratifies the conflicting interest transaction.

(4) (a) Neither a board of directors nor a committee thereof shall authorize a loan, by the corporation to a director of the corporation or to an entity in which a director of the corporation is a director or officer or has a financial interest, or a guaranty, by the corporation of an obligation of a director of the corporation or of an obligation of an entity in which a director of the corporation is a director or officer or has a financial interest, pursuant to paragraph (a) of subsection (2) of this section, until at least ten days after written notice of the proposed authorization of the loan or guaranty has been given to the shareholders who would be entitled to vote thereon if the issue of the loan or guaranty were submitted to a vote of the shareholders.

(b)

(I) Notwithstanding any provision of paragraph (a) of this subsection (4) to the contrary, a board of directors or a subsidiary of the corporation shall not authorize the corporation or subsidiary of the corporation to extend or maintain credit, to arrange for the extension of credit, or to renew an extension of credit in the form of a personal loan to or for a director of the corporation pursuant to paragraph (a) of subsection (2) of this section. For the purposes of this paragraph (b), a corporation or entity is limited to an issuer as defined in section 2 of the federal “Sarbanes-Oxley Act of 2002”, 15 U.S.C. sec. 7201.

(II) The provisions of this paragraph (b) shall not apply to:

(A) An extension of credit or guaranty maintained by a corporation or entity on August 6, 2003, so long as there is no material modification made to the extension of credit or guaranty or the extension of credit or guaranty is not renewed;

(B) An extension of credit or guaranty for a home improvement loan or manufactured home loan under section 5 of the federal “Home Owner’s Loan Act”, 12 U.S.C. sec. 1464;

(C) An extension of credit or guaranty for a consumer credit loan as defined in the federal “Truth in Lending Act”, 15 U.S.C. sec. 1602;

(D) An extension of credit under an open end credit plan pursuant to section 103 of the federal “Truth in Lending Act”, 15 U.S.C. sec. 1602;

(E) An extension of credit from a charge card pursuant to the federal “Truth in Lending Act”, 15 U.S.C. sec. 1637 (c)(4)(e);

(F) An extension of credit by a broker or dealer that buys, trades, or carries securities permitted under rules of the board of governors of the federal reserve system to an employee to buy, trade, or carry securities; except that such extension of credit shall not include an extension of credit that would be used to purchase stock of the corporation or entity employing such employee; or

(G) An extension of credit that is subject to 12 CFR 215 or 12 CFR 223, as amended, or any rule promulgated by the division of banking.

(III) An extension of credit pursuant to subparagraph (II) of this paragraph (b) shall be issued in terms no more favorable than terms offered to a member of the public for an extension of credit generally made available to a member of the public, and made in the ordinary course of business.

(IV) Subparagraphs (I) to (III) of this paragraph (b) are repealed as of the effective date of any federal law that would permit any activity described in this paragraph (b).

Source: L. 93: Entire article added, p. 788, § 1, effective July 1, 1994. L. 96: (1) and (2)(c) amended, p. 1319, § 24, effective June 1. L. 2003: (4) amended, p. 2527, § 1, effective August 6. L. 2004: (4)(a) amended, p. 1500, § 263, effective July 1.

Article 109 – Indemnification

Law reviews: For article, “Risk and Risk Takers: Protecting Corporate Executives With D&O Insurance Policies”, see 43 Colo. Law. 39 (Nov. 2014).

7-109-101. Definitions. As used in this article:

(1) “Corporation” includes any domestic or foreign entity that is a predecessor of a corporation by reason of a merger or other transaction in which the predecessor’s existence ceased upon consummation of the transaction.

(2) “Director” means an individual who is or was a director of a corporation or an individual who, while a director of a corporation, is or was serving at the corporation’s request as a director, an officer, an agent, an associate, an employee, a fiduciary, a manager, a member, a partner, a promoter, or a trustee of, or to hold any similar position with, another domestic or foreign entity or of an employee benefit plan. A director is considered to be serving an employee benefit plan at the corporation’s request if the director’s duties to the corporation also impose duties on, or otherwise involve services by, the director to the plan or to participants in or beneficiaries of the plan. “Director” includes, unless the context requires otherwise, the estate or personal representative of a deceased director.

(3) “Expenses” includes counsel fees.

(4) “Liability” means the obligation incurred with respect to a proceeding to pay a judgment, settlement, penalty, fine, including an excise tax assessed with respect to an employee benefit plan, or reasonable expenses.

(5) “Official capacity” means, when used with respect to a director, the office of director in a corporation and, when used with respect to a person other than a director as contemplated in section 7-109-107, the office in a corporation held by the officer or the employment, fiduciary, or agency relationship undertaken by the employee, fiduciary, or agent on behalf of the corporation. “Official capacity” does not include service for any other domestic or foreign corporation or other person or employee benefit plan.

(6) “Party” includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding.

(7) “Proceeding” means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal.

Source: L. 93: Entire article added, p. 789, § 1, effective July 1, 1994. L. 96: (2) amended, p. 1319, § 25, effective June 1. L. 2003: (2) amended, p. 2320, § 246, effective July 1, 2004. L. 2004: (2) amended, p. 1500, § 264, effective July 1.

Cross references: For additional definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

7-109-102. Authority to indemnify directors. (1) Except as provided in subsection (4) of this section, a corporation may indemnify a person made a party to a proceeding because the person is or was a director against liability incurred in the proceeding if:

(a) The person’s conduct was in good faith; and

(b) The person reasonably believed:

(I) In the case of conduct in an official capacity with the corporation, that such conduct was in the corporation’s best interests; and

(II) In all other cases, that such conduct was at least not opposed to the corporation’s best interests; and

(c) In the case of any criminal proceeding, the person had no reasonable cause to believe the person’s conduct was unlawful.

(2) A director’s conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in or beneficiaries of the plan is conduct that satisfies the requirement of subparagraph (II) of paragraph (b) of subsection (1) of this section. A director’s conduct with respect to an employee benefit plan for a purpose that the director did not reasonably believe to be in the interests of the participants in or beneficiaries of the plan shall be deemed not to satisfy the requirements of paragraph (a) of subsection (1) of this section.

(3) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section.

(4) A corporation may not indemnify a director under this section:

(a) In connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or

(b) In connection with any other proceeding charging that the director derived an improper personal benefit, whether or not involving action in an official capacity, in which proceeding the director was adjudged liable on the basis that the director derived an improper personal benefit.

(5) Indemnification permitted under this section in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding.

Source: L. 93: Entire article added, p. 790, § 1, effective July 1, 1994. L. 2004: (1) and (4) amended, p. 1500, § 265, effective July 1.

7-109-103. Mandatory indemnification of directors. Unless limited by its articles of incorporation, a corporation shall indemnify a person who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the person was a party because the person is or was a director, against reasonable expenses incurred by the person in connection with the proceeding.

Source: L. 93: Entire article added, p. 791, § 1, effective July 1, 1994. L. 2004: Entire section amended, p. 1501, § 266, effective July 1.

7-109-104. Advance of expenses to directors. (1) A corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if:

(a) The director furnishes to the corporation a written affirmation of the director’s good-faith belief that the director has met the standard of conduct described in section 7-109-102;

(b) The director furnishes to the corporation a written undertaking, executed personally or on the director’s behalf, to repay the advance if it is ultimately determined that the director did not meet the standard of conduct; and

(c) A determination is made that the facts then known to those making the determination would not preclude indemnification under this article.

(2) The undertaking required by paragraph (b) of subsection (1) of this section shall be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment.

(3) Determinations and authorizations of payments under this section shall be made in the manner specified in section 7-109-106.

Source: L. 93: Entire article added, p. 791, § 1, effective July 1, 1994. L. 2004: (1) amended, p. 1501, § 267, effective July 1.

7-109-105. Court-ordered indemnification of directors. (1) Unless otherwise provided in the articles of incorporation, a director who is or was a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court, after giving any notice the court considers necessary, may order indemnification in the following manner:

(a) If it determines that the director is entitled to mandatory indemnification under section 7-109-103, the court shall order indemnification, in which case the court shall also order the corporation to pay the director’s reasonable expenses incurred to obtain court-ordered indemnification.

(b) If it determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director met the standard of conduct set forth in section 7-109-102 (1) or was adjudged liable in the circumstances described in section 7-109-102 (4), the court may order such indemnification as the court deems proper; except that the indemnification with respect to any proceeding in which liability shall have been adjudged in the circumstances described in section 7-109-102 (4) is limited to reasonable expenses incurred in connection with the proceeding and reasonable expenses incurred to obtain court-ordered indemnification.

Source: L. 93: Entire article added, p. 792, § 1, effective July 1, 1994.

7-109-106. Determination and authorization of indemnification of directors. (1) A corporation may not indemnify a director under section 7-109-102 unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standard of conduct set forth in section 7-109-102. A corporation shall not advance expenses to a director under section 7-109-104 unless authorized in the specific case after the written affirmation and undertaking required by section 7-109-104 (1)(a) and (1)(b) are received and the determination required by section 7-109-104 (1)(c) has been made.

(2) The determinations required by subsection (1) of this section shall be made:

(a) By the board of directors by a majority vote of those present at a meeting at which a quorum is present, and only those directors not parties to the proceeding shall be counted in satisfying the quorum; or

(b) If a quorum cannot be obtained, by a majority vote of a committee of the board of directors designated by the board of directors, which committee shall consist of two or more directors not parties to the proceeding; except that directors who are parties to the proceeding may participate in the designation of directors for the committee.

(3) If a quorum cannot be obtained as contemplated in paragraph (a) of subsection (2) of this section, and a committee cannot be established under paragraph (b) of subsection (2) of this section, or, even if a quorum is obtained or a committee is designated, if a majority of the directors constituting such quorum or such committee so directs, the determination required to be made by subsection (1) of this section shall be made:

(a) By independent legal counsel selected by a vote of the board of directors or the committee in the manner specified in paragraph (a) or (b) of subsection (2) of this section or, if a quorum of the full board cannot be obtained and a committee cannot be established, by independent legal counsel selected by a majority vote of the full board of directors; or

(b) By the shareholders.

(4) Authorization of indemnification and advance of expenses shall be made in the same manner as the determination that indemnification or advance of expenses is permissible; except that, if the determination that indemnification or advance of expenses is permissible is made by independent legal counsel, authorization of indemnification and advance of expenses shall be made by the body that selected such counsel.

Source: L. 93: Entire article added, p. 792, § 1, effective July 1, 1994.

7-109-107. Indemnification of officers, employees, fiduciaries, and agents. (1) Unless otherwise provided in the articles of incorporation:

(a) An officer is entitled to mandatory indemnification under section 7-109-103, and is entitled to apply for court-ordered indemnification under section 7-109-105, in each case to the same extent as a director;

(b) A corporation may indemnify and advance expenses to an officer, employee, fiduciary, or agent of the corporation to the same extent as to a director; and

(c) A corporation may also indemnify and advance expenses to an officer, employee, fiduciary, or agent who is not a director to a greater extent, if not inconsistent with public policy, and if provided for by its bylaws, general or specific action of its board of directors or shareholders, or contract.

Source: L. 93: Entire article added, p. 793, § 1, effective July 1, 1994.

7-109-108. Insurance. A corporation may purchase and maintain insurance on behalf of a person who is or was a director, officer, employee, fiduciary, or agent of the corporation, or who, while a director, officer, employee, fiduciary, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, fiduciary, or agent of another domestic or foreign entity or of an employee benefit plan, against liability asserted against or incurred by the person in that capacity or arising from the person’s status as a director, officer, employee, fiduciary, or agent, whether or not the corporation would have power to indemnify the person against the same liability under section 7-109-102, 7-109-103, or 7-109-107. Any such insurance may be procured from any insurance company designated by the board of directors, whether such insurance company is formed under the law of this state or any other jurisdiction of the United States or elsewhere, including any insurance company in which the corporation has an equity or any other interest through stock ownership or otherwise.

Source: L. 93: Entire article added, p. 793, § 1, effective July 1, 1994. L. 2003: Entire section amended, p. 2320, § 247, effective July 1, 2004. L. 2004: Entire section amended, p. 1501, § 268, effective July 1.

7-109-109. Limitation of indemnification of directors. (1) A provision treating a corporation’s indemnification of, or advance of expenses to, directors that is contained in its articles of incorporation or bylaws, in a resolution of its shareholders or board of directors, or in a contract, except an insurance policy, or otherwise, is valid only to the extent the provision is not inconsistent with sections 7-109-101 to 7-109-108. If the articles of incorporation limit indemnification or advance of expenses, indemnification and advance of expenses are valid only to the extent not inconsistent with the articles of incorporation.

(2) Sections 7-109-101 to 7-109-108 do not limit a corporation’s power to pay or reimburse expenses incurred by a director in connection with an appearance as a witness in a proceeding at a time when the director has not been made a named defendant or respondent in the proceeding.

Source: L. 93: Entire article added, p. 794, § 1, effective July 1, 1994. L. 2004: (2) amended, p. 1502, § 269, effective July 1.

7-109-110. Notice to shareholders of indemnification of director. If a corporation indemnifies or advances expenses to a director under this article in connection with a proceeding by or in the right of the corporation, the corporation shall give written notice of the indemnification or advance to the shareholders with or before the notice of the next shareholders’ meeting. If the next shareholder action is taken without a meeting at the instigation of the board of directors, such notice shall be given to the shareholders at or before the time the first shareholder signs a writing consenting to such action.

Source: L. 93: Entire article added, p. 794, § 1, effective July 1, 1994.

ARTICLE 110 Amendment of Articles of Incorporation and Bylaws

Cross references: For definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

PART 1 – AMENDMENT OF ARTICLES OF INCORPORATION

7-110-101. Authority to amend articles of incorporation.

(1) A corporation may amend its articles of incorporation at any time to add or change a provision that is required or permitted in the articles of incorporation or to delete a provision not required in the articles of incorporation. Whether a provision is required or permitted in the articles of incorporation is determined as of the effective date of the amendment.

(2) A shareholder does not have a vested property right resulting from any provision in the articles of incorporation, including any provision relating to management, control, capital structure, dividend entitlement, purpose, or duration of the corporation.

Source: L. 93: Entire article added, p. 794, § 1, effective July 1, 1994.

7-110-102. Amendment of articles of incorporation by board of directors.

(1) Unless otherwise provided in the articles of incorporation, the board of directors may adopt, without shareholder action, one or more amendments to the articles of incorporation to:

(a) Delete the statement of the names and addresses of the incorporators or of the initial directors;

(b) Delete the statement of the registered agent name and registered agent address of the initial registered agent, if a statement of change changing the registered agent name and registered agent address of the registered agent is on file in the records of the secretary of state;

(b.3) Delete the statement of the principal office address of the initial principal office, if a statement of change changing the principal office address is on file in the records of the secretary of state;

(b.5) Delete the statement of the names and addresses of any or all of the individuals named in the articles of incorporation, pursuant to section 7-90-301 (6), as being individuals who caused the articles of incorporation to be delivered for filing;

(d) Change the domestic entity name of the corporation by substituting the word “corporation”, “incorporated”, “company”, or “limited”, or an abbreviation of any thereof for a similar word or abbreviation in the domestic entity name, or by adding, deleting, or changing a geographical attribution; or

(e) Make any other change expressly permitted by articles 101 to 117 of this title to be made without shareholder action.

(2) The board of directors may adopt, without shareholder action, one or more amendments to the articles of incorporation to change the domestic entity name of the corporation, if necessary, in connection with the reinstatement of a corporation pursuant to part 10 of article 90 of this title.

Source: L. 93: Entire article added, p. 795, § 1, effective July 1, 1994. L. 96: (1)(c) repealed, p. 1320, § 26, effective June 1. L. 2000: (1)(d) and (2) amended, p. 978, § 60, effective July 1. L. 2003: (1)(a), (1)(b), (1)(d), and (2) amended and (1)(b.5) added, p. 2321, § 248, effective July 1, 2004. L. 2004: (1)(b) and (1)(d) amended and (1)(b.3) added, p. 1502, § 270, effective July 1.

7-110-103. Amendment of articles of incorporation by board of directors and shareholders. (1) The board of directors or the holders of shares representing at least ten percent of all of the votes entitled to be cast on the amendment may propose an amendment to the articles of incorporation for submission to the shareholders.

(2) For an amendment to the articles of incorporation to be adopted pursuant to subsection (1) of this section:

(a) The board of directors shall recommend the amendment to the shareholders unless the amendment is proposed by shareholders or unless the board of directors determines that, because of conflict of interest or other special circumstances, it should make no recommendation and communicates the basis for its determination to the shareholders with the amendment; and

(b) The shareholders entitled to vote on the amendment shall approve the amendment as provided in subsection (5) of this section.

(3) The proposing board of directors or the proposing shareholders may condition the effectiveness of the amendment on any basis.

(4) The corporation shall give notice, in accordance with section 7-107-105, to each shareholder entitled to vote on the amendment of the shareholders’ meeting at which the amendment will be voted upon. The notice of the meeting shall state that the purpose, or one of the purposes, of the meeting is to consider the amendment, and the notice shall contain or be accompanied by a copy or a summary of the amendment.

(5) Unless articles 101 to 117 of this title (including the provisions of section 7-117-101 (7)), the articles of incorporation, bylaws adopted by the shareholders, or the proposing board of directors or the proposing shareholders acting pursuant to subsection (3) of this section require a greater vote, the amendment shall be approved by the votes required by sections 7-107-206 and 7-107-207 by the voting groups entitled to vote on the amendment.

Source: L. 93: Entire article added, p. 795, § 1, effective July 1, 1994. L. 96: (5) amended, p. 1320, § 27, effective June 1.

7-110-104. Voting on amendments of articles of incorporation by voting groups.

(1) If shareholder voting is otherwise required by articles 101 to 117 of this title, the holders of the shares of a class are entitled to vote as a separate voting group on an amendment if the amendment would:

(a) Increase or decrease the aggregate number of authorized shares of the class;

(b) Effect an exchange or reclassification of all or part of the shares of the class into shares of another class;

(c) Effect an exchange or reclassification, or create the right of exchange, of all or part of the shares of another class into shares of the class;

(d) Change the designation, preferences, limitations, or relative rights of all or part of the shares of the class;

(e) Change the shares of all or part of the class into a different number of shares of the same class;

(f) Create a new class of shares having rights or preferences with respect to distributions or dissolution that are prior, superior, or substantially equal to the shares of the class;

(g) Increase the rights, preferences, or number of authorized shares of any class that, after giving effect to the amendment, have rights or preferences with respect to distributions or to dissolution that are prior, superior, or substantially equal to the shares of the class;

(h) Limit or deny an existing preemptive right of all or part of the shares of the class; or

(i) Cancel or otherwise affect rights to distributions or dividends that have accumulated but have not yet been declared on all or part of the shares of the class.

(2) If an amendment would affect a series of a class of shares in one or more of the ways described in subsection (1) of this section, the shares of that series are entitled to vote as a separate voting group on the amendment.

(3) If an amendment that entitles two or more series of a class of shares to vote as separate voting groups under this section would affect those two or more series in the same or a substantially similar way, the shares of all the series so affected shall, instead, vote together as a single voting group on the amendment.

(4) A class or series of shares is entitled to the voting rights granted by this section notwithstanding any provision in the articles of incorporation that the shares are nonvoting shares.

Source: L. 93: Entire article added, p. 796, § 1, effective July 1, 1994.

7-110-105. Amendment of articles of incorporation before issuance of shares. If a corporation has not yet issued shares, its board of directors or, if no directors have been elected, its incorporators may adopt one or more amendments to the articles of incorporation.

Source: L. 93: Entire article added, p. 797, § 1, effective July 1, 1994.

7-110-106. Articles of amendment to articles of incorporation.

(1) A corporation amending its articles of incorporation shall deliver to the secretary of state, for filing pursuant to part 3 of article 90 of this title, articles of amendment stating:

(a) The domestic entity name of the corporation;

(b) The text of each amendment adopted; and

(c) If the amendment provides for an exchange, reclassification, or cancellation of issued shares, provisions for implementing the amendment if not contained in the amendment itself.

(d) to (f) Repealed.

Source: L. 93: Entire article added, p. 797, § 1, effective July 1, 1994. L. 2002: IP(1) amended, p. 1848, § 115, effective July 1; IP(1) amended, p. 1713, § 115, effective October 1. L. 2003: IP(1) and (1)(a) amended, p. 2321, § 249, effective July 1, 2004. L. 2004: (1)(d), (1)(e), and (1)(f) repealed, p. 1502, § 271, effective July 1.

7-110-107. Restated articles of incorporation.

(1) The board of directors may restate the articles of incorporation at any time with or without shareholder action. If the corporation has not yet issued shares and no directors have been elected, its incorporators may restate the articles of incorporation at any time.

(2) The restatement may include one or more amendments to the articles of incorporation. If the restatement includes an amendment requiring shareholder approval, it shall be adopted as provided in section 7-110-103.

(3) If the board of directors submits a restatement for shareholder action, the corporation shall give notice, in accordance with section 7-107-105, to each shareholder entitled to vote on the restatement of the shareholders’ meeting at which the restatement will be voted upon. The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the restatement, and the notice shall contain or be accompanied by a copy of the restatement that identifies any amendment or other change it would make in the articles of incorporation.

(4) A corporation restating its articles of incorporation shall deliver to the secretary of state, for filing pursuant to part 3 of article 90 of this title, articles of restatement stating:

(a) The domestic entity name of the corporation;

(b) The text of the restated articles of incorporation;

(d) If the restatement was adopted by the board of directors or incorporators without shareholder action, a statement to that effect and that shareholder action was not required.

(5) Upon filing by the secretary of state or at any later effective date determined pursuant to section 7-90-304, restated articles of incorporation supersede the original articles of incorporation and all prior amendments to them.

Source: L. 93: Entire article added, p. 798, § 1, effective July 1, 1994. L. 2002: IP(4) and (5) amended, p. 1848, § 116, effective July 1; IP(4) and (5) amended, p. 1713, § 116, effective October 1. L. 2003: IP(4) and (4)(a) amended, p. 2322, § 250, effective July 1, 2004. L. 2004: (4)(c) repealed, p. 1503, § 272, effective July 1.

7-110-108. Amendment of articles of incorporation pursuant to reorganization.

(1) Articles of incorporation may be amended, without action by the board of directors or shareholders, to carry out a plan of reorganization ordered or decreed by a court of competent jurisdiction under a statute of the United States if the articles of incorporation after amendment contain only provisions required or permitted by section 7-102-102.

(2) For an amendment to the articles of incorporation to be made pursuant to subsection (1) of this section, an individual or individuals designated by the court shall deliver to the secretary of state, for filing pursuant to part 3 of article 90 of this title, articles of amendment stating:

(a) The domestic entity name of the corporation;

(b) The text of each amendment approved by the court;

(d) The title of the reorganization proceeding in which the order or decree was entered; and

(e) A statement that the court had jurisdiction of the proceeding under a specified statute of the United States.

(3) Shareholders of a corporation undergoing reorganization do not have dissenters’ rights except as provided in the reorganization plan.

(4) This section does not apply after entry of a final decree in the reorganization proceeding even though the court retains jurisdiction of the proceeding for limited purposes unrelated to consummation of the reorganization plan.

Source: L. 93: Entire article added, p. 799, § 1, effective July 1, 1994. L. 2002: IP(2) amended, p. 1849, § 117, effective July 1; IP(2) amended, p. 1713, § 117, effective October 1. L. 2003: IP(2) and (2)(a) amended, p. 2322, § 251, effective July 1, 2004.

7-110-109. Effect of amendment of articles of incorporation. An amendment to the articles of incorporation does not affect any existing right of persons other than shareholders, any cause of action existing against or in favor of the corporation, or any proceeding to which the corporation is a party. An amendment changing a corporation’s domestic entity name does not abate a proceeding brought by or against a corporation in its former entity name.

Source: L. 93: Entire article added, p. 799, § 1, effective July 1, 1994. L. 2000: Entire section amended, p. 979, § 61, effective July 1. L. 2003: Entire section amended, p. 2322, § 252, effective July 1, 2004.

PART 2 AMENDMENT OF BYLAWS

7-110-201. Amendment of bylaws by board of directors or shareholders.

(1) The board of directors may amend the bylaws at any time to add, change, or delete a provision, unless:

(a) Articles 101 to 117 of this title or the articles of incorporation reserve such power exclusively to the shareholders in whole or part; or

(b) A particular bylaw expressly prohibits the board of directors from doing so.

(2) The shareholders may amend the bylaws even though the bylaws may also be amended by the board of directors.

Source: L. 93: Entire article added, p. 800, § 1, effective July 1, 1994.

7-110-202. Bylaw changing quorum or voting requirement for shareholders.

(1) If authorized by the articles of incorporation, the shareholders may amend the bylaws to fix a greater quorum or voting requirement for shareholders, or voting groups of shareholders, than is required by articles 101 to 117 of this title. An amendment to the bylaws to add, change, or delete a greater quorum or voting requirement for shareholders shall meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirements then in effect or proposed to be adopted, whichever are greater.

(2) A bylaw that fixes a greater quorum or voting requirement for shareholders under subsection (1) of this section shall not be amended by the board of directors.

Source: L. 93: Entire article added, p. 800, § 1, effective July 1, 1994.

7-110-203. Bylaw changing quorum or voting requirement for directors.

(1) A bylaw that fixes a greater quorum or voting requirement for the board of directors may be amended:

(a) If adopted by the shareholders, only by the shareholders; or

(b) If adopted by the board of directors, either by the shareholders or by the board of directors.

(2) A bylaw adopted or amended by the shareholders that fixes a greater quorum or voting requirement for the board of directors may provide that it may be amended only by a stated vote of either the shareholders or the board of directors.

(3) Action by the board of directors under paragraph (b) of subsection (1) of this section to adopt or amend a bylaw that changes the quorum or voting requirement for the board of directors shall meet the same quorum requirement and be adopted by the same vote required to take action under the quorum and voting requirement then in effect or proposed to be adopted, whichever is greater.

Source: L. 93: Entire article added, p. 800, § 1, effective July 1, 1994. L. 2003: (2) amended, p. 2322, § 253, effective July 1, 2004.

ARTICLE 111 – Merger, Share Exchange, and Redomestication

Cross references: For definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

Law reviews: For article, “Mergers and Acquisitions in Colorado: A Practitioner’s Roadmap”, see 16 Colo. Law. 769 (1987); for article, “Disclosure of Merger Negotiations: Formulating a Proper Response Under the Federal Securities Laws”, see 17 Colo. Law. 835 (1988); for article, “Corporate Successor Liability for Environmental and Toxic Tort Claims — Parts I and II”, see 19 Colo. Law. 867 and 1085 (1990).

7-111-101. Merger. (1) One or more domestic corporations may merge into another domestic entity if the board of directors of each domestic corporation that is a party to the merger and each other entity that is a party to the merger adopts a plan of merger complying with section 7-90-203.3 and the shareholders of each such corporation, if required by section 7-111-103, approve the plan of merger.

(2) and (3) (Deleted by amendment, L. 2007, p. 245, § 43, effective May 29, 2007.)

Source: L. 93: Entire article added, p. 801, § 1, effective July 1, 1994. L. 2003: IP(2), (2)(a), (2)(b), (2)(c), and (3) amended, p. 2322, § 254, effective July 1, 2004. L. 2007: Entire section amended, p. 245, § 43, effective May 29.

7-111-101.5. Conversion. A domestic corporation may convert into any form of entity permitted by section 7-90-201 if the board of directors of the corporation adopts a plan of conversion that complies with section 7-90-201.3 and the shareholders of the corporation, if required by section 7-111-103, approve the plan of conversion.

Source: L. 2007: Entire section added, p. 245, § 44, effective May 29.

7-111-102. Share exchange. (1) A domestic corporation may acquire all of the outstanding shares of one or more classes or series of one or more domestic corporations if the board of directors of each corporation adopts a plan of share exchange and the shareholders of each corporation approve the plan of share exchange.

(2) The plan of share exchange required by subsection (1) of this section shall state:

(a) The domestic entity name of each corporation whose shares will be acquired and the name of the acquiring corporation;

(b) The terms and conditions of the share exchange;

(c) The manner and basis of exchanging the shares to be acquired for shares, obligations, or other securities of the acquiring or any other corporation or for money or other property in whole or part.

(3) The plan of share exchange may state other provisions relating to the share exchange.

(4) This section does not limit the power of a corporation to acquire all or part of the shares of one or more classes or series of another corporation through a voluntary exchange of shares or otherwise.

Source: L. 93: Entire article added, p. 801, § 1, effective July 1, 1994. L. 2003: IP(2), (2)(a), and (3) amended, p. 2323, § 255, effective July 1, 2004. L. 2004: (1) amended, p. 1503, § 273, effective July 1.

7-111-103. Action on plan. (1) After adopting a plan of conversion complying with section 7-90-201.3, a plan of merger complying with section 7-90-203.3, or a plan of share exchange complying with section 7-111-102, the board of directors of the converting corporation, the board of directors of each corporation party to the merger, and the board of directors of each corporation whose shares will be acquired in the share exchange, shall submit the plan of conversion, plan of merger, except as provided in subsection (7) of this section or in section 7-111-104, or the plan of share exchange to its shareholders for approval.

(2) For a plan of conversion, a plan of merger, or a plan of share exchange to be approved by the shareholders:

(a) The board of directors shall recommend the plan of conversion, plan of merger, or plan of share exchange to the shareholders unless the board of directors determines that, because of conflict of interest or other special circumstances, it should make no recommendation and communicates the basis for its determination to the shareholders with the plan; and

(b) The shareholders entitled to vote on the plan of conversion, plan of merger, or plan of share exchange shall approve the plan as provided in subsection (5) of this section.

(3) The board of directors may condition the effectiveness of the plan of conversion, plan of merger, or plan of share exchange on any basis.

(4) The corporation shall give notice, in accordance with section 7-107-105, to each shareholder entitled to vote on the plan of conversion, plan of merger, or plan of share exchange of the shareholders’ meeting at which the plan will be voted upon. The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the plan of conversion, plan of merger, or plan of share exchange, and the notice shall contain or be accompanied by a copy of the plan or a summary thereof.

(5) Unless articles 101 to 117 of this title, including the provisions of section 7-117-101 (8), the articles of incorporation, bylaws adopted by the shareholders, or the board of directors acting pursuant to subsection (3) of this section require a greater vote, the plan of conversion, plan of merger, or plan of share exchange shall be approved by each voting group entitled to vote separately on the plan by a majority of all the votes entitled to be cast on the plan by that voting group.

(6) Separate voting by voting groups is required:

(a) On a plan of merger or a plan of conversion if the plan contains a provision that, if contained in an amendment to the articles of incorporation, would require action by one or more separate voting groups on the amendment under section 7-110-104;

(b) On a plan of share exchange by each class or series of shares included in the share exchange, with each class or series constituting a separate voting group.

(7) Action by the shareholders of the surviving corporation on a plan of merger is not required if:

(a) The articles of incorporation of the surviving corporation will not differ, except for amendments enumerated in section 7-110-102, from its articles of incorporation before the merger;

(b) Each shareholder of the surviving corporation whose shares were outstanding immediately before the merger will hold the same number of shares, with identical designations, preferences, limitations, and relative rights, immediately after the merger;

(c) The number of voting shares outstanding immediately after the merger, plus the number of voting shares issuable as a result of the merger either by the conversion of securities issued pursuant to the merger or by the exercise of rights and warrants issued pursuant to the merger, will not exceed by more than twenty percent the total number of voting shares of the surviving corporation outstanding immediately before the merger; and

(d) The number of participating shares outstanding immediately after the merger, plus the number of participating shares issuable as a result of the merger either by the conversion of securities issued pursuant to the merger or by the exercise of rights and warrants issued pursuant to the merger, will not exceed by more than twenty percent the total number of participating shares outstanding immediately before the merger.

(8) As used in subsection (7) of this section:

(a) “Participating shares” means shares that entitle their holders to participate without limitation in distributions.

(b) “Voting shares” means shares that entitle their holders to vote unconditionally in elections of directors.

(9) After a plan of merger, a plan of conversion, or a plan of share exchange is authorized, and at any time before the merger, conversion, or share exchange becomes effective, the merger, conversion, or share exchange may be abandoned, subject to any contractual rights, without further shareholder action, in accordance with the procedure stated in the plan of merger, conversion, or share exchange or, if none is stated, in the manner determined by the board of directors. If a merger, conversion, or share exchange is abandoned after a statement of merger has been filed by the secretary of state pursuant to section 7-90-203.7, a statement of conversion has been filed by the secretary of state pursuant to section 7-90-201.7, or a plan of share exchange has been filed by the secretary of state pursuant to section 7-111-105 stating a delayed effective date, the merger, conversion, or share exchange may be prevented from becoming effective by delivering to the secretary of state, for filing pursuant to part 3 of article 90 of this title, before the date the merger or share exchange becomes effective pursuant to section 7-90-304, a statement of change that states that, by appropriate corporate action, the merger, conversion, or share exchange has been abandoned.

Source: L. 93: Entire article added, p. 802, § 1, effective July 1, 1994. L. 2002: (9) amended, p. 1849, § 118, effective July 1; (9) amended, p. 1714, § 118, effective October 1. L. 2003: (9) amended, p. 2323, § 256, effective July 1, 2004. L. 2006: (9) amended, p. 880, § 72, effective July 1. L. 2007: (1) to (5), (6)(a), and (9) amended, p. 246, § 45, effective May 29.

7-111-104. Merger of parent and subsidiary. (1) By complying with the provisions of this section, a parent corporation owning at least ninety percent of the outstanding shares of each class of a subsidiary corporation may either merge such subsidiary into itself or merge itself into such subsidiary.

(2) The board of directors of such parent corporation shall adopt, and its shareholders, if required by subsection (3) of this section, shall approve, a plan of merger that states:

(a) The entity names of such parent corporation and subsidiary and the entity name of the surviving corporation;

(b) The terms and conditions of the merger;

(c) The manner and basis of converting the shares of each corporation into shares, obligations, or other securities of the surviving or any other corporation or into money or other property in whole or part;

(d) Any amendments to the articles of incorporation of the surviving corporation to be effected by the merger; and

(e) Any other provisions relating to the merger as are deemed necessary or desirable.

(3) No vote of the shareholders of such subsidiary shall be required with respect to the merger. If the subsidiary will be the surviving corporation, the approval of the shareholders of the parent corporation shall be sought in the manner provided in section 7-111-103 (1) to (6). If the parent will be the surviving corporation, no vote of its shareholders shall be required if all of the provisions of section 7-111-103 (7) are met with respect to the merger. If all of such provisions are not met, the approval of the shareholders of the parent shall be sought in the manner provided in subsections (1) to (6) of section 7-111-103.

(4) The parent corporation shall mail a copy or summary of the plan of merger to each shareholder of the subsidiary, other than the parent corporation, who does not waive this mailing requirement in writing.

(5) The effective date of the merger shall be no earlier than:

(a) The date on which all shareholders of the subsidiary waived the mailing requirement of subsection (4) of this section; or

(b) Ten days after the date the parent mailed a copy or summary of the plan of merger to each shareholder of the subsidiary who did not waive the mailing requirement.

Source: L. 93: Entire article added, p. 804, § 1, effective July 1, 1994. L. 2003: IP(2) and (2)(a) amended, p. 2323, § 257, effective July 1, 2004.

7-111-104.5. Statement of merger or conversion. (1) After a plan of merger is approved, the surviving corporation shall deliver to the secretary of state, for filing pursuant to part 3 of article 90 of this title, a statement of merger pursuant to section 7-90-203.7. If the plan of merger provides for amendments to the articles of incorporation of the surviving corporation, articles of amendment effecting the amendments shall be delivered to the secretary of state for filing pursuant to part 3 of article 90 of this title.

(2) After a plan of conversion is approved, the converting corporation shall deliver to the secretary of state, for filing pursuant to part 3 of article 90 of this title, a statement of conversion pursuant to section 7-90-201.7.

Source: L. 2004: Entire section added, p. 1503, § 274, effective July 1. L. 2007: Entire section amended, p. 247, § 46, effective May 29.

7-111-105. Statement of share exchange. (1) After a plan of share exchange is approved by the shareholders, the acquiring corporation shall deliver to the secretary of state, for filing pursuant to part 3 of article 90 of this title, a statement of share exchange stating:

(a) The entity name of each corporation whose shares will be acquired, and the principal office address of its principal office;

(b) The entity name of the acquiring corporation, and the principal office address of its principal office; and

(d) and (e) (Deleted by amendment, L. 2004, p. 1503, § 275, effective July 1, 2004.)

(2) and (3) (Deleted by amendment, L. 2003, p. 2324, § 258, effective July 1, 2004.)

Source: L. 93: Entire article added, p. 805, § 1, effective July 1, 1994. L. 2002: IP(1) amended, p. 1849, § 119, effective July 1; IP(1) amended, p. 1714, § 119, effective October 1. L. 2003: (1), (2), and (3) amended, p. 2324, § 258, effective July 1, 2004. L. 2004: (1) amended, p. 1503, § 275, effective July 1. L. 2006: (1)(b) amended, p. 880, § 73, effective July 1.

7-111-106. Effect of merger, conversion, or share exchange. (1) The effect of a merger shall be as provided in section 7-90-204.

(1.5) The effect of a conversion shall be as provided in section 7-90-202.

(2) When a share exchange takes effect, the shares of each acquired corporation are exchanged as provided in the plan, and the former holders of the shares are entitled only to the exchange rights provided in the articles of share exchange or to their rights under article 113 of this title.

Source: L. 93: Entire article added, p. 805, § 1, effective July 1, 1994. L. 2004: (1) amended, p. 1504, § 276, effective July 1. L. 2007: (1) amended and (1.5) added, p. 247, § 47, effective May 29.

7-111-106.5. Merger with foreign entity. (1) One or more domestic corporations may merge with one or more foreign entities if:

(a) The merger is permitted by section 7-90-203 (2);

(b) The foreign entity complies with section 7-90-203.7 if it is the surviving entity of the merger; and

(c) Each domestic corporation complies with the applicable provisions of sections 7-111-101 to 7-111-104 and, if it is the surviving corporation of the merger, with section 7-111-104.5.

(2) Upon the merger taking effect, the surviving foreign entity of a merger shall comply with section 7-90-204.5.

Source: L. 2007: Entire section added, p. 247, § 48, effective May 29.

7-111-107. Share exchange with foreign corporation. (1) One or more domestic corporations may enter into a share exchange with one or more foreign corporations if:

(a) (Deleted by amendment, L. 2007, p. 248, § 49, effective May 29, 2007.)

(b) In a share exchange, the corporation whose shares will be acquired is a domestic corporation, whether or not a share exchange is permitted by the law of the jurisdiction under the law of which the acquiring corporation is incorporated;

(c) The foreign corporation complies with section 7-111-105 if it is the acquiring corporation of the share exchange; and

(d) Each domestic corporation complies with the applicable provisions of sections 7-111-101 to 7-111-104 and, if it is the acquiring corporation of the share exchange, with section 7-111-105.

(1.5) (Deleted by amendment, L. 2007, p. 248, § 49, effective May 29, 2007.)

(2) Upon the share exchange taking effect, the acquiring foreign corporation of a share exchange:

(a) Shall either:

(I) Appoint a registered agent if the foreign corporation has no registered agent and maintain a registered agent pursuant to part 7 of article 90 of this title, whether or not the foreign corporation is otherwise subject to that part, to accept service in any proceeding to enforce any obligation or rights of dissenting shareholders of each domestic corporation party to the share exchange; or

(II) Be deemed to have authorized service of process on it in connection with any such proceeding by mailing in accordance with section 7-90-704 (2);

(b) Shall promptly pay to the dissenting shareholders of each domestic corporation party to the share exchange the amount, if any, to which they are entitled under article 113 of this title; and

(c) Shall comply with part 8 of article 90 of this title if it is to transact business or conduct activities in this state.

(3) (Deleted by amendment, L. 2004, p. 1505, § 277, effective July 1, 2004.)

(4) Subsection (2) of this section does not prescribe the only means, or necessarily the required means, of serving an acquiring foreign corporation of a share exchange.

(5) This section does not limit the power of a foreign corporation to acquire all or part of the shares of one or more classes or series of a domestic corporation through a voluntary exchange of shares or otherwise.

Source: L. 93: Entire article added, p. 806, § 1, effective July 1, 1994. L. 96: (2)(a)(I) amended, p. 1320, § 28, effective June 1. L. 2003: (1)(a), (1)(b), (2)(a), and (2)(c) amended, p. 2324, § 259, effective July 1, 2004. L. 2004: (1)(c), (1)(d), IP(2), (2)(a), (2)(b), (3), and (4) amended and (1.5) added, p. 1505, § 277, effective July 1. L. 2007: IP(1), (1)(a), (1)(c), (1)(d), (1.5), and (2)(a)(I) amended, p. 248, § 49, effective May 29.

7-111-108. Redomestication as a domestic insurer. (1) A foreign or alien insurer which seeks to change its domicile under section 10-3-125 or 10-3-126, C.R.S., shall submit articles of redomestication in triplicate to the commissioner of insurance and the attorney general for examination. After being approved by them, the articles of redomestication shall be delivered to the secretary of state for filing pursuant to part 3 of article 90 of this title. A copy of such articles, certified by the secretary of state, shall be filed with the commissioner of insurance.

(2) The articles of redomestication shall state:

(a) The domestic entity name for the corporation, which domestic entity name shall comply with the requirements of sections 7-90-601 and 10-3-103, C.R.S.;

(b) The state in which the corporation was originally incorporated, the name under which it was so incorporated, the date of such incorporation, and the date the corporation was authorized to transact business or conduct activities as an insurance company in the state of its original incorporation;

(c) If the state in which the corporation was last incorporated is different from the state in which it was originally incorporated, the state in which the corporation was last incorporated, the entity name under which it was so incorporated, the date of such incorporation, and the date the corporation was authorized to transact business or conduct activities as an insurance company in the state of its last incorporation;

(d) The information regarding shares required by section 7-106-101;

(e) The registered agent name and registered agent address of the corporation’s registered agent;

(f) The principal office address of the corporation’s principal office;

(g) The names and mailing addresses of the persons serving as the directors and officers of such corporation; and

(h) A statement that, upon redomestication, the corporation accepts and will be subject to the law of this state.

(3) The articles of incorporation may but need not state:

(a) Provisions not inconsistent with law regarding:

(I) The current purpose or purposes of the corporation and the purpose or purposes which it intends to pursue after redomestication;

(II) Managing the business of the corporation and regulating its affairs;

(III) Defining, limiting, and regulating the powers of the corporation, its board of directors, and its shareholders;

(IV) A par value for authorized shares or classes of shares; and

(V) The imposition of personal liability on shareholders for the debts of the corporation to a stated extent and upon stated conditions; and

(b) Any provision that, under articles 101 to 117 of this title, is required or permitted to be stated in the bylaws.

(4) It shall not be necessary to state in the articles of redomestication any of the corporate powers enumerated in articles 101 to 117 of this title.

(5) In its articles of redomestication, the corporation may amend, restate, or revise its articles of incorporation or charter to the same extent, subject to the same limitations, and by the same procedures as those provisions governing the amendment, restatement, and revision of articles of incorporation as provided in articles 101 to 117 of this title.

(6) The corporation shall attach to the articles of redomestication:

(a) Its articles of incorporation or charter, as amended or restated, as in effect immediately before the filing of its articles of redomestication, duly authenticated by the proper officer in the jurisdiction of its last incorporation;

(b) A certificate to the effect that the corporation is in good standing in the jurisdiction of its last incorporation, duly authenticated by the proper officer in the jurisdiction of its last incorporation. The certificate shall be dated within ninety days before the filing of the articles of redomestication.

(c) A resolution, duly certified by the secretary of the corporation, adopted by the affirmative vote of the shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast thereon, and, if any class of shares is entitled to vote thereon as a class, the affirmative vote of the holders of at least a majority of the outstanding shares in each class of shares entitled to vote as a class thereon, consenting to the filing of the articles of redomestication and the renunciation, conditioned upon its redomestication as a domestic insurer, of its last articles of incorporation or charter.

(7) Upon the issuance by the secretary of state of a certificate of redomestication, a corporation shall be deemed to be domiciled in and incorporated under the law of this state; except that an insurer that has redomesticated in this state pursuant to section 10-3-125 or 10-3-126, C.R.S., shall be considered to be the same corporation as that corporation that existed under the law of the jurisdiction in which it was formerly domiciled and shall be considered as having been an operating insurer from the date that the corporation was authorized to transact business or conduct activities as an insurer in such jurisdiction.

(8) The certificate of redomestication shall serve the same purpose as articles of incorporation under articles 101 to 117 of this title.

(9) The certificate of redomestication, subject to the provisions of the law of this state relating to insurance, shall entitle the redomesticated corporation to all the powers, rights, and privileges granted to corporations incorporated in this state and shall subject the redomesticated corporation to all of the duties, liabilities, and limitations imposed upon domestic corporations but shall continue the corporation as if it had been originally incorporated under the law of this state. Upon the issuance of the certificate of redomestication by the secretary of state, the articles of redomestication shall constitute the articles of incorporation of the corporation.

(10) Any domestic insurer, subject to and in compliance with section 10-3-125 (2), C.R.S., may change its domicile from this state to any other state in which it is authorized to transact business or conduct activities and, in connection therewith, shall submit to the commissioner of insurance a copy of the articles of redomestication or their equivalent, duly authenticated by the proper officer of its new state of domicile, and a certificate of good standing or its equivalent from that state. Upon approval by the commissioner of insurance, the copy of the articles of redomestication and certificate of good standing, or their equivalents, from the new state of domicile shall be delivered to the secretary of state for filing pursuant to part 3 of article 90 of this title. Upon the filing of such documents by the secretary of state, the domestic insurer shall cease to be a domestic corporation and a domestic insurer and, if otherwise qualified, shall become a foreign corporation and foreign insurer authorized to transact business or conduct activities in this state effective as of the date of its redomestication by the new state of domicile as stated in its articles of redomestication.

(11) All certificates of redomestication issued by the secretary of state shall state the date on which the articles of redomestication were filed and, based upon the information submitted to the secretary of state pursuant to this section, the date from which the corporation existed and operated as an insurer, which shall be the date the insurer was incorporated in the jurisdiction of its original incorporation.

Source: L. 93: Entire article added, p. 808, § 1, effective July 1, 1994. L. 2000: (2)(a) amended, p. 979, § 62, effective July 1. L. 2002: (2)(a) amended, p. 1012, § 3, effective June 1; (1), (2)(e), and (10) amended, p. 1849, § 120, effective July 1; (1), (2)(e), and (10) amended, p. 1714, § 120, effective October 1. L. 2003: IP(2), (2)(a), (2)(b), (2)(c), (2)(e), (2)(f), (2)(h), IP(3), (3)(a)(V), (3)(b), (4), (7), (9), (10), and (11) amended, p. 2325, § 260, effective July 1, 2004. L. 2004: (2)(c) and (2)(g) amended, p. 1506, § 278, effective July 1. L. 2008: (8) amended, p. 24, § 19, effective August 5.

ARTICLE 112

Sale of Property

Cross references: For definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

7-112-101. Sale or mortgage of property without shareholder approval. (1) A corporation may, as authorized by its bylaws or by the board of directors:

(a) Sell, lease, exchange, or otherwise dispose of any or all of its property in the usual and regular course of business;

(b) Mortgage, pledge, dedicate to the repayment of indebtedness, whether with or without recourse, or otherwise encumber any or all of its property whether or not in the usual and regular course of business; or

(c) Transfer any or all of its property to a domestic corporation all the shares of which are owned, directly or indirectly, by the corporation.

(2) Unless otherwise provided in the articles of incorporation, approval by the shareholders of a transaction described in subsection (1) of this section is not required.

Source: L. 93: Entire article added, p. 811, § 1, effective July 1, 1994. L. 96: IP(1) amended, p. 1321, § 29, effective June 1.

7-112-102. Sale of property requiring shareholder approval. (1) A corporation may sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property, with or without its good will, other than in the usual and regular course of business on the terms and conditions and for the consideration determined by the board of directors, if the board of directors proposes and the shareholders approve the transaction. A sale, lease, exchange, or other disposition of all, or substantially all, of the property of a corporation, with or without its good will, in connection with its dissolution, other than in the usual and regular course of business, and other than pursuant to a court order, shall be subject to the requirements of this section; but a sale, lease, exchange, or other disposition of all, or substantially all, of the property of a corporation, with or without its good will, pursuant to a court order shall not be subject to the requirements of this section.

(2) If a corporation is entitled to vote or otherwise consent, other than in the usual and regular course of its business, with respect to the sale, lease, exchange, or other disposition of all, or substantially all, of the property with or without the good will of another entity which it controls, and if the shares or other interests held by the corporation in such other entity constitute all, or substantially all, of the property of the corporation, then the corporation shall consent to such transaction only if the board of directors proposes and the shareholders approve the giving of consent.

(3) For a transaction described in subsection (1) of this section or a consent described in subsection (2) of this section to be approved by the shareholders:

(a) The board of directors shall recommend the transaction or the consent to the shareholders unless the board of directors determines that, because of conflict of interest or other special circumstances, it should make no recommendation and communicates the basis for its determination to the shareholders with the submission of the transaction; and

(b) The shareholders entitled to vote on the transaction or the consent shall approve the transaction or the consent as provided in subsection (6) of this section.

(4) The board of directors may condition the effectiveness of the transaction or the consent on any basis.

(5) The corporation shall give notice, in accordance with section 7-107-105, to each shareholder entitled to vote on the transaction described in subsection (1) of this section or the consent described in subsection (2) of this section, of the shareholders’ meeting at which the transaction or the consent will be voted upon. The notice shall:

(a) State that the purpose, or one of the purposes, of the meeting is to consider:

(I) In the case of action pursuant to subsection (1) of this section, the sale, lease, exchange, or other disposition of all, or substantially all, of the property of the corporation; or

(II) In the case of action pursuant to subsection (2) of this section, the corporation’s consent to the sale, lease, exchange, or other disposition of all, or substantially all, of the property of another entity (which entity shall be identified in the notice), shares or other interests of which are held by the corporation and constitute all, or substantially all, of the property of the corporation; and

(b) Contain or be accompanied by a description of the transaction, in the case of action pursuant to subsection (1) of this section, or by a description of the transaction underlying the consent, in the case of action pursuant to subsection (2) of this section.

(6) Unless articles 101 to 117 of this title (including the provisions of section 7-117-101 (9)), the articles of incorporation, bylaws adopted by the shareholders, or the board of directors acting pursuant to subsection (4) of this section require a greater vote, the transaction described in subsection (1) of this section or the consent described in subsection (2) of this section shall be approved by each voting group entitled to vote separately on the transaction or consent by a majority of all the votes entitled to be cast on the transaction or the consent by that voting group.

(7) After a transaction described in subsection (1) of this section or a consent described in subsection (2) of this section is authorized, the transaction may be abandoned or the consent withheld or revoked, subject to any contractual rights or other limitations on such abandonment, withholding, or revocation, without further shareholder action.

(8) A transaction that constitutes a distribution is governed by section 7-106-401 and not by this section.

Source: L. 93: Entire article added, p. 811, § 1, effective July 1, 1994.

ARTICLE 113 – Dissenters’ Rights

Law reviews: For article, “Valuation of Stock in Closely Held Corporations”, see 18 Colo. Law. 1731 (1989).

PART 1 – RIGHT OF DISSENT – PAYMENT FOR SHARES

7-113-101. Definitions. For purposes of this article:

(1) “Beneficial shareholder” means the beneficial owner of shares held in a voting trust or by a nominee as the record shareholder.

(2) “Corporation” means the issuer of the shares held by a dissenter before the corporate action, or the surviving or acquiring domestic or foreign corporation, by merger or share exchange of that issuer.

(3) “Dissenter” means a shareholder who is entitled to dissent from corporate action under section 7-113-102 and who exercises that right at the time and in the manner required by part 2 of this article.

(4) “Fair value”, with respect to a dissenter’s shares, means the value of the shares immediately before the effective date of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action except to the extent that exclusion would be inequitable.

(5) “Interest” means interest from the effective date of the corporate action until the date of payment, at the average rate currently paid by the corporation on its principal bank loans or, if none, at the legal rate as specified in section 5-12-101, C.R.S.

(6) “Record shareholder” means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares that are registered in the name of a nominee to the extent such owner is recognized by the corporation as the shareholder as provided in section 7-107-204.

(7) “Shareholder” means either a record shareholder or a beneficial shareholder.

Source: L. 93: Entire article added, p. 813, § 1, effective July 1, 1994.

Cross references: For additional definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

7-113-102. Right to dissent.

(1) A shareholder, whether or not entitled to vote, is entitled to dissent and obtain payment of the fair value of the shareholder’s shares in the event of any of the following corporate actions:

(a) Consummation of a plan of merger to which the corporation is a party if:

(I) Approval by the shareholders of that corporation is required for the merger by section 7-111-103 or 7-111-104 or by the articles of incorporation; or

(II) The corporation is a subsidiary that is merged with its parent corporation under section 7-111-104;

(b) Consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will be acquired;

(c) Consummation of a sale, lease, exchange, or other disposition of all, or substantially all, of the property of the corporation for which a shareholder vote is required under section 7-112-102 (1);

(d) Consummation of a sale, lease, exchange, or other disposition of all, or substantially all, of the property of an entity controlled by the corporation if the shareholders of the corporation were entitled to vote upon the consent of the corporation to the disposition pursuant to section 7-112-102 (2);

(e) Consummation of a conversion in which the corporation is the converting entity as provided in section 7-90-206 (2);

(f) An amendment, conversion, or merger described in section 7-101-504 (3); and

(g) Consummation of a plan by which a public benefit corporation terminates public benefit corporation status by merger or conversion into a corporation that has not elected public benefit corporation status as provided in section 7-101-504 (4) or by amendment of its articles of incorporation.

(1.3) A shareholder is not entitled to dissent and obtain payment, under subsection (1) of this section, of the fair value of the shares of any class or series of shares that either were listed on a national securities exchange registered under the federal “Securities Exchange Act of 1934”, as amended, or were held of record by more than two thousand shareholders, at the time of:

(a) The record date fixed under section 7-107-107 to determine the shareholders entitled to receive notice of the shareholders’ meeting at which the corporate action is submitted to a vote;

(b) The record date fixed under section 7-107-104 to determine shareholders entitled to sign writings consenting to the corporate action; or

(c) The effective date of the corporate action if the corporate action is authorized other than by a vote of shareholders.

(1.8) The limitation set forth in subsection (1.3) of this section shall not apply if the shareholder will receive for the shareholder’s shares, pursuant to the corporate action, anything except:

(a) Shares of the corporation surviving the consummation of the plan of merger or share exchange;

(b) Shares of any other corporation which, at the effective date of the plan of merger or share exchange, either will be listed on a national securities exchange registered under the federal “Securities Exchange Act of 1934”, as amended, or will be held of record by more than two thousand shareholders;

(d) Any combination of the foregoing described shares or cash in lieu of fractional shares.

(2) (Deleted by amendment, L. 96, p. 1321, § 30, effective June 1, 1996.)

(2.5) A shareholder, whether or not entitled to vote, is entitled to dissent and obtain payment of the fair value of the shareholder’s shares in the event of a reverse split that reduces the number of shares owned by the shareholder to a fraction of a share or to scrip if the fractional share or scrip so created is to be acquired for cash or the scrip is to be voided under section 7-106-104.

(3) A shareholder is entitled to dissent and obtain payment of the fair value of the shareholder’s shares in the event of any corporate action to the extent provided by the bylaws or a resolution of the board of directors.

(4) A shareholder entitled to dissent and obtain payment for the shareholder’s shares under this article may not challenge the corporate action creating such entitlement unless the action is unlawful or fraudulent with respect to the shareholder or the corporation.

Source: L. 93: Entire article added, p. 814, § 1, effective July 1, 1994. L. 96: Entire section amended, p. 1321, § 30, effective June 1. L. 2006: (1)(e) added, p. 881, § 74, effective July 1. L. 2008: IP(1.3) and (1.8)(b) amended, p. 21, § 8, effective August 5. L. 2013: (1)(d) and (1)(e) amended and (1)(f) and (1)(g) added, (HB 13-1138), ch. 230, p. 1104, § 2, effective April 1, 2014.

Cross references: For the federal “Securities Exchange Act of 1934”, see 15 U.S.C. 78a et seq.

7-113-103. Dissent by nominees and beneficial owners.

(1) A record shareholder may assert dissenters’ rights as to fewer than all the shares registered in the record shareholder’s name only if the record shareholder dissents with respect to all shares beneficially owned by any one person and causes the corporation to receive written notice which states such dissent and the name, address, and federal taxpayer identification number, if any, of each person on whose behalf the record shareholder asserts dissenters’ rights. The rights of a record shareholder under this subsection (1) are determined as if the shares as to which the record shareholder dissents and the other shares of the record shareholder were registered in the names of different shareholders.

(2) A beneficial shareholder may assert dissenters’ rights as to the shares held on the beneficial shareholder’s behalf only if:

(a) The beneficial shareholder causes the corporation to receive the record shareholder’s written consent to the dissent not later than the time the beneficial shareholder asserts dissenters’ rights; and

(b) The beneficial shareholder dissents with respect to all shares beneficially owned by the beneficial shareholder.

(3) The corporation may require that, when a record shareholder dissents with respect to the shares held by any one or more beneficial shareholders, each such beneficial shareholder must certify to the corporation that the beneficial shareholder and the record shareholder or record shareholders of all shares owned beneficially by the beneficial shareholder have asserted, or will timely assert, dissenters’ rights as to all such shares as to which there is no limitation on the ability to exercise dissenters’ rights. Any such requirement shall be stated in the dissenters’ notice given pursuant to section 7-113-203.

Source: L. 93: Entire article added, p. 815, § 1, effective July 1, 1994.

PART 2 – PROCEDURE FOR EXERCISE OF DISSENTERS’ RIGHTS

7-113-201. Notice of dissenters’ rights.

(1) If a proposed corporate action creating dissenters’ rights under section 7-113-102 is submitted to a vote at a shareholders’ meeting, the notice of the meeting shall be given to all shareholders, whether or not entitled to vote. The notice shall state that shareholders are or may be entitled to assert dissenters’ rights under this article and shall be accompanied by a copy of this article and the materials, if any, that, under articles 101 to 117 of this title, are required to be given to shareholders entitled to vote on the proposed action at the meeting. Failure to give notice as provided by this subsection (1) shall not affect any action taken at the shareholders’ meeting for which the notice was to have been given, but any shareholder who was entitled to dissent but who was not given such notice shall not be precluded from demanding payment for the shareholder’s shares under this article by reason of the shareholder’s failure to comply with the provisions of section 7-113-202 (1).

(2) If a proposed corporate action creating dissenters’ rights under section 7-113-102 is authorized without a meeting of shareholders pursuant to section 7-107-104, any written or oral solicitation of a shareholder to execute a writing consenting to such action contemplated in section 7-107-104 shall be accompanied or preceded by a written notice stating that shareholders are or may be entitled to assert dissenters’ rights under this article, by a copy of this article, and by the materials, if any, that, under articles 101 to 117 of this title, would have been required to be given to shareholders entitled to vote on the proposed action if the proposed action were submitted to a vote at a shareholders’ meeting. Failure to give notice as provided by this subsection (2) shall not affect any action taken pursuant to section 7-107-104 for which the notice was to have been given, but any shareholder who was entitled to dissent but who was not given such notice shall not be precluded from demanding payment for the shareholder’s shares under this article by reason of the shareholder’s failure to comply with the provisions of section 7-113-202 (2).

Source: L. 93: Entire article added, p. 816, § 1, effective July 1, 1994. L. 96: Entire section amended, p. 1323, § 31, effective June 1.

7-113-202. Notice of intent to demand payment.

(1) If a proposed corporate action creating dissenters’ rights under section 7-113-102 is submitted to a vote at a shareholders’ meeting and if notice of dissenters’ rights has been given to such shareholder in connection with the action pursuant to section 7-113-201 (1), a shareholder who wishes to assert dissenters’ rights shall:

(a) Cause the corporation to receive, before the vote is taken, written notice of the shareholder’s intention to demand payment for the shareholder’s shares if the proposed corporate action is effectuated; and

(b) Not vote the shares in favor of the proposed corporate action.

(2) If a proposed corporate action creating dissenters’ rights under section 7-113-102 is authorized without a meeting of shareholders pursuant to section 7-107-104 and if notice of dissenters’ rights has been given to such shareholder in connection with the action pursuant to section 7-113-201 (2), a shareholder who wishes to assert dissenters’ rights shall not execute a writing consenting to the proposed corporate action.

(3) A shareholder who does not satisfy the requirements of subsection (1) or (2) of this section is not entitled to demand payment for the shareholder’s shares under this article.

Source: L. 93: Entire article added, p. 816, § 1, effective July 1, 1994. L. 96: IP(1) and (2) amended, p. 1323, § 32, effective June 1.

7-113-203. Dissenters’ notice.

(1) If a proposed corporate action creating dissenters’ rights under section 7-113-102 is authorized, the corporation shall give a written dissenters’ notice to all shareholders who are entitled to demand payment for their shares under this article.

(2) The dissenters’ notice required by subsection (1) of this section shall be given no later than ten days after the effective date of the corporate action creating dissenters’ rights under section 7-113-102 and shall:

(a) State that the corporate action was authorized and state the effective date or proposed effective date of the corporate action;

(b) State an address at which the corporation will receive payment demands and the address of a place where certificates for certificated shares must be deposited;

(c) Inform holders of uncertificated shares to what extent transfer of the shares will be restricted after the payment demand is received;

(d) Supply a form for demanding payment, which form shall request a dissenter to state an address to which payment is to be made;

(e) Set the date by which the corporation must receive the payment demand and certificates for certificated shares, which date shall not be less than thirty days after the date the notice required by subsection (1) of this section is given;

(f) State the requirement contemplated in section 7-113-103 (3), if such requirement is imposed; and

(g) Be accompanied by a copy of this article.

Source: L. 93: Entire article added, p. 817, § 1, effective July 1, 1994.

7-113-204. Procedure to demand payment.

(1) A shareholder who is given a dissenters’ notice pursuant to section 7-113-203 and who wishes to assert dissenters’ rights shall, in accordance with the terms of the dissenters’ notice:

(a) Cause the corporation to receive a payment demand, which may be the payment demand form contemplated in section 7-113-203 (2)(d), duly completed, or may be stated in another writing; and

(b) Deposit the shareholder’s certificates for certificated shares.

(2) A shareholder who demands payment in accordance with subsection (1) of this section retains all rights of a shareholder, except the right to transfer the shares, until the effective date of the proposed corporate action giving rise to the shareholder’s exercise of dissenters’ rights and has only the right to receive payment for the shares after the effective date of such corporate action.

(3) Except as provided in section 7-113-207 or 7-113-209 (1)(b), the demand for payment and deposit of certificates are irrevocable.

(4) A shareholder who does not demand payment and deposit the shareholder’s share certificates as required by the date or dates set in the dissenters’ notice is not entitled to payment for the shares under this article.

Source: L. 93: Entire article added, p. 817, § 1, effective July 1, 1994.

7-113-205. Uncertificated shares.

(1) Upon receipt of a demand for payment under section 7-113-204 from a shareholder holding uncertificated shares, and in lieu of the deposit of certificates representing the shares, the corporation may restrict the transfer thereof.

(2) In all other respects, the provisions of section 7-113-204 shall be applicable to shareholders who own uncertificated shares.

Source: L. 93: Entire article added, p. 818, § 1, effective July 1, 1994.

7-113-206. Payment.

(1) Except as provided in section 7-113-208, upon the effective date of the corporate action creating dissenters’ rights under section 7-113-102 or upon receipt of a payment demand pursuant to section 7-113-204, whichever is later, the corporation shall pay each dissenter who complied with section 7-113-204, at the address stated in the payment demand, or if no such address is stated in the payment demand, at the address shown on the corporation’s current record of shareholders for the record shareholder holding the dissenter’s shares, the amount the corporation estimates to be the fair value of the dissenter’s shares, plus accrued interest.

(2) The payment made pursuant to subsection (1) of this section shall be accompanied by:

(a) The corporation’s balance sheet as of the end of its most recent fiscal year or, if that is not available, the corporation’s balance sheet as of the end of a fiscal year ending not more than sixteen months before the date of payment, an income statement for that year, and, if the corporation customarily provides such statements to shareholders, a statement of changes in shareholders’ equity for that year and a statement of cash flow for that year, which balance sheet and statements shall have been audited if the corporation customarily provides audited financial statements to shareholders, as well as the latest available financial statements, if any, for the interim or full-year period, which financial statements need not be audited;

(b) A statement of the corporation’s estimate of the fair value of the shares;

(d) A statement of the dissenter’s right to demand payment under section 7-113-209; and

(e) A copy of this article.

Source: L. 93: Entire article added, p. 818, § 1, effective July 1, 1994.

7-113-207. Failure to take action. (1) If the effective date of the corporate action creating dissenters’ rights under section 7-113-102 does not occur within sixty days after the date set by the corporation by which the corporation must receive the payment demand as provided in section 7-113-203, the corporation shall return the deposited certificates and release the transfer restrictions imposed on uncertificated shares.

(2) If the effective date of the corporate action creating dissenters’ rights under section 7-113-102 occurs more than sixty days after the date set by the corporation by which the corporation must receive the payment demand as provided in section 7-113-203, then the corporation shall send a new dissenters’ notice, as provided in section 7-113-203, and the provisions of sections 7-113-204 to 7-113-209 shall again be applicable.

Source: L. 93: Entire article added, p. 819, § 1, effective July 1, 1994.

7-113-208. Special provisions relating to shares acquired after announcement of proposed corporate action. (1) The corporation may, in or with the dissenters’ notice given pursuant to section 7-113-203, state the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action creating dissenters’ rights under section 7-113-102 and state that the dissenter shall certify in writing, in or with the dissenter’s payment demand under section 7-113-204, whether or not the dissenter (or the person on whose behalf dissenters’ rights are asserted) acquired beneficial ownership of the shares before that date. With respect to any dissenter who does not so certify in writing, in or with the payment demand, that the dissenter or the person on whose behalf the dissenter asserts dissenters’ rights acquired beneficial ownership of the shares before such date, the corporation may, in lieu of making the payment provided in section 7-113-206, offer to make such payment if the dissenter agrees to accept it in full satisfaction of the demand.

(2) An offer to make payment under subsection (1) of this section shall include or be accompanied by the information required by section 7-113-206 (2).

Source: L. 93: Entire article added, p. 819, § 1, effective July 1, 1994.

7-113-209. Procedure if dissenter is dissatisfied with payment or offer. (1) A dissenter may give notice to the corporation in writing of the dissenter’s estimate of the fair value of the dissenter’s shares and of the amount of interest due and may demand payment of such estimate, less any payment made under section 7-113-206, or reject the corporation’s offer under section 7-113-208 and demand payment of the fair value of the shares and interest due, if:

(a) The dissenter believes that the amount paid under section 7-113-206 or offered under section 7-113-208 is less than the fair value of the shares or that the interest due was incorrectly calculated;

(b) The corporation fails to make payment under section 7-113-206 within sixty days after the date set by the corporation by which the corporation must receive the payment demand; or

(c) The corporation does not return the deposited certificates or release the transfer restrictions imposed on uncertificated shares as required by section 7-113-207 (1).

(2) A dissenter waives the right to demand payment under this section unless the dissenter causes the corporation to receive the notice required by subsection (1) of this section within thirty days after the corporation made or offered payment for the dissenter’s shares.

Source: L. 93: Entire article added, p. 820, § 1, effective July 1, 1994.

PART 3 JUDICIAL APPRAISAL OF SHARES

7-113-301. Court action.

(1) If a demand for payment under section 7-113-209 remains unresolved, the corporation may, within sixty days after receiving the payment demand, commence a proceeding and petition the court to determine the fair value of the shares and accrued interest. If the corporation does not commence the proceeding within the sixty-day period, it shall pay to each dissenter whose demand remains unresolved the amount demanded.

(2) The corporation shall commence the proceeding described in subsection (1) of this section in the district court for the county in this state in which the street address of the corporation’s principal office is located, or, if the corporation has no principal office in this state, in the district court for the county in which the street address of its registered agent is located, or, if the corporation has no registered agent, in the district court for the city and county of Denver. If the corporation is a foreign corporation without a registered agent, it shall commence the proceeding in the county in which the domestic corporation merged into, or whose shares were acquired by, the foreign corporation would have commenced the action if that corporation were subject to the first sentence of this subsection (2).

(3) The corporation shall make all dissenters, whether or not residents of this state, whose demands remain unresolved parties to the proceeding commenced under subsection (2) of this section as in an action against their shares, and all parties shall be served with a copy of the petition. Service on each dissenter shall be by registered or certified mail, to the address stated in such dissenter’s payment demand, or if no such address is stated in the payment demand, at the address shown on the corporation’s current record of shareholders for the record shareholder holding the dissenter’s shares, or as provided by law.

(4) The jurisdiction of the court in which the proceeding is commenced under subsection (2) of this section is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers have the powers described in the order appointing them, or in any amendment to such order. The parties to the proceeding are entitled to the same discovery rights as parties in other civil proceedings.

(5) Each dissenter made a party to the proceeding commenced under subsection (2) of this section is entitled to judgment for the amount, if any, by which the court finds the fair value of the dissenter’s shares, plus interest, exceeds the amount paid by the corporation, or for the fair value, plus interest, of the dissenter’s shares for which the corporation elected to withhold payment under section 7-113-208.

Source: L. 93: Entire article added, p. 820, § 1, effective July 1, 1994. L. 96: (2) amended, p. 1324, § 33, effective June 1. L. 2003: (2) amended, p. 2327, § 261, effective July 1, 2004. L. 2004: (2) amended, p. 1506, § 279, effective July 1.

7-113-302. Court costs and counsel fees.

(1) The court in an appraisal proceeding commenced under section 7-113-301 shall determine all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court shall assess the costs against the corporation; except that the court may assess costs against all or some of the dissenters, in amounts the court finds equitable, to the extent the court finds the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding payment under section 7-113-209.

(2) The court may also assess the fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable:

(a) Against the corporation and in favor of any dissenters if the court finds the corporation did not substantially comply with part 2 of this article; or

(b) Against either the corporation or one or more dissenters, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this article.

(3) If the court finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated, and that the fees for those services should not be assessed against the corporation, the court may award to said counsel reasonable fees to be paid out of the amounts awarded to the dissenters who were benefited.

Source: L. 93: Entire article added, p. 821, § 1, effective July 1, 1994. L. 2003: (2)(a) amended, p. 2327, § 262, effective July 1, 2004.

ARTICLE 114 – Dissolution

Cross references: For definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

Law reviews: For article, “Commercial and Corporate Law”, which discusses a Tenth Circuit decision dealing with criminal liability of corporations and partnerships for acts committed prior to dissolution, see 64 Den. U. L. Rev. 176 (1987).

PART 1 VOLUNTARY DISSOLUTION

7-114-101. Authorization of dissolution before issuance of shares. If a corporation has not yet issued shares, a majority of its directors or, if no directors have been elected, a majority of its incorporators may authorize the dissolution of the corporation.

Source: L. 93: Entire article added, p. 822, § 1, effective July 1, 1994.

7-114-102. Authorization of dissolution after issuance of shares. (1) After shares have been issued, dissolution of a corporation may be authorized in the manner provided in subsection (2) of this section.

(2) For a proposal to dissolve the corporation to be authorized:

(a) The board of directors shall adopt the proposal to dissolve;

(b) The board of directors shall recommend the proposal to dissolve to the shareholders unless the board of directors determines that, because of conflict of interest or other special circumstances, it should make no recommendation and communicates the basis for its determination to the shareholders; and

(c) The shareholders entitled to vote on the proposal to dissolve shall approve the proposal to dissolve as provided in subsection (5) of this section.

(3) The board of directors may condition the effectiveness of the dissolution on any basis.

(4) The corporation shall give notice, in accordance with section 7-107-105, to each shareholder entitled to vote on the proposal of the shareholders’ meeting at which the proposal to dissolve will be voted upon. The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the proposal to dissolve the corporation, and the notice shall contain or be accompanied by a copy of the proposal or a summary thereof.

(5) Unless articles 101 to 117 of this title (including the provisions of section 7-117-101 (10)), the articles of incorporation, bylaws adopted by the shareholders, or the board of directors acting pursuant to subsection (3) of this section require a greater vote, the proposal to dissolve shall be approved by each voting group entitled to vote separately on the proposal by a majority of all the votes entitled to be cast on the proposal by that voting group.

Source: L. 93: Entire article added, p. 822, § 1, effective July 1, 1994.

7-114-102.5. Dissolution upon expiration of period of duration. (1) A corporation shall be dissolved upon and by reason of the expiration of its period of duration, if any, stated in its articles of incorporation.

(2) A provision in the articles of incorporation to the effect that the corporation or its existence shall be terminated at a stated date or after a stated period of time or upon a contingency, or any similar provision, shall be deemed to be a provision for a period of duration within the meaning of this section, and the occurrence of such date, the expiration of the stated period of time, the occurrence of such contingency, or the satisfaction of such provision shall be deemed to be the expiration of the corporation’s period of duration for purposes of this section.

Source: L. 96: Entire section added, p. 1324, § 34, effective June 1. L. 2003: (2) amended, p. 2327, § 263, effective July 1, 2004.

7-114-103. Articles of dissolution. (1) At any time after dissolution is authorized, the corporation may dissolve by delivering to the secretary of state, for filing pursuant to part 3 of article 90 of this title, articles of dissolution stating:

(a) The domestic entity name of the corporation;

(b) The principal office address of the corporation’s principal office; and

(d) to (f) (Deleted by amendment, L. 2004, p. 1506, § 280, effective July 1, 2004.)

(2) A corporation is dissolved upon the effective date of its articles of dissolution.

(3) Repealed.

(4) Articles of dissolution need not be filed by a corporation that is dissolved pursuant to section 7-114-102.5.

Source: L. 93: Entire article added, p. 823, § 1, effective July 1, 1994. L. 96: (3) repealed and (4) added, pp. 1324, 1325, §§ 35, 36, effective June 1. L. 2002: IP(1) amended, p. 1850, § 121, effective July 1; IP(1) amended, p. 1715, § 121, effective October 1. L. 2003: IP(1), (1)(a), and (1)(b) amended, p. 2328, § 264, effective July 1, 2004. L. 2004: (1)(c), (1)(d), (1)(e), and (1)(f) amended, p. 1506, § 280, effective July 1.

7-114-103.5. Name of dissolved corporation – repeal. (Repealed)

Source: L. 96: Entire section added, p. 1324, § 34, effective June 1. L. 2000: Entire section amended, p. 979, § 63, effective July 1. L. 2003: (2) added by revision, pp. 2356, 2357, §§ 347, 348.

Editor’s note: Subsection (2) provided for the repeal of this section, effective July 1, 2004. (See L. 2003, pp. 2356, 2357.)

7-114-104. Revocation of dissolution. (Repealed)

Source: L. 93: Entire article added, p. 823, § 1, effective July 1, 1994. L. 2000: (3)(a) and (5) amended, p. 979, § 64, effective July 1. L. 2002: IP(3) and (4) amended, p. 1850, § 122, effective July 1; IP(3) and (4) amended, p. 1715, § 122, effective October 1. L. 2003: IP(3), (3)(a), (4), and (5) amended, p. 2328, § 265, effective July 1, 2004. L. 2004: Entire section repealed, p. 1507, § 281, effective July 1.

7-114-105. Effect of dissolution. (1) A dissolved corporation continues its corporate existence but may not carry on any business except as is appropriate to wind up and liquidate its business and affairs, including:

(a) Collecting its assets;

(b) Disposing of its properties that will not be distributed in kind to its shareholders;

(d) Distributing its remaining property among its shareholders according to their interests; and

(e) Doing every other act necessary to wind up and liquidate its business and affairs.

(2) Dissolution of a corporation does not:

(a) Transfer title to the corporation’s property;

(b) Prevent transfer of its shares or securities, although the authorization to dissolve may provide for closing the corporation’s share transfer records;

(c) Subject its directors or officers to standards of conduct different from those prescribed in article 108 of this title;

(d) Change quorum or voting requirements for its board of directors or shareholders; change provisions for selection, resignation, or removal of its directors or officers or both; or change provisions for amending its bylaws or its articles of incorporation;

(e) Prevent commencement of a proceeding by or against the corporation in its name; or

(f) Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution.

(3) A dissolved corporation may dispose of claims against it pursuant to sections 7-90-911 and 7-90-912.

Source: L. 93: Entire article added, p. 824, § 1, effective July 1, 1994. L. 2004: (2)(e) amended, p. 1508, § 282, effective July 1. L. 2006: (3) added, p. 881, § 75, effective July 1.

7-114-106. Disposition of known claims by notification. (Repealed)

Source: L. 93: Entire article added, p. 825, § 1, effective July 1, 1994. L. 96: (2) amended, p. 1325, § 37, effective June 1. L. 2006: Entire section repealed, p. 884, § 87, effective July 1.

7-114-107. Disposition of claims by publication. (Repealed)

Source: L. 93: Entire article added, p. 826, § 1, effective July 1, 1994. L. 2003: (2)(a) amended, p. 2328, § 266, effective July 1, 2004. L. 2006: Entire section repealed, p. 884, § 87, effective July 1.

7-114-108. Enforcement of claims against dissolved corporation. (Repealed)

Source: L. 93: Entire article added, p. 827, § 1, effective July 1, 1994. L. 2006: Entire section repealed, p. 884, § 87, effective July 1.

7-114-109. Service on dissolved corporation – repeal. (Repealed)

Source: L. 93: Entire article added, p. 827, § 1, effective July 1, 1994. L. 96: (1)(a) amended, p. 1325, § 38, effective June 1. L. 2003: (4) added by revision, pp. 2356, 2357, §§ 347, 348.

Editor’s note: Subsection (4) provided for the repeal of this section, effective July 1, 2004. (See L. 2003, pp. 2356, 2357.)

PART 2 – ADMINISTRATIVE DISSOLUTION

7-114-201. Grounds for administrative dissolution. (Repealed)

Source: L. 93: Entire article added, p. 828, § 1, effective July 1, 1994. L. 96: (1)(c) amended, p. 1325, § 39, effective June 1. L. 2000: (1)(b) amended, p. 980, § 65, effective July 1. L. 2003: (1)(a), (1)(b), (1)(c), and (1)(d) amended, p. 2328, § 267, effective July 1, 2004. L. 2004: (1)(b) amended, p. 1508, § 283, effective July 1. L. 2005: Entire section repealed, p. 1218, § 26, effective October 1.

7-114-202. Procedure for and effect of administrative dissolution. (Repealed)

Source: L. 93: Entire article added, p. 828, § 1, effective July 1, 1994. L. 94: (1) and (2) amended, p. 75, § 1, effective July 1. L. 2003: (2), (3), (4), and (5) amended, p. 2329, § 268, effective July 1, 2004. L. 2005: Entire section repealed, p. 1218, § 26, effective October 1.

7-114-203. Reinstatement following administrative dissolution – repeal. (Repealed)

Source: L. 93: Entire article added, p. 829, § 1, effective July 1, 1994. L. 94: (3) amended, p. 75, § 2, effective July 1. L. 96: (1)(e) amended, p. 1326, § 40, effective June 1. L. 2000: (1)(a) and (1)(c) amended, p. 980, § 66, effective July 1. L. 2002: IP(1), (2), and (3) amended, p. 1850, § 123, effective July 1; IP(1), (2), and (3) amended, p. 1715, § 123, effective October 1. L. 2003: (5) added by revision, pp. 2356, 2357, §§ 347, 348.

Editor’s note: Subsection (5) provided for the repeal of this section, effective July 1, 2004. (See L. 2003, pp. 2356, 2357.)

7-114-204. Appeal from denial of reinstatement – repeal. (Repealed)

Source: L. 93: Entire article added, p. 830, § 1, effective July 1, 1994. L. 94: (1) and (2) amended, p. 76, § 3, effective July 1. L. 96: (2) amended, p. 1326, § 41, effective June 1. L. 2003: (5) added by revision, pp. 2356, 2357, §§ 347, 348.

Editor’s note: Subsection (5) provided for the repeal of this section, effective July 1, 2004. (See L. 2003, pp. 2356, 2357.)

PART 3

JUDICIAL DISSOLUTION

7-114-301. Grounds for judicial dissolution. (1) A corporation may be dissolved in a proceeding by the attorney general if it is established that:

(a) The corporation obtained its articles of incorporation through fraud; or

(b) The corporation has continued to exceed or abuse the authority conferred upon it by law.

(2) A corporation may be dissolved in a proceeding by a shareholder if it is established that:

(a) The directors are deadlocked in the management of the corporate affairs, the shareholders are unable to break the deadlock, and irreparable injury to the corporation is threatened or being suffered, or the business and affairs of the corporation can no longer be conducted to the advantage of the shareholders generally, because of the deadlock;

(b) The directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent;

(c) The shareholders are deadlocked in voting power and have failed, for a period that includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have expired or would have expired upon the election of their successors; or

(d) The corporate assets are being misapplied or wasted.

(3) A corporation may be dissolved in a proceeding by a creditor if it is established that:

(a) The creditor’s claim has been reduced to judgment, the execution on the judgment has been returned unsatisfied, and the corporation is insolvent; or

(b) The corporation is insolvent and the corporation has admitted in writing that the creditor’s claim is due and owing.

(4) (a) If a corporation has been dissolved by voluntary action taken under part 1 of this article:

(I) The corporation may bring a proceeding to wind up and liquidate its business and affairs under judicial supervision in accordance with section 7-114-105; and

(II) The attorney general, a shareholder, or a creditor, as the case may be, may bring a proceeding to wind up and liquidate the business and affairs of the corporation under judicial supervision in accordance with section 7-114-105, upon establishing the grounds set forth for such person, respectively, in subsections (1) to (3) of this section.

(b) As used in sections 7-114-302 to 7-114-304, a “proceeding to dissolve a corporation” includes a proceeding brought under this subsection (4), and a “decree of dissolution” includes an order of court entered in a proceeding under this subsection (4) which directs that the business and affairs of a corporation shall be wound up and liquidated under judicial supervision.

Source: L. 93: Entire article added, p. 830, § 1, effective July 1, 1994. L. 2004: (4)(b) amended, p. 1508, § 284, effective July 1. L. 2005: IP(4)(a) amended, p. 1219, § 29, effective October 1.

7-114-302. Procedure for judicial dissolution. (1) A proceeding by the attorney general to dissolve a corporation shall be brought in the district court for the county in this state in which the street address of the corporation’s principal office or the street address of its registered agent is located or, if the corporation has no principal office in this state and no registered agent, in the district court for the city and county of Denver. A proceeding brought by any other party named in section 7-114-301 shall be brought in the district court for the county in this state in which the street address of the corporation’s principal office is located or, if it has no principal office in this state, in the district court for the county in which the street address of its registered agent is located, or, if the corporation has no registered agent, in the district court for the city and county of Denver.

(2) It is not necessary to make shareholders parties to a proceeding to dissolve a corporation unless relief is sought against them individually.

(3) A court in a proceeding brought to dissolve a corporation may issue injunctions, appoint a receiver or custodian pendente lite with all powers and duties the court directs, take other action required to preserve the corporate assets wherever located, and carry on the business of the corporation until a full hearing can be held.

Source: L. 93: Entire article added, p. 831, § 1, effective July 1, 1994. L. 96: (1) amended, p. 1326, § 42, effective June 1. L. 2003: (1) amended, p. 2330, § 269, effective July 1, 2004.

7-114-303. Receivership or custodianship. (1) A court in a judicial proceeding to dissolve a corporation may appoint one or more receivers to wind up and liquidate, or one or more custodians to manage, the business and affairs of the corporation. The court shall hold a hearing, after giving notice to all parties to the proceeding and any interested persons designated by the court, before appointing a receiver or custodian. The court appointing a receiver or custodian has exclusive jurisdiction over the corporation and all of its property, wherever located.

(2) The court may appoint an individual, a domestic entity, or a foreign entity authorized to transact business or conduct activities in this state as a receiver or custodian. The court may require the receiver or custodian to post bond, with or without sureties, in an amount the court directs.

(3) The court shall describe the powers and duties of the receiver or custodian in its appointing order, which may be amended from time to time. Among other powers:

(a) The receiver:

(I) May dispose of all or any part of the property of the corporation wherever located, at a public or private sale, if authorized by the court; and

(II) May sue and defend in the receiver’s own name as receiver of the corporation in all courts; or

(b) The custodian may exercise all of the powers of the corporation, through or in place of its board of directors or officers, to the extent necessary to manage the affairs of the corporation in the best interests of its shareholders and creditors.

(4) The court during a receivership may redesignate the receiver a custodian, and during a custodianship may redesignate the custodian a receiver, if doing so is in the best interests of the corporation and its shareholders and creditors.

(5) The court from time to time during the receivership or custodianship may order compensation paid and expense disbursements or reimbursements made to the receiver or custodian and such person’s counsel from the assets of the corporation or proceeds from the sale of the assets.

Source: L. 93: Entire article added, p. 832, § 1, effective July 1, 1994. L. 2003: (2) amended, p. 2330, § 270, effective July 1, 2004. L. 2004: (1) amended, p. 1508, § 285, effective July 1.

7-114-304. Decree of dissolution. (1) If after a hearing the court determines that one or more grounds for judicial dissolution described in section 7-114-301 exist, it may enter a decree dissolving the corporation and stating the effective date of the dissolution, and the clerk of the court shall deliver a certified copy of the decree to the secretary of state for filing pursuant to part 3 of article 90 of this title.

(2) After entering the decree of dissolution, the court shall direct the winding up and liquidation of the corporation’s business and affairs in accordance with section 7-114-105 and the giving of notice to claimants in accordance with sections 7-90-911 and 7-90-912.

(3) The court’s order or decision may be appealed as in other civil proceedings.

Source: L. 93: Entire article added, p. 833, § 1, effective July 1, 1994. L. 2003: (1) and (2) amended, p. 2330, § 271, effective July 1, 2004. L. 2004: (2) amended, p. 1508, § 286, effective July 1. L. 2006: (2) amended, p. 881, § 76, effective July 1.

PART 4 MISCELLANEOUS

7-114-401. Deposit with state treasurer. Assets of a dissolved corporation that should be transferred to a creditor, claimant, or shareholder of the corporation who cannot be found or who is not legally competent to receive them shall be reduced to cash and deposited with the state treasurer as property presumed to be abandoned under the provisions of article 13 of title 38, C.R.S.

Source: L. 93: Entire article added, p. 833, § 1, effective July 1, 1994.

ARTICLE 115

Foreign Corporations

Editor’s note: This article was added in 1993 and was subsequently repealed and reenacted in 2003, effective July 1, 2004, resulting in the addition, relocation, and elimination of sections as well as subject matter. For amendments to this article prior to 2004, consult the Colorado statutory research explanatory note and the table itemizing the replacement volumes and supplements to the original volume of C.R.S. 1973 beginning on page vii in the front of this volume.

Cross references: For definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

7-115-101. Authority to transact business or conduct activities required. Part 8 of article 90 of this title, providing for the transaction of business or the conduct of activities by foreign entities, applies to foreign corporations.

Source: L. 2003: Entire article R&RE, p. 2330, § 272, effective July 1, 2004.

ARTICLE 116 – Records, Information, and Reports

Cross references: For definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

7-116-101. Corporate records.

(1) A corporation shall keep as permanent records minutes of all meetings of its shareholders and board of directors, a record of all actions taken by the shareholders or board of directors without a meeting, a record of all actions taken by a committee of the board of directors in place of the board of directors on behalf of the corporation, and a record of all waivers of notices of meetings of shareholders and of the board of directors or any committee of the board of directors.

(2) A corporation shall maintain appropriate accounting records.

(3) A corporation or its agent shall maintain a record of the names and addresses of its shareholders, in a form that permits preparation of a list of shareholders that is arranged by voting group and within each voting group by class or series of shares, that is alphabetical within each class or series, and that shows the address of, and the number of shares of each class and series held by, each shareholder.

(4) A corporation shall maintain its records in written form or in another form capable of conversion into written form within a reasonable time.

(5) A corporation shall keep a copy of each of the following records at its principal office:

(a) Its articles of incorporation;

(b) Its bylaws;

(c) The minutes of all shareholders’ meetings, and records of all action taken by shareholders without a meeting, for the past three years;

(d) All written communications within the past three years to shareholders as a group or to the holders of any class or series of shares as a group;

(e) A list of the names and business addresses of its current directors and officers;

(f) A copy of its most recent periodic report pursuant to part 5 of article 90 of this title; and

(g) All financial statements prepared for periods ending during the last three years that a shareholder could have requested under section 7-116-105.

Source: L. 93: Entire article added, p. 843, § 1, effective July 1, 1994. L. 2000: (5)(f) amended, p. 981, § 72, effective July 1. L. 2003: (5)(f) amended, p. 2331, § 273, effective July 1, 2004. L. 2010: (5)(f) amended, (HB 10-1403), ch. 404, p. 2000, § 25, effective August 11.

7-116-102. Inspection of corporate records by shareholder.

(1) A shareholder is entitled to inspect and copy, during regular business hours at the corporation’s principal office, any of the records of the corporation described in section 7-116-101 (5) if the shareholder gives the corporation written demand at least five business days before the date on which the shareholder wishes to inspect and copy such records.

(2) In addition to the rights set forth in subsection (1) of this section, a shareholder is entitled to inspect and copy, during regular business hours at a reasonable location stated by the corporation, any of the following records of the corporation if the shareholder meets the requirements of subsection (3) of this section and gives the corporation written demand at least five business days before the date on which the shareholder wishes to inspect and copy such records:

(a) Excerpts from minutes of any meeting of the board of directors or from records of any action taken by the board of directors without a meeting, minutes of any meeting of the shareholders or records of any action taken by the shareholders without a meeting, excerpts of records of any action of a committee of the board of directors while acting in place of the board of directors on behalf of the corporation, and waivers of notices of any meeting of the shareholders or the board of directors or any committee of the board of directors;

(b) Accounting records of the corporation; and

(3) A shareholder may inspect and copy the records described in subsection (2) of this section only if:

(a) The shareholder has been a shareholder for at least three months immediately preceding the demand to inspect or copy or is a shareholder of at least five percent of all of the outstanding shares of any class of shares of the corporation as of the date the demand is made;

(b) The demand is made in good faith and for a proper purpose;

(c) The shareholder describes with reasonable particularity the purpose and the records the shareholder desires to inspect; and

(d) The records are directly connected with the described purpose.

(4) For purposes of this section:

(a) “Proper purpose” means a purpose reasonably related to the demanding shareholder’s interest as a shareholder; and

(b) “Shareholder” includes a beneficial owner whose shares are held in a voting trust and any other beneficial owner who establishes beneficial ownership.

(5) The right of inspection granted by this section may not be abolished or limited by the articles of incorporation or bylaws.

(6) This section does not affect:

(a) The right of a shareholder to inspect records under section 7-107-201;

(b) The right of a shareholder to inspect records to the same extent as any other litigant if the shareholder is in litigation with the corporation; or

(c) The power of a court, independent of articles 101 to 117 of this title, to compel the production of corporate records for examination.

Source: L. 93: Entire article added, p. 844, § 1, effective July 1, 1994. L. 2003: IP(2) amended, p. 2331, § 274, effective July 1, 2004.

7-116-103. Scope of shareholder’s inspection right.

(1) A shareholder’s agent or attorney has the same inspection and copying rights as the shareholder.

(2) The right to copy records under section 7-116-102 includes, if reasonable, the right to receive copies made by photographic, xerographic, or other means.

(3) Except as provided in section 7-116-106, the corporation may impose a reasonable charge, covering the costs of labor and material, for copies of any documents provided to the shareholder. The charge may not exceed the estimated cost of production and reproduction of the records.

(4) The corporation may comply with a shareholder’s demand to inspect the record of shareholders under section 7-116-102 (2)(c) by furnishing to the shareholder a list of shareholders that complies with section 7-116-101 (3) and was compiled no earlier than the date of the shareholder’s demand.

Source: L. 93: Entire article added, p. 846, § 1, effective July 1, 1994.

7-116-104. Court-ordered inspection of corporate records.

(1) If a corporation refuses to allow a shareholder, or the shareholder’s agent or attorney, who complies with section 7-116-102 (1) to inspect or copy any records that the shareholder is entitled to inspect or copy by said section, the district court for the county in this state in which the street address of the corporation’s principal office is located or, if the corporation has no principal office in this state, the district court for the county in which the street address of its registered agent is located or, if the corporation has no registered agent, the district court for the city and county of Denver may, on application of the shareholder, summarily order the inspection or copying of the records demanded at the corporation’s expense.

(2) If a corporation refuses to allow a shareholder, or the shareholder’s agent or attorney, who complies with section 7-116-102 (2) and (3) to inspect or copy any records that the shareholder is entitled to inspect or copy by section 7-116-102 (2) and (3) within a reasonable time following the shareholder’s demand, the district court for the county in this state in which the street address of the corporation’s principal office is located or, if the corporation has no principal office in this state, the district court for the county in which the street address of its registered agent is located or, if the corporation has no registered agent, the district court for the city and county of Denver may, on application of the shareholder, summarily order the inspection or copying of the records demanded.

(3) If a court orders inspection or copying of the records demanded, unless the corporation proves that it refused inspection or copying in good faith because it had a reasonable basis for doubt about the right of the shareholder or the shareholder’s agent or attorney to inspect or copy the records demanded:

(a) The court shall also order the corporation to pay the shareholder’s costs, including reasonable counsel fees, incurred to obtain the order;

(b) The court may order the corporation to pay the shareholder for any damages the shareholder incurred;

(c) If inspection or copying is ordered pursuant to subsection (2) of this section, the court may order the corporation to pay the shareholder’s inspection and copying expenses; and

(d) The court may grant the shareholder any other remedy provided by law.

(4) If a court orders inspection or copying of records demanded, it may impose reasonable restrictions on the use or distribution of the records by the demanding shareholder.

Source: L. 93: Entire article added, p. 846, § 1, effective July 1, 1994. L. 96: (1) and (2) amended, p. 1327, § 48, effective June 1. L. 2003: (1) and (2) amended, p. 2331, § 275, effective July 1, 2004.

7-116-105. Financial statements. Upon the written request of any shareholder, a corporation shall mail to such shareholder its most recent annual financial statements, if any, and its most recently published financial statements, if any, showing in reasonable detail its assets and liabilities and results of its operations.

Source: L. 93: Entire article added, p. 847, § 1, effective July 1, 1994.

7-116-106. Information respecting shares. Upon the written request of any shareholder, a corporation shall mail to such shareholder, at the corporation’s expense, the information specified by section 7-106-206 (4), whether or not such information is also contained or summarized on any share certificate of the shareholder.

Source: L. 93: Entire article added, p. 847, § 1, effective July 1, 1994.

7-116-107. Periodic report to secretary of state. Part 5 of article 90 of this title, providing for periodic reports from reporting entities, applies to domestic corporations and applies to foreign corporations that are authorized to transact business or conduct activities in this state.

Source: L. 93: Entire article added, p. 847, § 1, effective July 1, 1994. L. 96: (1)(c) amended, p. 1328, § 49, effective June 1. L. 2000: Entire section R&RE, p. 981, § 73, effective July 1. L. 2003: Entire section amended, p. 2331, § 276, effective July 1, 2004. L. 2004: Entire section amended, p. 1508, § 287, effective July 1. L. 2010: Entire section amended, (HB 10-1403), ch. 404, p. 2000, § 26, effective August 11.

7-116-108. Statement of person named as director or officer. (Repealed)

Source: L. 93: Entire article added, p. 849, § 1, effective July 1, 1994. L. 2000: Entire section repealed, p. 990, § 109, effective July 1.

7-116-109. Interrogatories by secretary of state. (Repealed)

Source: L. 93: Entire article added, p. 849, § 1, effective July 1, 1994. L. 96: (5) amended, p. 1328, § 50, effective June 1. L. 2002: (4) amended, p. 1852, § 130, effective July 1; (4) amended, p. 1717, § 130, effective October 1. L. 2003: (4) and (5) amended, p. 2332, § 277, effective July 1, 2004. L. 2004: (1) amended, p. 1509, § 288, effective July 1. L. 2006: Entire section repealed, p. 884, § 87, effective July 1.

ARTICLE 117 – TRANSITION PROVISIONS

Cross references: For definitions applicable to this article, see §§ 7-90-102 and 7-101-401.

7-117-101. Application to existing corporations. (1) For purposes of this article, “existing corporation” means any domestic corporation that was in existence on June 30, 1994, and that was incorporated under any general statute of this state providing for incorporation of corporations for profit if the power to amend or repeal the statute under which the corporation was incorporated was reserved.

(2) Articles 101 to 117 of this title apply to all existing corporations.

(3) Except to the extent the articles of incorporation of an existing corporation limit or deny preemptive rights, shareholders of such corporation shall have a preemptive right to acquire unissued shares or securities convertible into such shares or carrying a right to subscribe to or acquire shares; except that, unless otherwise provided in the articles of incorporation, such preemptive rights shall not exist:

(a) To acquire any shares issued to directors, officers, or employees pursuant to approval by the affirmative vote of the holders of a majority of the shares entitled to vote thereon or when authorized by and not inconsistent with a plan theretofore approved by such a vote of shareholders; or

(b) To acquire any shares sold otherwise than for cash.

(4) Notwithstanding the provisions of subsection (3) of this section, unless the articles of incorporation of an existing corporation provide otherwise:

(a) Holders of shares of any class that is preferred or limited as to dividends or assets shall not be entitled to any preemptive right;

(b) Holders of shares of common stock shall not be entitled to any preemptive right to shares of any class that is preferred or limited as to dividends or assets or to any obligations unless such shares are convertible into shares of common stock or carry a right to subscribe to or acquire shares of common stock; and

(c) Holders of common stock without voting powers shall have no preemptive right to shares of common stock with voting power.

(5) To the extent that preemptive rights exist pursuant to subsections (3) and (4) of this section, the preemptive right shall be only an opportunity to acquire shares or other securities under such terms and conditions as the board of directors may fix for the purpose of providing a fair and reasonable opportunity for the exercise of such right.

(6) Nothing in subsections (3) and (4) of this section shall confer any preemptive right with respect to shares of a corporation incorporated before January 1, 1959, that have been or may be issued and subsequently acquired by such corporation and that have not been cancelled or restored to the status of authorized but unissued shares. Any such shares in existence on June 30, 1994, or acquired thereafter by any such corporation shall not be deemed to be restored to the status of authorized but unissued shares, for purposes of this subsection (6) only, notwithstanding the provisions of section 7-106-302.

(7) Unless the articles of incorporation of an existing corporation contain a provision establishing the vote of shareholders required to amend the articles of incorporation, as contemplated in section 7-110-103, such amendment shall be approved by each voting group entitled to vote separately on the amendment by two-thirds of all the votes entitled to be cast on the amendment by that voting group.

(8) Unless the articles of incorporation of an existing corporation contain a provision establishing the vote of shareholders required to approve a plan of merger or a plan of share exchange, as contemplated in section 7-111-103, such plan shall be approved by each voting group entitled to vote separately on the plan by two-thirds of all the votes entitled to be cast on the plan by that voting group. In the case of a corporation incorporated before July 1, 1978, each outstanding share of the corporation, other than a redeemable share that is not entitled to vote by reason of section 7-107-202 (4), shall be entitled to vote on the plan of merger or share exchange whether or not such share has voting rights under the provisions of the articles of incorporation, unless the articles of incorporation have been amended after June 30, 1978, by the same vote of shareholders which would have been necessary at the time of the amendment to approve the plan, so as to restrict or eliminate the right of such share to vote on such plan.

(9) Unless the articles of incorporation of an existing corporation contain a provision establishing the vote of shareholders required to approve a transaction involving a sale, lease, exchange, or other disposition of all, or substantially all, of its property, with or without its good will, otherwise than in the usual and regular course of business, as contemplated in section 7-112-102 (1), such transaction shall be approved by each voting group entitled to vote separately on the transaction by two-thirds of all the votes entitled to be cast on the transaction by that voting group.

(10) Unless the articles of incorporation of an existing corporation contain a provision establishing the vote of shareholders required to approve a proposal to dissolve the corporation as contemplated in section 7-114-102, such proposal shall be approved by each voting group entitled to vote separately on the proposal by two-thirds of all the votes entitled to be cast on the proposal by that voting group. In the case of a corporation incorporated before July 1, 1978, each outstanding share of the corporation, other than a redeemable share that is not entitled to vote by reason of section 7-107-202 (4), shall be entitled to vote on a proposal to dissolve the corporation whether or not such share has voting rights under the provisions of the articles of incorporation, unless the articles of incorporation have been amended after June 30, 1978, by the same vote of shareholders which would have been necessary at the time of the amendment to approve the proposal, so as to restrict or eliminate the right of such share to vote on such proposal.

(11) An amendment to the articles of incorporation of an existing corporation to reduce the vote required to take any action specified in subsections (7) to (10) of this section, which amendment may not reduce the required vote to less than that which would be required to take the action if the action were to be taken by a corporation formed on or after July 1, 1994, shall be adopted by the same vote and voting groups required to take the action specified in said subsections (7) to (10).

Source: L. 93: Entire article added, p. 850, § 1, effective July 1, 1994. L. 96: (11) amended, p. 1328, § 51, effective June 1. L. 2004: (10) amended, p. 1509, § 289, effective July 1.

7-117-102. Application to foreign corporations. A foreign corporation authorized to transact business or conduct activities in this state on June 30, 1994, is subject to articles 101 to 117 of this title but is not required to obtain new authorization to transact business or conduct activities under said articles.

Source: L. 93: Entire article added, p. 852, § 1, effective July 1, 1994. L. 2003: Entire section amended, p. 2332, § 278, effective July 1, 2004.

7-117-103. Saving provisions.

(1) Except as provided in subsection (2) of this section, the repeal of any provision of the “Colorado Corporation Code”, articles 1 to 10 of this title, does not affect:

(a) The operation of the statute, or any action taken under it, before its repeal;

(b) Any ratification, right, remedy, privilege, obligation, or liability acquired, accrued, or incurred under the provision before its repeal;

(c) Any violation of the provision, or any penalty, forfeiture, or punishment incurred because of the violation, before its repeal; or

(d) Any proceeding, reorganization, or dissolution commenced under the provision before its repeal, and the proceeding, reorganization, or dissolution may be completed in accordance with the provision as if it had not been repealed.

(2) If a penalty or punishment imposed for violation of any provision of the “Colorado Corporation Code”, articles 1 to 10 of this title, is reduced by articles 101 to 117 of this title, the penalty or punishment, if not already imposed, shall be imposed in accordance with said articles 101 to 117.

Source: L. 93: Entire article added, p. 853, § 1, effective July 1, 1994.

7-117-104. Severability. If any provision of articles 101 to 117 of this title or its application to any person or circumstance is held invalid by a court of competent jurisdiction, the invalidity does not affect other provisions or applications of said articles that can be given effect without the invalid provision or application, and to this end the provisions of said articles are severable.

Source: L. 93: Entire article added, p. 853, § 1, effective July 1, 1994.

7-117-105. Effective date. Articles 101 to 117 of this title are effective July 1, 1994.

Source: L. 93: Entire article added, p. 853, § 1, effective July 1, 1994.

Foundry Legal is a boutique transactional and regulatory law practice in Denver, Colorado.

We are business attorneys focused on guiding new tech and social impact companies through regulatory hurdles and complex transactions, especially in the areas of privacy law and compliance, emerging growth securities, and commercial transactions.

selected statutes.

Colorado Statutes – Colorado Business Corporations Act; Article 101-121

Disclaimer: This page is for reference purposes only and is not the official version of the Colorado statutes. You should not rely on it for any reason. You can find the official statutes provided by LexisNexis here.

Colorado Business Corporations

ARTICLE 101 – General Provisions

PART 1 – SHORT TITLE AND RESERVATION OF POWER

PART 2 – Filing documents

PART 3 – Secretary of State

PART 4 – Definitions

PART 5 – PUBLIC BENEFIT CORPORATIONS

ARTICLE 102 – INCORPORATION

7-102-105. Organization of corporation.

ARTICLE 103 – PURPOSES AND POWERS

PART 2 Issuance of shares

ARTICLE 107 – Shareholders

PART 3 – VOTING TRUSTS AND AGREEMENTS –

PART 4 – ACTIONS BY SHAREHOLDERS

Article 108 – Directors and Officers

PART 3 OFFICERS

PART 5 – DIRECTOR – CONFLICTS OF INTEREST

Article 109 – Indemnification

ARTICLE 110 Amendment of Articles of Incorporation and Bylaws

ARTICLE 111 – Merger, Share Exchange, and Redomestication

ARTICLE 113 – Dissenters’ Rights

PART 3 JUDICIAL APPRAISAL OF SHARES

ARTICLE 114 – Dissolution

PART 1 VOLUNTARY DISSOLUTION

ARTICLE 116 – Records, Information, and Reports

ARTICLE 117 – TRANSITION PROVISIONS

CONTACT

LINKS

PRACTICE AREAS

The Forum Newsletter

Good call

the first of many

drop us a line