Minnesota Session Laws - 1991, Regular Session

  

                         Laws of Minnesota 1991 

                         CHAPTER 49-H.F.No. 526 
           An act relating to corporations; clarifying and 
          modifying provisions governing divisions and 
          combinations of shares and rights of shareholders; 
          clarifying meeting notice requirements; authorizing 
          electronic communications by shareholders; modifying 
          access to corporate records; clarifying and modifying 
          provisions governing mergers and dissolutions; 
          amending Minnesota Statutes 1990, sections 302A.111, 
          subdivision 2; 302A.139; 302A.401, subdivisions 3 and 
          4; 302A.405, subdivision 1; 302A.413, subdivision 3; 
          302A.435, subdivision 1; 302A.437, subdivision 1; 
          302A.449, subdivision 1, and by adding a subdivision; 
          302A.461, subdivisions 2, 4, and 4a; 302A.471, 
          subdivision 1; 302A.551, subdivision 4; 302A.613, 
          subdivision 2; 302A.621; 302A.651, subdivision 1; 
          302A.701; 302A.723, subdivision 3; 302A.725, 
          subdivision 1; 302A.727; and 302A.781; proposing 
          coding for new law in Minnesota Statutes, chapter 
          302A; repealing Minnesota Statutes 1990, sections 
          302A.729; 302A.730; and 302A.733. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1990, section 302A.111, 
subdivision 2, is amended to read: 
    Subd. 2.  [STATUTORY PROVISIONS THAT MAY BE MODIFIED ONLY 
IN ARTICLES.] The following provisions govern a corporation 
unless modified in the articles:  
     (a) A corporation has general business purposes (section 
302A.101); 
     (b) A corporation has perpetual existence and certain 
powers (section 302A.161); 
     (c) The power to adopt, amend, or repeal the bylaws is 
vested in the board (section 302A.181); 
     (d) A corporation must allow cumulative voting for 
directors (section 302A.215); 
     (e) The affirmative vote of a majority of directors present 
is required for an action of the board (section 302A.237); 
     (f) A written action by the board taken without a meeting 
must be signed by all directors (section 302A.239); 
     (g) The board may authorize the issuance of securities and 
rights to purchase securities (section 302A.401, subdivision 1); 
     (h) All shares are common shares entitled to vote and are 
of one class and one series (section 302A.401, subdivision 2, 
clauses (a) and (b)); 
     (i) All shares have equal rights and preferences in all 
matters not otherwise provided for by the board (section 
302A.401, subdivision 2, clause (b)); 
     (j) The par value of shares is fixed at one cent per share 
for certain purposes and may be fixed by the board for certain 
other purposes (section 302A.401, subdivision 2, clause (c)); 
    (k) The board or the shareholders may issue shares for any 
consideration or for no consideration to effectuate share 
dividends or splits, divisions, or combinations, and determine 
the value of nonmonetary consideration (section 302A.405, 
subdivision 1); 
    (l) Shares of a class or series must not be issued to 
holders of shares of another class or series to effectuate share 
dividends or splits, divisions, or combinations, unless 
authorized by a majority of the voting power of the shares of 
the same class or series as the shares to be issued (section 
302A.405, subdivision 1); 
    (m) A corporation may issue rights to purchase securities 
whose terms, provisions, and conditions are fixed by the board 
(section 302A.409); 
    (n) A shareholder has certain preemptive rights, unless 
otherwise provided by the board (section 302A.413); 
    (o) The affirmative vote of the holders of a majority of 
the voting power of the shares present and entitled to vote at a 
duly held meeting is required for an action of the shareholders, 
except where this chapter requires the affirmative vote of a 
majority of the voting power of all shares entitled to vote 
(section 302A.437, subdivision 1); 
    (p) Shares of a corporation acquired by the corporation may 
be reissued (section 302A.553, subdivision 1); 
    (q) Each share has one vote unless otherwise provided in 
the terms of the share (section 302A.445, subdivision 3); and 
    (r) A corporation may issue shares for a consideration less 
than the par value, if any, of the shares (section 302A.405, 
subdivision 2); and 
     (s) The board may effect share dividends, divisions, and 
combinations under certain circumstances without shareholder 
approval (section 5).  
    Sec. 2.  Minnesota Statutes 1990, section 302A.139, is 
amended to read: 
    302A.139 [ARTICLES OF AMENDMENT.] 
    When an amendment has been adopted, articles of amendment 
shall be prepared that contain:  
    (a) The name of the corporation; 
    (b) The amendment adopted; 
    (c) With respect to an amendment restating the articles, a 
statement that the amendment restating the articles correctly 
sets forth without change the corresponding provisions of the 
articles as previously amended if the amendment was approved 
only by the board; 
    (d) If the amendment provides for but does not establish 
the manner for effecting an exchange, 
reclassification, division, combination, or cancellation of 
issued shares, a statement of the manner in which it will be 
effected; and 
    (e) A statement that the amendment has been adopted 
pursuant to this chapter.  
    Sec. 3.  Minnesota Statutes 1990, section 302A.401, 
subdivision 3, is amended to read: 
    Subd. 3.  [PROCEDURE FOR FIXING TERMS.] (a) Subject to any 
restrictions in the articles, the power granted in subdivision 2 
may be exercised by a resolution or resolutions approved by the 
affirmative vote of a majority of the directors present 
establishing a class or series, setting forth the designation of 
the class or series, and fixing the relative rights and 
preferences of the class or series.  Any of the rights and 
preferences of a class or series:  
    (1) may be made dependent upon facts ascertainable outside 
the articles, or outside the resolution or resolutions 
establishing the class or series, provided that the manner in 
which the facts operate upon the rights and preferences of the 
class or series is clearly and expressly set forth in the 
articles or in the resolution or resolutions establishing the 
class or series; and 
    (2) may incorporate by reference some or all of the terms 
of any agreements, contracts, or other arrangements entered into 
by the issuing corporation in connection with the establishment 
of the class or series if the corporation retains at its 
principal executive office a copy of the agreements, contracts, 
or other arrangements or the portions incorporated by reference. 
    (b) A statement setting forth the name of the corporation 
and the text of the resolution and certifying the adoption of 
the resolution and the date of adoption shall be filed with the 
secretary of state before the issuance of any shares for which 
the resolution creates rights or preferences not set forth in 
the articles; provided, however, where the shareholders have 
received notice of the creation of shares with rights or 
preferences not set forth in the articles before the issuance of 
the shares, the statement may be filed any time within one year 
after the issuance of the shares.  The resolution is effective 
when the statement has been filed with the secretary of state; 
or, if it is not required to be filed with the secretary of 
state before the issuance of shares, on the date of its adoption 
by the directors. 
    (c) A statement filed with the secretary of state in 
accordance with paragraph (b) is not considered an amendment of 
the articles for purposes of sections 302A.137 and 302A.471. 
    Sec. 4.  Minnesota Statutes 1990, section 302A.401, 
subdivision 4, is amended to read: 
    Subd. 4.  [SPECIFIC TERMS.] Without limiting the authority 
granted in this section, a corporation may issue shares of a 
class or series:  
    (a) Subject to the right of the corporation to redeem any 
of those shares at the price fixed for their redemption by the 
articles or by the board or at a price determined in the manner 
specified by the articles or by the board; 
    (b) Entitling the shareholders to cumulative, partially 
cumulative, or noncumulative distributions in the amounts fixed 
by the articles or by the board or in amounts determined in the 
manner specified by the articles or by the board; 
    (c) Having preference over any class or series of shares 
for the payment of distributions of any or all kinds; 
    (d) Convertible into shares of any other class or any 
series of the same or another class on the terms fixed by the 
articles or by the board or on terms determined in the manner 
specified by the articles or by the board; or 
    (e) Having full, partial, or no voting rights, except as 
provided in section 302A.137.  
    Sec. 5.  [302A.402] [SHARE DIVIDENDS, DIVISIONS, AND 
COMBINATIONS.] 
    Subdivision 1.  [POWER TO EFFECT.] A corporation may effect 
a share dividend or a division or combination of its shares as 
provided in this section.  As used in this section, the terms 
"division" and "combination" mean dividing or combining shares 
of any class or series, whether issued or unissued, into a 
greater or lesser number of shares of the same class or series. 
    Subd. 2.  [WHEN SHAREHOLDER APPROVAL REQUIRED; FILING OF 
ARTICLES OF AMENDMENT.] (a) Articles of amendment must be 
adopted by the board and the shareholders under sections 
302A.135 and 302A.137 to effect a division or combination if, as 
a result of the proposed division or combination: 
    (1) the rights or preferences of the holders of outstanding 
shares of any class or series will be adversely affected; or 
    (2) the percentage of authorized shares remaining unissued 
after the division or combination will exceed the percentage of 
authorized shares that were unissued before the division or 
combination. 
    For purposes of this section, an increase or decrease in 
the relative voting rights of the shares that are the subject of 
the division or combination that arises solely from the increase 
or decrease in the number of the shares outstanding is not an 
adverse effect on the outstanding shares of any class or series 
and any increase in the percentage of authorized shares 
remaining unissued arising solely from the elimination of 
fractional shares under section 302A.423 must be disregarded. 
    (b) If a division or combination is effected under this 
subdivision, articles of amendment must be prepared that contain 
the information required by section 302A.139. 
    Subd. 3.  [BY ACTION OF BOARD ALONE; FILING OF ARTICLES OF 
AMENDMENT.] (a) Subject to the restrictions provided in 
subdivision 2 or any restrictions in the articles, a share 
dividend, division, or combination may be effected by action of 
the board alone, without the approval of shareholders under 
sections 302A.135 and 302A.137.  In effecting a division or 
combination under this subdivision, the board may amend the 
articles to increase or decrease the par value of shares, 
increase or decrease the number of authorized shares, and make 
any other change necessary or appropriate to assure that the 
rights or preferences of the holders of outstanding shares of 
any class or series will not be adversely affected by the 
division or combination. 
    (b) If a division or combination that includes an amendment 
of the articles is effected under this subdivision, then 
articles of amendment must be prepared that contain the 
information required by section 302A.139 and a statement that 
the amendment will not adversely affect the rights or 
preferences of the holders of outstanding shares of any class or 
series and will not result in the percentage of authorized 
shares that remains unissued after the division or combination 
exceeding the percentage of authorized shares that were issued 
before the division or combination. 
    Sec. 6.  Minnesota Statutes 1990, section 302A.405, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CONSIDERATION; PROCEDURE.] Subject to any 
restrictions in the articles: 
    (a) Shares may be issued for any consideration, including, 
without limitation, money or other tangible or intangible 
property received by the corporation or to be received by the 
corporation under a written agreement, or services rendered to 
the corporation or to be rendered to the corporation under a 
written agreement, as authorized by resolution approved by the 
affirmative vote of a majority of the directors present, or 
approved by the affirmative vote of the holders of a majority of 
the voting power of the shares present, valuing all nonmonetary 
consideration and establishing a price in money or other 
consideration, or a minimum price, or a general formula or 
method by which the price will be determined; and 
    (b) Upon authorization by resolution approved by the 
affirmative vote of a majority of the directors present or 
approved by the affirmative vote of the holders of a majority of 
the voting power of the shares present in accordance with 
section 5, the corporation may, without any new or additional 
consideration, issue its own shares in exchange for or in 
conversion of its outstanding shares, or issue its own shares 
pro rata to its shareholders or the shareholders of one or more 
classes or series, to effectuate share dividends or splits, 
including reverse share splits, divisions, or combinations.  No 
shares of a class or series, shares of which are then 
outstanding, shall be issued to the holders of shares of another 
class or series (except in exchange for or in conversion of 
outstanding shares of the other class or series), unless the 
issuance either is expressly provided for in the articles or is 
approved at a meeting by the affirmative vote of the holders of 
a majority of the voting power of all shares of the same class 
or series as the shares to be issued. 
    Sec. 7.  Minnesota Statutes 1990, section 302A.413, 
subdivision 3, is amended to read: 
    Subd. 3.  [WHEN RIGHT ACCRUES.] A shareholder has a 
preemptive right whenever the corporation proposes to issue new 
or additional shares or rights to purchase shares of the same 
class or series as those the series held by the shareholder or, 
if a class of shares has no series, the same class as the class 
held by the shareholder, or new or additional securities other 
than shares, or rights to purchase securities other than shares, 
that are exchangeable for, convertible into, or carry a right to 
acquire new or additional shares of the same class or series as 
those the series held by the shareholder or, if a class of 
shares has no series, the same class as the class held by the 
shareholder.  
    Sec. 8.  Minnesota Statutes 1990, section 302A.435, 
subdivision 1, is amended to read: 
    Subdivision 1.  [TO WHOM GIVEN.] Except as otherwise 
provided in this chapter, notice of all meetings of shareholders 
shall be given to every holder of shares entitled to vote, 
except unless: 
    (1) the meeting is an adjourned meeting and the date, time, 
and place of the meeting were announced at the time of 
adjournment; or 
    (2) the following have been mailed by first class mail to a 
shareholder at the address in the corporate records and returned 
undeliverable: 
    (i) two consecutive annual meeting notices; and notices of 
any special meetings held during the period between the two 
annual meetings; or 
    (ii) all meeting notices during the period between the two 
annual meetings; or all payments of dividends, provided there 
are at least two sent during a 12-month period. 
    An action or meeting that is taken or held without notice 
under clause (2) has the same force and effect as if notice was 
given.  If the shareholder delivers a written notice of the 
shareholder's current address to the corporation, the notice 
requirement is reinstated. 
    Sec. 9.  [302A.436] [ELECTRONIC COMMUNICATIONS.] 
    Subdivision 1.  [ELECTRONIC CONFERENCES.] If and to the 
extent authorized in the bylaws or by the board of a closely 
held corporation, a conference among shareholders by any means 
of communication through which the shareholders may 
simultaneously hear each other during the conference constitutes 
a regular or special meeting of shareholders, if the same notice 
is given of the conference to every holder of shares entitled to 
vote as would be required by this chapter for a meeting, and if 
the number of shares held by the shareholders participating in 
the conference would be sufficient to constitute a quorum at a 
meeting.  Participation in a conference by that means 
constitutes presence at the meeting in person or by proxy if all 
the other requirements of section 302A.449 are met. 
    Subd. 2.  [PARTICIPATION BY ELECTRONIC MEANS.] If and to 
the extent authorized in the bylaws or by the board of a closely 
held corporation, a shareholder may participate in a regular or 
special meeting of shareholders not described in subdivision 1 
by any means of communication through which the shareholder, 
other shareholders so participating, and all shareholders 
physically present at the meeting may simultaneously hear each 
other during the meeting.  Participation in a meeting by that 
means constitutes presence at the meeting in person or by proxy 
if all the other requirements of section 302A.449 are met. 
    Subd. 3.  [WAIVER.] Waiver of notice of a meeting by means 
of communication described in subdivisions 1 and 2 may be given 
in the manner provided in section 302A.435, subdivision 4.  
Participation in a meeting by means of communication described 
in subdivisions 1 and 2 is a waiver of notice of that meeting, 
except where the shareholder objects at the beginning of the 
meeting to the transaction of business because the meeting is 
not lawfully called or convened, or objects before a vote on an 
item of business because the item may not lawfully be considered 
at the meeting and does not participate in the consideration of 
the item at that meeting. 
    Sec. 10.  Minnesota Statutes 1990, section 302A.437, 
subdivision 1, is amended to read: 
    Subdivision 1.  [MAJORITY REQUIRED.] The shareholders shall 
take action by the affirmative vote of the holders of the 
greater of (1) a majority of the voting power of the shares 
present and entitled to vote on that item of business, or (2) a 
majority of the voting power of the minimum number of the shares 
entitled to vote that would constitute a quorum for the 
transaction of business at the meeting, except where this 
chapter or the articles require a larger proportion or number.  
If the articles require a larger proportion or number than is 
required by this chapter for a particular action, the articles 
control. 
    Sec. 11.  Minnesota Statutes 1990, section 302A.449, 
subdivision 1, is amended to read: 
     Subdivision 1.  [AUTHORIZATION.] A shareholder may cast or 
authorize the casting of a vote by filing a written appointment 
of a proxy with an officer of the corporation at or before the 
meeting at which the appointment is to be effective.  A written 
appointment of a proxy may be signed by the shareholder or 
authorized by the shareholder by transmission of a telegram, 
cablegram, or other means of electronic transmission, provided 
that the telegram, cablegram, or other means of electronic 
transmission must set forth or be submitted with information 
from which it can be determined that the telegram, cablegram, or 
other electronic transmission was authorized by the 
shareholder.  Any reproduction of the writing or transmission 
may be substituted or used in lieu of the original writing or 
transmission for any purpose for which the original transmission 
could be used, provided that the copy, facsimile 
telecommunication, or other reproduction is a complete and 
legible reproduction of the entire original writing or 
transmission.  An appointment of a proxy for shares held jointly 
by two or more shareholders is valid if signed or otherwise 
authorized by any one of them, unless the corporation receives 
from any one of those shareholders written notice either denying 
the authority of that person to appoint a proxy or appointing a 
different proxy.  
    Sec. 12.  Minnesota Statutes 1990, section 302A.449, is 
amended by adding a subdivision to read: 
    Subd. 8.  [LIMITED AUTHORITY.] If a proxy is given 
authority by a shareholder to vote on less than all items of 
business considered at a meeting of shareholders, the 
shareholder is considered to be present and entitled to vote by 
the proxy for purposes of section 302A.437, subdivision 1, only 
with respect to those items of business for which the proxy has 
authority to vote.  A proxy who is given authority by a 
shareholder who abstains with respect to an item of business is 
considered to have authority to vote on the item of business for 
purposes of this subdivision. 
    Sec. 13.  Minnesota Statutes 1990, section 302A.461, 
subdivision 2, is amended to read: 
    Subd. 2.  [OTHER DOCUMENTS REQUIRED.] A corporation shall 
keep at its principal executive office, or, if its principal 
executive office is outside of this state, shall make available 
at its registered office within ten days after receipt by an 
officer of the corporation of a written demand for them made by 
a person described in subdivision 4, originals or copies of:  
     (a) Records of all proceedings of shareholders for the last 
three years; 
     (b) Records of all proceedings of the board for the last 
three years; 
     (c) Its articles and all amendments currently in effect; 
     (d) Its bylaws and all amendments currently in effect; 
     (e) Financial statements required by section 302A.463 and 
the financial statement for the most recent interim period 
prepared in the course of the operation of the corporation for 
distribution to the shareholders or to a governmental agency as 
a matter of public record; 
     (f) Reports made to shareholders generally within the last 
three years; 
     (g) A statement of the names and usual business addresses 
of its directors and principal officers; 
     (h) Voting trust agreements described in section 302A.453; 
and 
     (i) Shareholder control agreements described in section 
302A.457; and 
     (j) A copy of agreements, contracts, or other arrangements 
or portions of them incorporated by reference under section 
320A.401, subdivision 3.  
    Sec. 14.  Minnesota Statutes 1990, section 302A.461, 
subdivision 4, is amended to read: 
    Subd. 4.  [RIGHT TO INSPECT.] (a) A shareholder, beneficial 
owner, or a holder of a voting trust certificate of a 
corporation that is not a publicly held corporation has an 
absolute right, upon written demand, to examine and copy, in 
person or by a legal representative, at any reasonable time:  
    (1) The share register; and 
    (2) All documents referred to in subdivision 2.  
    (b) A shareholder, beneficial owner, or a holder of a 
voting trust certificate of a corporation that is not a publicly 
held corporation has a right, upon written demand, to examine 
and copy, in person or by a legal representative, other 
corporate records at any reasonable time only if the 
shareholder, beneficial owner, or holder of a voting trust 
certificate demonstrates a proper purpose for the examination.  
    (c) A shareholder, beneficial owner, or a holder of a 
voting trust certificate of a publicly held corporation has, 
upon written demand stating the purpose and acknowledged or 
verified in the manner provided in chapter 358, a right at any 
reasonable time to examine and copy the corporation's share 
register and other corporate records reasonably related to the 
stated purpose and described with reasonable particularity in 
the written demand upon demonstrating the stated purpose to be a 
proper purpose.  The acknowledged or verified demand must be 
directed to the corporation at its registered office in this 
state or at its principal place of business. 
    (d) For purposes of this section, a "proper purpose" is one 
reasonably related to the person's interest as a shareholder, 
beneficial owner, or holder of a voting trust certificate of the 
corporation. 
    Sec. 15.  Minnesota Statutes 1990, section 302A.461, 
subdivision 4a, is amended to read: 
    Subd. 4a.  [PROTECTIVE ORDERS.] On application of the 
corporation, a court in this state may issue a protective order 
permitting the corporation to withhold portions of the records 
of proceedings of the board for a reasonable period of time, not 
to exceed 12 months, in order to prevent premature disclosure of 
confidential information which would be likely to cause 
competitive injury to the corporation.  A protective order may 
be renewed for successive reasonable periods of time, each not 
to exceed 12 months and in total not to exceed 36 months, for 
good cause shown.  In the event a protective order is issued, 
the statute of limitations for any action which the shareholder, 
beneficial owner, or holder of a voting trust certificate might 
bring as a result of information withheld automatically extends 
for the period of delay.  If the court does not issue a 
protective order with respect to any portion of the records of 
proceedings as requested by the corporation, it shall award 
reasonable expenses, including attorney's fees and 
disbursements, to the shareholder, beneficial owner, or holder 
of a voting trust certificate.  This subdivision does not limit 
the right of a court to grant other protective orders or impose 
other reasonable restrictions on the nature of the corporate 
records that may be copied or examined under subdivision 4 or 
the use or distribution of the records by the demanding 
shareholder, beneficial owner, or holder of a voting trust 
certificate. 
    Sec. 16.  Minnesota Statutes 1990, section 302A.471, 
subdivision 1, is amended to read: 
    Subdivision 1.  [ACTIONS CREATING RIGHTS.] A shareholder of 
a corporation may dissent from, and obtain payment for the fair 
value of the shareholder's shares in the event of, any of the 
following corporate actions:  
    (a) An amendment of the articles that materially and 
adversely affects the rights or preferences of the shares of the 
dissenting shareholder in that it:  
    (1) alters or abolishes a preferential right of the shares; 
    (2) creates, alters, or abolishes a right in respect of the 
redemption of the shares, including a provision respecting a 
sinking fund for the redemption or repurchase of the shares; 
    (3) alters or abolishes a preemptive right of the holder of 
the shares to acquire shares, securities other than shares, or 
rights to purchase shares or securities other than shares; 
    (4) excludes or limits the right of a shareholder to vote 
on a matter, or to cumulate votes, except as the right may be 
excluded or limited by dilution through the authorization or 
issuance of securities of an existing or new class or series 
with similar or different voting rights; except that an 
amendment to the articles of an issuing public corporation that 
provides that section 302A.671 does not apply to a control share 
acquisition does not give rise to the right to obtain payment 
under this section; 
    (b) A sale, lease, transfer, or other disposition of all or 
substantially all of the property and assets of the corporation 
not made in the usual or regular course of its business, but not 
including a disposition in dissolution described in section 
302A.725, subdivision 2, or a disposition pursuant to an order 
of a court, or a disposition for cash on terms requiring that 
all or substantially all of the net proceeds of disposition be 
distributed to the shareholders in accordance with their 
respective interests within one year after the date of 
disposition; 
    (c) A plan of merger to which the corporation is a party, 
except as provided in subdivision 3; 
    (d) A plan of exchange to which the corporation is a party 
as the corporation whose shares will be acquired by the 
acquiring corporation, if the shares of the shareholder are 
entitled to be voted on the plan; or 
    (e) Any other corporate action taken pursuant to a 
shareholder vote with respect to which the articles, the bylaws, 
or a resolution approved by the board directs that dissenting 
shareholders may obtain payment for their shares. 
    Sec. 17.  Minnesota Statutes 1990, section 302A.551, 
subdivision 4, is amended to read: 
    Subd. 4.  [RESTRICTIONS.] (a) A distribution may be made to 
the holders of a class or series of shares only if:  
    (1) All amounts payable to the holders of shares having a 
preference for the payment of that kind of distribution, other 
than those holders who give notice to the corporation of their 
agreement to waive their rights to that payment, are paid; and 
    (2) The payment of the distribution does not reduce the 
remaining net assets of the corporation below the aggregate 
preferential amount payable in the event of liquidation to the 
holders of shares having preferential rights, unless the 
distribution is made to those shareholders in the order and to 
the extent of their respective priorities. or the holders of 
shares who do not receive distributions in that order give 
notice to the corporation of their agreement to waive their 
rights to that distribution. 
    A determination that the payment of the distribution does 
not reduce the remaining net assets of the corporation below the 
aggregate preferential amount payable in the event of 
liquidation to the holders of shares having preferential rights 
is presumed to be proper if the determination is made in 
compliance with the standard of conduct provided in section 
302A.251 on the basis of financial information prepared in 
accordance with accounting methods, or a fair valuation, or 
other methods, reasonable in the circumstances.  Liability under 
section 302A.251 or 302A.559 will not arise if the requirements 
of this paragraph are met.  
    (b) If the money or property available for distribution is 
insufficient to satisfy all preferences, the distributions shall 
be made pro rata according to the order of priority of 
preferences by classes and by series within those classes unless 
those holders who do not receive distributions in that order 
give notice to the corporation of their agreement to waive their 
rights to that distribution.  
    Sec. 18.  Minnesota Statutes 1990, section 302A.613, 
subdivision 2, is amended to read: 
    Subd. 2.  [APPROVAL BY SHAREHOLDERS.] (a) At the meeting a 
vote of the shareholders shall be taken on the proposed plan.  
The plan of merger or exchange is adopted when approved by the 
affirmative vote of the holders of a majority of the voting 
power of all shares entitled to vote.  Except as provided in 
paragraph (b), a class or series of shares of the corporation is 
entitled to vote as a class or series if any provision of the 
plan would, if contained in a proposed amendment to the 
articles, entitle the class or series of shares to vote as a 
class or series and, in the case of an exchange, if the class or 
series is included in the exchange. 
    (b) A class or series of shares of the corporation is not 
entitled to vote as a class or series solely because the plan of 
merger or exchange effects a cancellation of the shares of the 
class or series if the plan of merger or exchange effects a 
cancellation of all shares of the corporation of all classes and 
series that are outstanding immediately prior to the merger or 
exchange and shareholders of shares of that class or series are 
entitled to obtain payment for the fair value of their shares 
under section 302A.471 in the event of the merger or exchange. 
    Sec. 19.  Minnesota Statutes 1990, section 302A.621, is 
amended to read: 
    302A.621 [MERGER OF SUBSIDIARY INTO PARENT.] 
    Subdivision 1.  [WHEN AUTHORIZED; CONTENTS OF PLAN.] A 
parent owning at least 90 percent of the outstanding shares of 
each class and series of a subsidiary directly, or indirectly 
through related corporations, may merge the subsidiary into 
itself or into any other subsidiary at least 90 percent of the 
outstanding shares of each class and series of which is owned by 
the parent directly, or indirectly through related corporations, 
without a vote of the shareholders of either corporation itself 
or any subsidiary or may merge itself, or itself and one or more 
of the subsidiaries, into one of the subsidiaries under this 
section.  A resolution approved by the affirmative vote of a 
majority of the directors of the parent present shall set forth 
a plan of merger that contains:  
    (a) The name of the subsidiary and or subsidiaries, the 
name of the parent and the name of the surviving corporation; 
and 
    (b) The manner and basis of converting the shares of the 
subsidiary or subsidiaries or parent into securities of the 
parent, subsidiary, or of another corporation or, in whole or in 
part, into money or other property.; 
    (c) If the parent is a constituent corporation but is not 
the surviving corporation in the merger, a provision for the pro 
rata issuance of shares of the surviving corporation to the 
holders of shares of the parent on surrender of any certificates 
for shares of the parent; and 
    (d) If the surviving corporation is a subsidiary, a 
statement of any amendments to the articles of the surviving 
corporation that will be part of the merger. 
    If the parent is a constituent corporation but is not the 
surviving corporation in the merger, the resolution is not 
effective unless it is also approved by the affirmative vote of 
the holders of a majority of the voting power of all shares of 
the parent entitled to vote at a regular or special meeting held 
in accordance with section 302A.613 if the parent is a domestic 
corporation or in accordance with the laws under which it is 
incorporated if the parent is a foreign corporation. 
    Subd. 2.  [NOTICE TO SHAREHOLDERS OF SUBSIDIARY.] A copy of 
the plan of merger shall be mailed to each shareholder, other 
than the parent and any subsidiary, of the each subsidiary that 
is a constituent corporation in the merger.  
    Subd. 3.  [ARTICLES OF MERGER; CONTENTS OF ARTICLES.] 
Articles of merger shall be prepared that contain:  
    (a) The plan of merger; 
    (b) The number of outstanding shares of each class and 
series of the each subsidiary that is a constituent corporation 
in the merger and the number of shares of each class and 
series of the subsidiary or subsidiaries owned by the parent 
directly, or indirectly through related corporations; and 
    (c) The date a copy of the plan of merger was mailed to 
shareholders, other than the parent or a subsidiary, of the each 
subsidiary that is a constituent corporation in the merger; and 
    (d) A statement that the plan of merger has been approved 
by the parent under this section.  
    Subd. 4.  [ARTICLES SIGNED, FILED.] Within 30 days after a 
copy of the plan of merger is mailed to shareholders of the each 
subsidiary that is a constituent corporation to the merger, or 
upon waiver of the mailing by the holders of all outstanding 
shares of each subsidiary that is a constituent corporation to 
the merger, the articles of merger shall be signed on behalf of 
the parent and filed with the secretary of state.  
    Subd. 5.  [CERTIFICATE.] The secretary of state shall issue 
a certificate of merger to the parent or its legal 
representative or, if the parent is a constituent corporation 
but is not the surviving corporation in the merger, to the 
surviving corporation or its legal representative. 
    Subd. 6.  [RIGHTS OF DISSENTING SHAREHOLDERS.] In the event 
all of the stock of one or more domestic subsidiaries of the 
parent that is a constituent party to a merger under this 
section is not owned by the parent directly, or indirectly 
through related corporations, immediately prior to the merger, 
the shareholders of each domestic subsidiary have dissenters' 
rights under section 302A.471, without regard to sections 
302A.471, subdivision 3, and 302A.473.  If the parent is a 
constituent corporation but is not the surviving corporation in 
the merger, and the articles of incorporation of the surviving 
corporation immediately after the merger differ from the 
articles of incorporation of the parent immediately prior to the 
merger in a manner that would entitle a shareholder of the 
parent to dissenters' rights under section 302A.471, subdivision 
1, paragraph (a), if the articles of incorporation of the 
surviving corporation constituted an amendment to the articles 
of incorporation of the parent, that shareholder of the parent 
has dissenters' rights as provided under sections 302A.471 and 
302A.473.  Except as provided in this subdivision, sections 
302A.471 and 302A.473 do not apply to any merger effected under 
this section. 
    Subd. 7.  [NONEXCLUSIVITY.] A merger among a parent and one 
or more subsidiaries or among two or more subsidiaries of a 
parent may be accomplished under sections 302A.611, 302A.613, 
and 302A.615 instead of this section, in which case this section 
does not apply. 
    Sec. 20.  Minnesota Statutes 1990, section 302A.651, 
subdivision 1, is amended to read: 
    Subdivision 1.  [WHEN PERMITTED.] A domestic corporation 
may merge with or participate in an exchange with a foreign 
corporation by following the procedures set forth in this 
section, if the merger or exchange is permitted by the laws of 
the state under which the foreign corporation is incorporated.: 
    (1) with respect to a merger, the merger is permitted by 
the laws of the state under which the foreign corporation is 
incorporated; and 
    (2) with respect to an exchange, the corporation whose 
shares will be acquired is a domestic corporation, whether or 
not the exchange is permitted by the laws of the state under 
which the foreign corporation is incorporated. 
    Sec. 21.  Minnesota Statutes 1990, section 302A.701, is 
amended to read: 
    302A.701 [METHODS OF DISSOLUTION.] 
    A corporation may be dissolved:  
    (a) By the incorporators pursuant to section 302A.711; 
    (b) By the shareholders pursuant to sections 302A.721 to 
302A.733 25; or 
    (c) By order of a court pursuant to sections 302A.741 to 
302A.765.  
    Sec. 22.  Minnesota Statutes 1990, section 302A.723, 
subdivision 3, is amended to read: 
    Subd. 3.  [REMEDIES CONTINUED.] The filing with the 
secretary of state of a notice of intent to dissolve does not 
affect any remedy in favor of the corporation or any remedy 
against it or its directors, officers, or shareholders in those 
capacities, except as provided in section sections 302A.727, 25, 
and 302A.781.  
    Sec. 23.  Minnesota Statutes 1990, section 302A.725, 
subdivision 1, is amended to read: 
    Subdivision 1.  [COLLECTION; PAYMENT.] When a notice of 
intent to dissolve has been filed with the secretary of state, 
the board, or the officers acting under the direction of the 
board, shall proceed as soon as possible:  
    (a) To collect or make provision for the collection of all 
known debts due or owing to the corporation, including unpaid 
subscriptions for shares; and 
    (b) Except as provided in sections 302A.727, 25, and 
302A.781, to pay or make provision for the payment of all known 
debts, obligations, and liabilities of the corporation according 
to their priorities; and 
    (c) To give notice to creditors and claimants under section 
302A.727 or to proceed under section 25. 
    Sec. 24.  Minnesota Statutes 1990, section 302A.727, is 
amended to read: 
    302A.727 [DISSOLUTION PROCEDURE FOR CORPORATIONS THAT GIVE 
NOTICE TO CREDITORS AND CLAIMANTS.] 
    Subdivision 1.  [WHEN PERMITTED; HOW GIVEN.] When a notice 
of intent to dissolve has been filed with the secretary of 
state, the corporation may give notice of the filing to each 
creditor of and claimant against the corporation known or 
unknown, present or future, and contingent or noncontingent.  If 
notice to creditors and claimants is given, it must be given by 
publishing the notice once each week for four successive weeks 
in a legal newspaper in the county or counties where the 
registered office and the principal executive office of the 
corporation are located and by giving written notice to known 
creditors and claimants pursuant to section 302A.011, 
subdivision 17.  
    Subd. 2.  [CONTENTS.] The notice to creditors and claimants 
shall contain:  
    (a) A statement that the corporation is in the process of 
dissolving; 
    (b) A statement that the corporation has filed with the 
secretary of state a notice of intent to dissolve; 
    (c) The date of filing the notice of intent to dissolve; 
    (d) The address of the office to which written claims 
against the corporation must be presented; and 
    (e) The date by which all the claims must be received, 
which shall be the later of 90 days after published notice or, 
with respect to a particular known creditor or claimant, 90 days 
after the date on which written notice was given to that 
creditor or claimant.  Published notice is deemed given on the 
date of first publication for the purpose of determining this 
date.  
    Subd. 3.  [CLAIMS AGAINST CORPORATIONS THAT GIVE 
NOTICE.] (a) A corporation that gives notice to creditors and 
claimants has 30 days from the receipt of each claim filed 
according to the procedures set forth by the corporation on or 
before the date set forth in the notice to accept or reject the 
claim by giving written notice to the person submitting it; a 
claim not expressly rejected in this manner is deemed accepted. 
    (b) A creditor or claimant to whom notice is given and 
whose claim is rejected by the corporation has 60 days from the 
date of rejection, 180 days from the date the corporation filed 
with the secretary of state the notice of intent to dissolve, or 
90 days after the date on which notice was given to the creditor 
or claimant, whichever is longer, to pursue any other remedies 
with respect to the claim. 
    (c) A creditor or claimant to whom notice is given who 
fails to file a claim according to the procedures set forth by 
the corporation on or before the date set forth in the notice is 
barred from suing on that claim or otherwise realizing upon or 
enforcing it, except as provided in section 302A.781. 
    (d) A creditor or claimant whose claim is rejected by the 
corporation under paragraph (b) is barred from suing on that 
claim or otherwise realizing upon or enforcing it, if the 
creditor or claimant does not initiate legal, administrative, or 
arbitration proceedings with respect to the claim within the 
time provided n paragraph (b). 
    Subd. 4.  [ARTICLES OF DISSOLUTION; WHEN FILED.] Articles 
of dissolution for a corporation that has given notice to 
creditors and claimants under this section must be filed with 
the secretary of state after: 
    (1) the 90-day period in subdivision 2, paragraph (e), has 
expired and the payment of claims of all creditors and claimants 
filing a claim within that period has been made or provided for; 
or 
    (2) the longest of the periods described in subdivision 3, 
paragraph (b), has expired and there are no pending legal, 
administrative, or arbitration proceedings by or against the 
corporation commenced within the time provided in subdivision 3, 
paragraph (b). 
    Subd. 5.  [CONTENTS OF ARTICLES.] The articles of 
dissolution must state: 
    (1) the last date on which the notice was given and:  (i) 
that the payment of all creditors and claimants filing a claim 
within the 90-day period in subdivision 2, paragraph (e), has 
been made or provided for; or (ii) the date on which the longest 
of the periods described in subdivision 3, paragraph (b), 
expired; 
    (2) that the remaining property, assets, and claims of the 
corporation have been distributed among its shareholders in 
accordance with section 302A.551, subdivision 4, or that 
adequate provision has been made for that distribution; and 
    (3) that there are no pending legal, administrative, or 
arbitration proceedings by or against the corporation commenced 
within the time provided in subdivision 3, paragraph (b), or 
that adequate provision has been made for the satisfaction of 
any judgment, order, or decree that may be entered against it in 
a pending proceeding. 
    Sec. 25.  [302A.7291] [DISSOLUTION PROCEDURE FOR 
CORPORATIONS THAT DO NOT GIVE NOTICE.] 
    Subdivision 1.  [ARTICLES OF DISSOLUTION; WHEN 
FILED.] Articles of dissolution for a corporation that has not 
given notice to creditors and claimants in the manner provided 
in section 302A.727 must be filed with the secretary of state 
after: 
    (1) the payment of claims of all known creditors and 
claimants has been made or provided for; or 
    (2) at least two years have elapsed from the date of filing 
the notice of intent to dissolve. 
    Subd. 2.  [CONTENTS OF ARTICLES.] The articles of 
dissolution must state: 
     (1) if articles of dissolution are being filed pursuant to 
subdivision 1, clause (1), that all known debts, obligations, 
and liabilities of the corporation have been paid and discharged 
or that adequate provision has been made for payment or 
discharge; 
     (2) that the remaining property, assets, and claims of the 
corporation have been distributed among its shareholders in 
accordance with section 302A.551, subdivision 4, or that 
adequate provision has been made for that distribution; and 
    (3) that there are no pending legal, administrative, or 
arbitration proceedings by or against the corporation, or that 
adequate provision has been made for the satisfaction of any 
judgment, order, or decree that may be entered against it in a 
pending proceeding. 
    Subd. 3.  [CLAIMS AGAINST CORPORATIONS THAT DO NOT GIVE 
NOTICE.] (a) If the corporation has paid or provided for all 
known creditors or claimants at the time articles of dissolution 
are filed, a creditor or claimant who does not file a claim or 
pursue a remedy in a legal, administrative, or arbitration 
proceeding within two years after the date of filing the notice 
of intent to dissolve is barred from suing on that claim or 
otherwise realizing upon or enforcing it. 
    (b) If the corporation has not paid or provided for all 
known creditors and claimants at the time articles of 
dissolution are filed, a person who does not file a claim or 
pursue a remedy in a legal, administrative, or arbitration 
proceeding within two years after the date of filing the notice 
of intent to dissolve is barred from suing on that claim or 
otherwise realizing upon or enforcing it, except as provided in 
section 302A.781. 
    Sec. 26.  [302A.734] [EFFECTIVE DATE OF DISSOLUTION; 
CERTIFICATE.] 
     Subdivision 1.  [EFFECTIVE DATE.] When the articles of 
dissolution have been filed with the secretary of state, the 
corporation is dissolved. 
    Subd. 2.  [CERTIFICATE.] The secretary of state shall issue 
to the dissolved corporation or its legal representative a 
certificate of dissolution that contains: 
    (1) the name of the corporation; 
    (2) the date and time the articles of dissolution were 
filed with the secretary of state; and 
     (3) a statement that the corporation is dissolved. 
    Sec. 27.  Minnesota Statutes 1990, section 302A.781, is 
amended to read: 
    302A.781 [CLAIMS BARRED; EXCEPTIONS.] 
    Subdivision 1.  [CLAIMS BARRED.] Except as provided in this 
section, a creditor or claimant whose claims are barred under 
section 302A.727, 25, or 302A.759 includes a person who is or 
becomes a creditor or claimant at any time before, during, or 
following the conclusion of dissolution proceedings, who does 
not file a claim or pursue a remedy in a legal, administrative, 
or arbitration proceeding within the time provided in section 
302A.730, 302A.741, 302A.751, or 302A.759, or has not initiated 
a legal, administrative, or arbitration proceeding before the 
commencement of the dissolution proceedings, and all those 
claiming through or under the creditor or claimant, are forever 
barred from suing on that claim or otherwise realizing upon or 
enforcing it, except as provided in this section.  
    Subd. 2.  [CLAIMS REOPENED.] At any time within one year 
after articles of dissolution have been filed with the secretary 
of state pursuant to section 302A.733 302A.727 or 25, 
subdivision 1, clause (b) or (c) (2), or a decree of dissolution 
has been entered, a creditor or claimant who shows good cause 
for not having previously filed the claim may apply to a court 
in this state to allow a claim:  
    (a) Against the corporation to the extent of undistributed 
assets; or 
    (b) If the undistributed assets are not sufficient to 
satisfy the claim, against a shareholder, whose liability shall 
be limited to a portion of the claim that is equal to the 
portion of the distributions to shareholders in liquidation or 
dissolution received by the shareholder, but in no event may a 
shareholder's liability exceed the amount which that shareholder 
actually received in the dissolution.  
    Subd. 3.  [CLAIMS PERMITTED OBLIGATIONS INCURRED DURING 
DISSOLUTION PROCEEDINGS.] All known contractual debts, 
obligations, and liabilities incurred during dissolution 
proceedings in the course of winding up the corporation's 
affairs shall be paid or provided for by the corporation before 
the distribution of assets to a shareholder.  A person to whom 
this kind of debt, obligation, or liability is owed but not paid 
may pursue any remedy before the expiration of the applicable 
statute of limitations against the officers, and directors, and 
shareholders of the corporation before the expiration of the 
applicable statute of limitations who are responsible for, but 
who fail to cause the corporation to pay or make provision for 
payment of the debts, obligations, and liabilities or against 
shareholders to the extent permitted under section 302A.559.  
This subdivision does not apply to dissolution under the 
supervision or order of a court.  
    Sec. 28.  [REPEALER.] 
    Minnesota Statutes 1990, sections 302A.729; 302A.730; and 
302A.733, are repealed. 
    Presented to the governor May 2, 1991 
    Signed by the governor May 6, 1991, 3:29 p.m.