HF 3232

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to business organizations; business 
  1.3             corporations and limited liability companies; 
  1.4             regulating the rights of shareholders and members; 
  1.5             clarifying notice of director and governor conflicts 
  1.6             of interest; regulating the issuing of and right to 
  1.7             purchase shares; regulating contribution allowance 
  1.8             agreements; amending Minnesota Statutes 1998, sections 
  1.9             302A.135, subdivision 2; 302A.181, subdivision 3; 
  1.10            302A.255, subdivision 1; 302A.405, subdivision 3; 
  1.11            302A.409, subdivision 3; 302A.471, subdivision 3; 
  1.12            302A.521, subdivision 6; 302A.613, subdivision 2; and 
  1.13            322B.699, subdivision 6; Minnesota Statutes 1999 
  1.14            Supplement, sections 302A.471, subdivision 1; 322B.43, 
  1.15            subdivision 1; 322B.666, subdivision 1; and 322B.72, 
  1.16            subdivision 2. 
  1.17  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.18     Section 1.  Minnesota Statutes 1998, section 302A.135, 
  1.19  subdivision 2, is amended to read: 
  1.20     Subd. 2.  [SUBMISSION TO SHAREHOLDERS.] A resolution 
  1.21  approved by the affirmative vote of a majority of the directors 
  1.22  present, or proposed by a shareholder or shareholders holding 
  1.23  three percent or more of the voting power of the shares entitled 
  1.24  to vote, that sets forth the proposed amendment shall be 
  1.25  submitted to a vote at the next regular or special meeting of 
  1.26  the shareholders of which notice has not yet been given but 
  1.27  still can be timely given.  Any number of amendments may be 
  1.28  submitted to the shareholders and voted upon at one meeting, but 
  1.29  the same or substantially the same amendment proposed by a 
  1.30  shareholder or shareholders need not be submitted to the 
  1.31  shareholders or be voted upon at more than one meeting during a 
  2.1   15-month period, except that if a corporation is registered or 
  2.2   reporting under the federal securities laws, the provisions of 
  2.3   this sentence do not apply to the extent that those provisions 
  2.4   are in conflict with the federal securities laws or rules 
  2.5   adopted under those laws.  The resolution may amend the articles 
  2.6   in their entirety to restate and supersede the original articles 
  2.7   and all amendments to them.  The provisions of this subdivision 
  2.8   regarding shareholder-proposed amendments do not apply to a 
  2.9   corporation registered or reporting under the federal securities 
  2.10  laws, to the extent that those provisions are in conflict with 
  2.11  the federal securities laws or rules promulgated thereunder, in 
  2.12  which case the federal securities laws or rules promulgated 
  2.13  thereunder shall govern. 
  2.14     Sec. 2.  Minnesota Statutes 1998, section 302A.181, 
  2.15  subdivision 3, is amended to read: 
  2.16     Subd. 3.  [POWER OF SHAREHOLDERS; PROCEDURE.] If a 
  2.17  shareholder or shareholders holding three percent or more of the 
  2.18  voting power of the shares entitled to vote propose a resolution 
  2.19  for action by the shareholders to adopt, amend, or repeal bylaws 
  2.20  adopted, amended, or repealed by the board and the resolution 
  2.21  sets forth the provision or provisions proposed for adoption, 
  2.22  amendment, or repeal, the limitations and procedures for 
  2.23  submitting, considering, and adopting the resolution are the 
  2.24  same as provided in section 302A.135, subdivisions 2 to 4, for 
  2.25  amendment of the articles.  The provisions of this subdivision 
  2.26  regarding shareholder-proposed amendments shall not apply to a 
  2.27  corporation registered or reporting under the federal securities 
  2.28  laws, to the extent that those provisions are in conflict with 
  2.29  the federal securities laws or rules promulgated thereunder, in 
  2.30  which case the federal securities laws or rules promulgated 
  2.31  thereunder shall govern. 
  2.32     Sec. 3.  Minnesota Statutes 1998, section 302A.255, 
  2.33  subdivision 1, is amended to read: 
  2.34     Subdivision 1.  [CONFLICT; PROCEDURE WHEN CONFLICT ARISES.] 
  2.35  A contract or other transaction between a corporation and one or 
  2.36  more of its directors, or between a corporation and an 
  3.1   organization in or of which one or more of its directors are 
  3.2   directors, officers, or legal representatives or have a material 
  3.3   financial interest, is not void or voidable because the director 
  3.4   or directors or the other organizations are parties or because 
  3.5   the director or directors are present at the meeting of the 
  3.6   shareholders or the board or a committee at which the contract 
  3.7   or transaction is authorized, approved, or ratified, if:  
  3.8      (a) The contract or transaction was, and the person 
  3.9   asserting the validity of the contract or transaction sustains 
  3.10  the burden of establishing that the contract or transaction was, 
  3.11  fair and reasonable as to the corporation at the time it was 
  3.12  authorized, approved, or ratified; 
  3.13     (b) The material facts as to the contract or transaction 
  3.14  and as to the director's or directors' interest are fully 
  3.15  disclosed or known to the shareholders holders of all 
  3.16  outstanding shares, whether or not entitled to vote, and the 
  3.17  contract or transaction is approved in good faith by (1) the 
  3.18  holders of two-thirds of the voting power of the shares entitled 
  3.19  to vote which are owned by persons other than the interested 
  3.20  director or directors, or (2) the unanimous affirmative vote of 
  3.21  the holders of all outstanding shares, whether or not entitled 
  3.22  to vote; 
  3.23     (c) The material facts as to the contract or transaction 
  3.24  and as to the director's or directors' interest are fully 
  3.25  disclosed or known to the board or a committee, and the board or 
  3.26  committee authorizes, approves, or ratifies the contract or 
  3.27  transaction in good faith by a majority of the board or 
  3.28  committee, but the interested director or directors shall not be 
  3.29  counted in determining the presence of a quorum and shall not 
  3.30  vote; or 
  3.31     (d) The contract or transaction is a distribution described 
  3.32  in section 302A.551, subdivision 1, or a merger or exchange 
  3.33  described in section 302A.601, subdivision 1 or 2.  
  3.34     Sec. 4.  Minnesota Statutes 1998, section 302A.405, 
  3.35  subdivision 3, is amended to read: 
  3.36     Subd. 3.  [PAYMENT; LIABILITY; CONTRIBUTION; STATUTE OF 
  4.1   LIMITATIONS.] (a) A corporation shall issue only shares that are 
  4.2   nonassessable or that are assessable but are issued with the 
  4.3   unanimous consent of the shareholders.  "Nonassessable" shares 
  4.4   are shares for which the agreed consideration has been fully 
  4.5   paid, delivered, or rendered to the corporation.  Consideration 
  4.6   in the form of a promissory note, a check, or a written 
  4.7   agreement to transfer property or render services to a 
  4.8   corporation in the future is fully paid when the note, check, or 
  4.9   written agreement is delivered to the corporation, and 
  4.10  consideration in the form of services to be rendered to the 
  4.11  corporation is fully paid when the issuance of the shares is 
  4.12  authorized or approved pursuant to subdivision 1, paragraph (a). 
  4.13     (b) If shares are issued in violation of paragraph (a), the 
  4.14  following persons are jointly and severally liable to the 
  4.15  corporation for the difference between the agreed consideration 
  4.16  for the shares and the consideration actually received by the 
  4.17  corporation:  
  4.18     (1) A director or shareholder who was present and entitled 
  4.19  to vote but who failed to vote against the issuance of the 
  4.20  shares knowing of the violation; 
  4.21     (2) The person to whom the shares were issued; and 
  4.22     (3) A successor or transferee of the interest in the 
  4.23  corporation of a person described in clause (1) or (2), 
  4.24  including a purchaser of shares, a subsequent assignee, 
  4.25  successor, or transferee, a pledgee, a holder of any other 
  4.26  security interest in the assets of the corporation or shares 
  4.27  granted by the person described in clause (1) or (2), or a legal 
  4.28  representative of or for the person or estate of the person, 
  4.29  which successor, transferee, purchaser, assignee, pledgee, 
  4.30  holder, or representative acquired the interest knowing of the 
  4.31  violation.  
  4.32     (c)(1) A pledgee or holder of any other security interest 
  4.33  in all or any shares that have been issued in violation of 
  4.34  paragraph (a) is not liable under paragraph (b) if all those 
  4.35  shares are surrendered to the corporation.  The surrender does 
  4.36  not impair any rights of the pledgee or holder of any other 
  5.1   security interest against the pledgor or person granting the 
  5.2   security interest.  
  5.3      (2) A pledgee, holder of any other security interest, or 
  5.4   legal representative is liable under paragraph (b) only in that 
  5.5   capacity.  The liability of the person under paragraph (b) is 
  5.6   limited to the assets held in that capacity for the person or 
  5.7   estate of the person described in clause (1) or (2) of paragraph 
  5.8   (b).  
  5.9      (3) Each person liable under paragraph (b) has a full right 
  5.10  of contribution on an equitable basis from all other persons 
  5.11  liable under paragraph (b) for the same transaction.  
  5.12     (4) An action shall not be maintained against a person 
  5.13  under paragraph (b) unless commenced within two years from the 
  5.14  date on which shares are issued in violation of paragraph (a).  
  5.15     Sec. 5.  Minnesota Statutes 1998, section 302A.409, 
  5.16  subdivision 3, is amended to read: 
  5.17     Subd. 3.  [ISSUANCE PERMITTED.] A corporation may issue 
  5.18  rights to purchase after the terms, provisions, and conditions 
  5.19  of the rights to purchase to be issued, including the conversion 
  5.20  basis or the price at which securities may be purchased or 
  5.21  subscribed for, are fixed by the board, or by an officer 
  5.22  pursuant to board authorization, subject to any restrictions in 
  5.23  the articles.  Notwithstanding any provision of this chapter, a 
  5.24  corporation may issue rights to purchase or amend the instrument 
  5.25  or agreement fixing the terms, provisions, and conditions of the 
  5.26  rights to purchase to include terms and conditions that prevent 
  5.27  the holder of a specified percentage of the outstanding shares 
  5.28  of the corporation, including subsequent transferees of the 
  5.29  holder, from exercising those rights to purchase. 
  5.30     Sec. 6.  Minnesota Statutes 1999 Supplement, section 
  5.31  302A.471, subdivision 1, is amended to read: 
  5.32     Subdivision 1.  [ACTIONS CREATING RIGHTS.] A shareholder of 
  5.33  a corporation may dissent from, and obtain payment for the fair 
  5.34  value of the shareholder's shares in the event of, any of the 
  5.35  following corporate actions:  
  5.36     (a) An amendment of the articles that materially and 
  6.1   adversely affects the rights or preferences of the shares of the 
  6.2   dissenting shareholder in that it:  
  6.3      (1) alters or abolishes a preferential right of the shares; 
  6.4      (2) creates, alters, or abolishes a right in respect of the 
  6.5   redemption of the shares, including a provision respecting a 
  6.6   sinking fund for the redemption or repurchase of the shares; 
  6.7      (3) alters or abolishes a preemptive right of the holder of 
  6.8   the shares to acquire shares, securities other than shares, or 
  6.9   rights to purchase shares or securities other than shares; 
  6.10     (4) excludes or limits the right of a shareholder to vote 
  6.11  on a matter, or to cumulate votes, except as the right may be 
  6.12  excluded or limited through the authorization or issuance of 
  6.13  securities of an existing or new class or series with similar or 
  6.14  different voting rights; except that an amendment to the 
  6.15  articles of an issuing public corporation that provides that 
  6.16  section 302A.671 does not apply to a control share acquisition 
  6.17  does not give rise to the right to obtain payment under this 
  6.18  section; 
  6.19     (b) A sale, lease, transfer, or other disposition of all or 
  6.20  substantially all of the property and assets of the corporation, 
  6.21  but not including a transaction permitted without shareholder 
  6.22  approval in section 302A.661, subdivision 1, or a disposition in 
  6.23  dissolution described in section 302A.725, subdivision 2, or a 
  6.24  disposition pursuant to an order of a court, or a disposition 
  6.25  for cash on terms requiring that all or substantially all of the 
  6.26  net proceeds of disposition be distributed to the shareholders 
  6.27  in accordance with their respective interests within one year 
  6.28  after the date of disposition; 
  6.29     (c) A plan of merger, whether under this chapter or under 
  6.30  chapter 322B, to which the corporation is a constituent 
  6.31  organization, except as provided in subdivision 3; 
  6.32     (d) A plan of exchange, whether under this chapter or under 
  6.33  chapter 322B, to which the corporation is a party as the 
  6.34  corporation whose shares will be acquired by the acquiring 
  6.35  corporation, if the shares of the shareholder are entitled to be 
  6.36  voted on the plan except as provided in subdivision 3; or 
  7.1      (e) Any other corporate action taken pursuant to a 
  7.2   shareholder vote with respect to which the articles, the bylaws, 
  7.3   or a resolution approved by the board directs that dissenting 
  7.4   shareholders may obtain payment for their shares. 
  7.5      Sec. 7.  Minnesota Statutes 1998, section 302A.471, 
  7.6   subdivision 3, is amended to read: 
  7.7      Subd. 3.  [RIGHTS NOT TO APPLY.] (a) Unless the articles, 
  7.8   the bylaws, or a resolution approved by the board otherwise 
  7.9   provide, the right to obtain payment under this section does not 
  7.10  apply to a shareholder of (1) the surviving corporation in a 
  7.11  merger, if the shares of the shareholder are not entitled to be 
  7.12  voted on the merger with respect to shares of the shareholder 
  7.13  that are not entitled to be voted on the merger and are not 
  7.14  canceled or exchanged in the merger or (2) the corporation whose 
  7.15  shares will be acquired by the acquiring corporation in a plan 
  7.16  of exchange with respect to shares of the shareholder that are 
  7.17  not entitled to be voted on the plan of exchange and are not 
  7.18  exchanged in the plan of exchange. 
  7.19     (b) If a date is fixed according to section 302A.445, 
  7.20  subdivision 1, for the determination of shareholders entitled to 
  7.21  receive notice of and to vote on an action described in 
  7.22  subdivision 1, only shareholders as of the date fixed, and 
  7.23  beneficial owners as of the date fixed who hold through 
  7.24  shareholders, as provided in subdivision 2, may exercise 
  7.25  dissenters' rights. 
  7.26     Sec. 8.  Minnesota Statutes 1998, section 302A.521, 
  7.27  subdivision 6, is amended to read: 
  7.28     Subd. 6.  [DETERMINATION OF ELIGIBILITY.] (a) All 
  7.29  determinations whether indemnification of a person is required 
  7.30  because the criteria set forth in subdivision 2 have been 
  7.31  satisfied and whether a person is entitled to payment or 
  7.32  reimbursement of expenses in advance of the final disposition of 
  7.33  a proceeding as provided in subdivision 3 shall be made:  
  7.34     (1) by the board by a majority of a quorum, if the 
  7.35  directors who are at the time parties to the proceeding are not 
  7.36  counted for determining either a majority or the presence of a 
  8.1   quorum; 
  8.2      (2) if a quorum under clause (1) cannot be obtained, by a 
  8.3   majority of a committee of the board, consisting solely of two 
  8.4   or more directors not at the time parties to the proceeding, 
  8.5   duly designated to act in the matter by a majority of the full 
  8.6   board including directors who are parties; 
  8.7      (3) if a determination is not made under clause (1) or (2), 
  8.8   by special legal counsel, selected either by a majority of the 
  8.9   board or a committee by vote pursuant to clause (1) or (2) or, 
  8.10  if the requisite quorum of the full board cannot be obtained and 
  8.11  the committee cannot be established, by a majority of the full 
  8.12  board including directors who are parties; 
  8.13     (4) if a determination is not made under clauses (1) to 
  8.14  (3), by the shareholders affirmative vote of the shareholders 
  8.15  required by section 302A.437, but the shares held by parties to 
  8.16  the proceeding must not be counted in determining the presence 
  8.17  of a quorum and are not considered to be present and entitled to 
  8.18  vote on the determination; or 
  8.19     (5) if an adverse determination is made under clauses (1) 
  8.20  to (4) or under paragraph (b), or if no determination is made 
  8.21  under clauses (1) to (4) or under paragraph (b) within 60 days 
  8.22  after (i) the later to occur of the termination of a proceeding 
  8.23  or a written request for indemnification to the corporation or 
  8.24  (ii) a written request for an advance of expenses, as the case 
  8.25  may be, by a court in this state, which may be the same court in 
  8.26  which the proceeding involving the person's liability took 
  8.27  place, upon application of the person and any notice the court 
  8.28  requires.  The person seeking indemnification or payment or 
  8.29  reimbursement of expenses pursuant to this clause has the burden 
  8.30  of establishing that the person is entitled to indemnification 
  8.31  or payment or reimbursement of expenses.  
  8.32     (b) With respect to a person who is not, and was not at the 
  8.33  time of the acts or omissions complained of in the proceedings, 
  8.34  a director, officer, or person possessing, directly or 
  8.35  indirectly, the power to direct or cause the direction of the 
  8.36  management or policies of the corporation, the determination 
  9.1   whether indemnification of this person is required because the 
  9.2   criteria set forth in subdivision 2 have been satisfied and 
  9.3   whether this person is entitled to payment or reimbursement of 
  9.4   expenses in advance of the final disposition of a proceeding as 
  9.5   provided in subdivision 3 may be made by an annually appointed 
  9.6   committee of the board, having at least one member who is a 
  9.7   director.  The committee shall report at least annually to the 
  9.8   board concerning its actions.  
  9.9      Sec. 9.  Minnesota Statutes 1998, section 302A.613, 
  9.10  subdivision 2, is amended to read: 
  9.11     Subd. 2.  [APPROVAL BY OWNERS.] (a) At the meeting a vote 
  9.12  of the owners shall be taken on the proposed plan.  The plan of 
  9.13  merger or exchange is adopted when approved by the affirmative 
  9.14  vote of the holders of a majority of the voting power of all 
  9.15  shares entitled to vote and, if the merger or exchange is with a 
  9.16  domestic or foreign limited liability company, when approved in 
  9.17  the manner required by the laws of the state under which the 
  9.18  limited liability company is organized.  Except as provided in 
  9.19  paragraph (b), a class or series of shares of the corporation is 
  9.20  entitled to vote as a class or series if any provision of the 
  9.21  plan would, if contained in a proposed amendment to the 
  9.22  articles, entitle the class or series of shares to vote as a 
  9.23  class or series and, in the case of an exchange, if the class or 
  9.24  series is included in the exchange. 
  9.25     (b) A class or series of shares of the corporation is not 
  9.26  entitled to vote as a class or series solely because the plan of 
  9.27  merger or exchange effects a cancellation or exchange of the 
  9.28  shares of the class or series if the plan of merger or exchange 
  9.29  effects a cancellation or exchange of all shares of the 
  9.30  corporation of all classes and series that are outstanding 
  9.31  immediately prior to the merger or exchange and shareholders of 
  9.32  shares of that class or series are entitled to obtain payment 
  9.33  for the fair value of their shares under section 302A.471 in the 
  9.34  event of the merger or exchange. 
  9.35     Sec. 10.  Minnesota Statutes 1999 Supplement, section 
  9.36  322B.43, subdivision 1, is amended to read: 
 10.1      Subdivision 1.  [AGREEMENTS PERMITTED.] Subject to any 
 10.2   restrictions in the articles of organization or a member control 
 10.3   agreement, a limited liability company may enter into 
 10.4   contribution allowance agreements under the terms, provisions, 
 10.5   and conditions fixed by the board of governors or by a manager 
 10.6   pursuant to board authorization.  
 10.7      Sec. 11.  Minnesota Statutes 1999 Supplement, section 
 10.8   322B.666, subdivision 1, is amended to read: 
 10.9      Subdivision 1.  [CONFLICT AND PROCEDURE WHEN CONFLICT 
 10.10  ARISES.] A contract or other transaction between a limited 
 10.11  liability company and one or more of its governors, or between a 
 10.12  limited liability company and an organization in or of which one 
 10.13  or more of its governors are governors, directors, managers, 
 10.14  officers, or legal representatives or have a material financial 
 10.15  interest, is not void or voidable because the governor or 
 10.16  governors or the other organizations are parties or because the 
 10.17  governor or governors are present at the meeting of the members 
 10.18  or the board of governors or a committee at which the contract 
 10.19  or transaction is authorized, approved, or ratified, if:  
 10.20     (1) the contract or transaction was, and the person 
 10.21  asserting the validity of the contract or transaction sustains 
 10.22  the burden of establishing that the contract or transaction was, 
 10.23  fair and reasonable as to the limited liability company at the 
 10.24  time it was authorized, approved, or ratified; 
 10.25     (2) the material facts as to the contract or transaction 
 10.26  and as to the governor's or governors' interest are fully 
 10.27  disclosed or known to the members, whether or not entitled to 
 10.28  vote, and the contract or transaction is approved in good faith 
 10.29  by (i) the owners of two-thirds of the voting power of the 
 10.30  membership interests entitled to vote that are owned by persons 
 10.31  other than the interested governor or governors, or (ii) the 
 10.32  unanimous affirmative vote of all members, whether or not 
 10.33  entitled to vote; 
 10.34     (3) the material facts as to the contract or transaction 
 10.35  and as to the governor's or governors' interest are fully 
 10.36  disclosed or known to the board of governors or a committee, and 
 11.1   the board of governors or committee authorizes, approves, or 
 11.2   ratifies the contract or transaction in good faith by a majority 
 11.3   of the board of governors or committee, but the interested 
 11.4   governor or governors are not counted in determining the 
 11.5   presence of a quorum and must not vote; or 
 11.6      (4) the contract or transaction is a distribution described 
 11.7   in section 322B.54, subdivision 1, or a merger or exchange 
 11.8   described in section 322B.70, subdivision 1 or 2. 
 11.9      Sec. 12.  Minnesota Statutes 1998, section 322B.699, 
 11.10  subdivision 6, is amended to read: 
 11.11     Subd. 6.  [DETERMINATION OF ELIGIBILITY.] (a) All 
 11.12  determinations whether indemnification of a person is required 
 11.13  because the criteria set forth in subdivision 2 have been 
 11.14  satisfied and whether a person is entitled to payment or 
 11.15  reimbursement of expenses in advance of the final disposition of 
 11.16  a proceeding as provided in subdivision 3 must be made:  
 11.17     (1) by the board of governors by a majority of a quorum.  
 11.18  If the governors who are, at the time, parties to the proceeding 
 11.19  are not counted for determining either a majority or the 
 11.20  presence of a quorum; 
 11.21     (2) if a quorum under clause (1) cannot be obtained, by a 
 11.22  majority of a committee of the board of governors, consisting 
 11.23  solely of two or more governors not at the time parties to the 
 11.24  proceeding, duly designated to act in the matter by a majority 
 11.25  of the full board of governors including governors who are 
 11.26  parties; 
 11.27     (3) if a determination is not made under clause (1) or (2), 
 11.28  by special legal counsel, selected either by a majority of the 
 11.29  board of governors or a committee by vote pursuant to clause (1) 
 11.30  or (2) or, if the requisite quorum of the full board of 
 11.31  governors cannot be obtained and the committee cannot be 
 11.32  established, by a majority of the full board of governors 
 11.33  including governors who are parties; 
 11.34     (4) if a determination is not made under clauses (1) to 
 11.35  (3), by the affirmative vote of the members required by section 
 11.36  322B.346, but the membership interests held by parties to the 
 12.1   proceeding must not be counted in determining the presence of a 
 12.2   quorum and are not considered to be present and entitled to vote 
 12.3   on the determination; or 
 12.4      (5) if an adverse determination is made under clauses (1) 
 12.5   to (4) or under paragraph (b), or if no determination is made 
 12.6   under clauses (1) to (4) or under paragraph (b) within 60 days 
 12.7   after (i) the later to occur of the termination of a proceeding 
 12.8   or a written request for indemnification to the limited 
 12.9   liability company or (ii) a written request for an advance of 
 12.10  expenses, as the case may be, by a court in this state, which 
 12.11  may be the same court in which the proceeding involving the 
 12.12  person's liability took place, upon application of the person 
 12.13  and any notice the court requires.  The person seeking 
 12.14  indemnification or payment or reimbursement of expenses pursuant 
 12.15  to this clause has the burden of establishing that the person is 
 12.16  entitled to indemnification or payment or reimbursement or 
 12.17  expenses. 
 12.18     (b) With respect to a person who is not, and was not at the 
 12.19  time of the acts or omissions complained of in the proceedings, 
 12.20  a governor, manager, or person possessing, directly or 
 12.21  indirectly, the power to direct or cause the direction of the 
 12.22  management or policies of the limited liability company, the 
 12.23  determination whether indemnification of this person is required 
 12.24  because the criteria set forth in subdivision 2 have been 
 12.25  satisfied and whether this person is entitled to payment or 
 12.26  reimbursement of expenses in advance of the final disposition of 
 12.27  a proceeding as provided in subdivision 3 may be made by an 
 12.28  annually appointed committee of the board of governors, having 
 12.29  at least one member who is a governor.  The committee shall 
 12.30  report at least annually to the board of governors concerning 
 12.31  its actions. 
 12.32     Sec. 13.  Minnesota Statutes 1999 Supplement, section 
 12.33  322B.72, subdivision 2, is amended to read: 
 12.34     Subd. 2.  [APPROVAL BY OWNERS.] (a) At the meeting a vote 
 12.35  of the owners must be taken on the proposed plan.  The plan of 
 12.36  merger or exchange is adopted when approved by the affirmative 
 13.1   vote of the owners of a majority of the voting power of all 
 13.2   ownership interests entitled to vote.  Except as provided in 
 13.3   paragraph (b) or a member control agreement, a class or series 
 13.4   of ownership interests of the organization is entitled to vote 
 13.5   as a class or series if any provision of the plan would, if 
 13.6   contained in a proposed amendment to the articles of 
 13.7   organization entitle the class or series of ownership interests 
 13.8   to vote as a class or series and, in the case of an exchange, if 
 13.9   the class or series is included in the exchange.  
 13.10     (b) A class or series of ownership interests of the 
 13.11  organization is not entitled to vote as a class or series solely 
 13.12  because the plan of merger or exchange effects a cancellation or 
 13.13  exchange of the ownership interests of the class or series if 
 13.14  the plan of merger or exchange effects a cancellation or 
 13.15  exchange of all ownership interests of the organization of all 
 13.16  classes and series that are existing immediately before the 
 13.17  merger or exchange and owners of ownership interests of that 
 13.18  class or series are entitled to obtain payment for the fair 
 13.19  value of their shares ownership interests under section 322B.383 
 13.20  in the event of the merger or exchange.