(a) A statutory close corporation may operate without a board of directors if its articles of incorporation contain a statement to that effect.

(b) An amendment to articles of incorporation eliminating a board of directors must be approved by all the shareholders of the corporation, whether or not otherwise entitled to vote on amendments or, if no shares have been issued, by all the subscribers for shares, if any, or, if none, by all the incorporators.

(c) While a corporation is operating without a board of directors as authorized by subsection (a):

(1) all corporate powers must be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, the shareholders;

(2) unless the articles of incorporation provide otherwise, (i) action requiring director approval or both director and shareholder approval is authorized if approved by the shareholders and (ii) action requiring a majority or greater percentage vote of the board of directors is authorized if approved by the majority or greater percentage of the votes of shareholders entitled to vote on the action;

(3) a shareholder is not liable for his act or omission, although a director would be, unless the shareholder was entitled to vote on the action;

(4) a requirement by a state or the United States that a document delivered for filing contain a statement that specified action has been taken by the board of directors is satisfied by a statement that the corporation is a statutory close corporation without a board of directors and that the action was approved by the shareholders;

(5) the shareholders by resolution may appoint shareholders to sign documents as "designated directors".

(d) An amendment to articles of incorporation deleting the statement eliminating a board of directors must be approved by the holders of at least two-thirds of the votes of each class or series of shares of the corporation, voting as separate voting groups, whether or not otherwise entitled to vote on amendments. The amendment also must specify the number, names, and addresses of the corporation's directors or describe who will perform the duties of a board under Section 33-8-101.

HISTORY: Derived from 1976 Code Section 33-11-220 [1962 Code Section 12-16.22; 1962 (52) 1996; 1981 Act No. 146, Section 2; Repealed, 1988 Act No. 444, Section 2]; 1988 Act No. 444, Section 2.