Section 10A-30-2.08

Management by shareholders; applicable to corporations formed as close corporations or electing close corporation status prior to January 1, 1995.

The certificate of formation of a close corporation may provide that the business of the corporation shall be managed by the shareholders of the corporation rather than by a board of directors. So long as this provision continues in effect:

(1) No meeting of shareholders need be called to elect directors;

(2) Unless the context clearly requires otherwise, the shareholders of the corporation shall be deemed to be directors for purposes of applying provisions of this article; and

(3) The shareholders of the corporation shall be subject to all liabilities of directors.

Such a provision may be inserted in the certificate of formation by amendment if all incorporators and subscribers or all holders of record of all of the outstanding shares, whether or not having voting power, authorize such a provision. An amendment to the certificate of formation to delete such a provision shall be adopted by a vote of the holders of record of not less than one-third of all outstanding shares of the corporation, whether or not otherwise entitled to vote. If the certificate of formation contains a provision authorized by this section, the existence of such provision shall be noted conspicuously on the face or back of every certificate for shares issued by such corporation.

(Acts 1980, No. 80-633, p. 1094, §169; §10-2A-308; amended and renumbered by Act 2009-513, p. 967, §374.)