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An Ordinance to provide for the establishment of
business corporations in the Republic of New Lemuria and to provide for matters
incidental or consequential thereto.
Commencement.
Be It Enacted by the House of Elders by and with the advice
and consent of the President, and by the authority of the same as follows:
Part I.
General Provisions
Short Title
1. This ordinance shall be known as the "Republic of New Lemuria Business Corporation Ordinance of 1991".
Definitions
2. In this Ordinance, unless the context otherwise requires,
the term:
"Articles of Incorporation" includes (i) the original
articles of incorporation or any other instrument filed or issued under any law
to form a domestic or foreign corporation, amended, supplemented, corrected or
restated by articles of amendment, merger or consolidation, or other instruments
filed or issued under any law; or (ii) a special law or charter creating a
domestic or foreign corporation, as amended, supplemented or restated.
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"Board" means the Board of Directors.
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"Corporation" or "Domestic Corporation" means a
corporation for profit formed under this ordinance, or
existing on its effective date and theretofore formed under
any other ordinance of the Republic of New Lemuria Congress.
"Minister of Finance" means the Minister for the time being
charged with the responsibility of finance in the Republic of New Lemuria
Administration.
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"Registrar of Companies" means the person who is
appointed under the provisions of the Companies Act.
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"Treasury Shares" means shares which have been issued,
have been subsequently acquired, and are retained uncanceled by the corporation.
Application of the Ordinance.
3. (1) Any corporation or company created prior to the
effective date of this ordinance may at any time subject itself to the
provisions of this Ordinance by amending its articles of incorporation in
accordance with the manner prescribed by Part IX. Any corporation formed or
subject to this Ordinance which does business in the Republic of New Lemuria,
shall be subject to and comply with all requirements of the Companies Act in the
same manner as a company formed thereunder.
(2) A corporation to which the Banking Law or Insurance Law
is applicable shall also be subject to this Ordinance, but the Banking law or
Insurance Law, as the case may be shall prevail over any conflicting provisions
of this Ordinance.
Form of Instruments; Filing
4. (1) Whenever any provision of this Ordinance requires any
instrument to be filed with the Registrar of Companies, such instrument shall
comply with the provisions of this Part unless otherwise expressly provided by
law.
(2) Every instrument referenced herein, filed or required to
be filed, shall be in the English language, except that the corporate name may
be in another language if written in English letters or characters.
(3) All instruments shall be signed by all directors; or, by
the president, vice president or managing director, and by the secretary or an
assistant secretary.
(4) Whenever any provision of this Ordinance requires an
instrument to be acknowledged, such requirement means in the case of execution
of an instrument within the Republic of New Lemuria.
(i) The person signing the instrument shall acknowledge that
it is his act and deed or that it is the act and deed of the corporation, as the
case may be; and, (ii) The instrument shall be acknowledged before a notary
public, commissioner for oaths or other person authorized to take
acknowledgments, who shall attest that he knows the person who executed the
instrument.
(5) In the case of the execution of an instrument outside of
the Republic of New Lemuria, an acknowledgment shall mean:
(i) The person signing the instrument shall acknowledge that
it is his act and deed or that it is the act and deed of the corporation, as the
case may be; and,
(ii) The instrument shall be acknowledged before a notary
public or any other person authorized to take acknowledgments according to the
laws of the place of execution, or a consul or vice-consul of the Republic of New Lemuria, or other governmental official of the Republic of New Lemuria,
authorized to take acknowledgments or, in their absence, a consular official of
another government having diplomatic relations with the Republic of New Lemuria,
and such notary, person, consul or vice-consul shall attest that he knows the
person making the acknowledgment to be the person who executed the instrument;
and,
(iii) When the acknowledgment shall be taken by a notary
public or any other person authorized to take acknowledgments, except a
governmental official of the Republic of New Lemuria, or foreign consular
official, the signature of such person who has authority shall be attested to by
a consul or vice-consul of the Republic of New Lemuria or, in his absence, by a
consular of another government having diplomatic relations with the DOM, or a
government official of the place of execution who is authorized to make such
attestation, or apostille according to the convention de la Hage de 5, October
1961.
(6) Whenever any provision of this Ordinance requires any
instrument to be filed with the Registrar of Companies, such requirement means
that:
(i) An appropriate receipt evidencing payment of all
appropriate fees shall be delivered to the office of the Registrar of Companies
and, within ten days of the date of the receipt, the original instrument
together with a duplicate instrument, both signed and acknowledged;
(ii) Upon delivery of the original signed and acknowledged
instrument with the required receipt and an exact signed and acknowledged copy,
the Registrar of Companies shall certify that the instrument has been filed in
his office by endorsing the word "filed" and the date of the required receipt
upon the original instrument. Said date shall be the filing date;
(iii) the Registrar of Companies shall compare the duplicate
signed and acknowledged copy with the original signed and acknowledged copy with
the original signed and acknowledged instrument, and if he finds that the text
is identical, shall affix on the duplicate copy the same endorsement of filing
as he affixed on the original. The said original, as endorsed, shall be returned
to the corporation. The endorsement constitutes the certificate of the Registrar
of Companies that the document is a true copy of the instrument filed in his
office and that it was filed as of the date stated in the endorsement; and,
(iv) Any instrument filed in accordance with subsection (ii)
shall be effective as of the filing date stated thereon.
(7) Any instrument relating to a domestic or foreign
corporation filed with the Registrar of Companies under this Ordinance may be
corrected with respect to any error apparent on the face or defect in the
execution thereof by filing with the registrar of companies a certificate of
correction, executed and acknowledged in the manner required for the original
instrument. The certificate of correction shall specify the error or defect to
be corrected and shall set forth the portion of the instrument in correct form.
The corrected instrument when filed shall be effective as of the date the
original instrument was filed.
Certificates or Certified Copies as Evidence
5. All certificates issued by the Registrar of Companies in
accordance with the provisions of this Ordinance and all copies of documents
filed in his office in accordance with the provisions of this Ordinance shall,
when certified by him, be taken and received in all courts, public offices and
official bodies as prima facie evidence of the facts therein stated and of the
execution of such instruments.
Fees on Filing Articles of Incorporation and Other Documents
6. (1) The Minister of Finance is hereby empowered to
promulgate and shall so promulgate a schedule of fees for the filing and
issuance of documents under this Ordinance. Fees payable in respect of this
Ordinance shall be payable in United States Dollars or upon the authorization of
the Minister of Finance, in a currency other than that of the Nation of the
Republic of New Lemuria.
(2) On filing with the registrar of Companies an amendment of
articles of incorporation increasing the authorized number of shares or articles
of merger or consolidation of two or more domestic corporations, a fee shall be
computed and paid in accordance with the schedule promulgated pursuant to
section (1) on the basis of the number of shares provided for in the articles of
amendment or articles of merger or consolidation, except that all fees paid by
the corporation with respect to the shares authorized prior to such amendment or
merger or consolidation shall be deducted from the amount to paid.
(3) On filing with the Registrar of Companies an amendment of
articles of incorporation other than an amendment increasing the authorized
number of shares, or articles of dissolution, or articles of merger or
consolidation into a foreign corporation or any other document for which a
certificate is issued under this Ordinance, a fee shall be paid in accordance
with the schedule promulgated pursuant to section (1)
(4) Fees for certifying copies of documents and for filing,
recording or indexing papers shall be fixed by the Minister of Finance.
Annual Registration Fee
7. Every corporation shall pay to the Minister of Finance an
annual fee as prescribed in the schedule required to be promulgated by the
Minister of Finance under this Ordinance.
Waiver of Notice
8. Whenever any notice is required to be given to any
shareholder or director or bondholder of a corporation or to any other person
under the provisions of this Ordinance or under the provisions of the articles
of incorporation or bylaws of the corporation, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or after
the time stated therein, shall be deemed to be equivalent to the giving of such
notice.
Notice to Shareholders of Bearer Shares
9. Any notice or information required to be given to
shareholders of bearer shares shall be provided in the manner designated in the
corporation's articles of incorporation or bylaws or, if the notice can no
longer be provided as stated therein, the notice shall be published in a
publication of general circulation in the Republic of New Lemuria, or in a place
where the corporation has a place of business. Any notice requiring a
shareholder to take action in order to secure a right or privilege shall be
published or given in time to allow a reasonable opportunity for such action to
be taken.
Construction
10. In construing this Ordinance, or any part hereof, the
Courts or any other person shall refer to the common law or to the construction
of the same or similar acts in other jurisdictions.
Part II.
Corporate Purposes and Powers
Purposes
11. Corporations may be organized under this Ordinance for
any lawful business purpose or purposes.
General Powers
12. Subject to any limitations provided in this Ordinance or
any other law of Republic of New Lemuria or its articles of incorporation, every
corporation shall have power in furtherance of its corporate purposes
irrespective of corporate benefit and whether or not enumerated in its articles:
(1) To have perpetual succession.
(2) To sue and be sued in all courts of competent
jurisdiction.
(3) To have a corporate seal, and to alter such seal at
pleasure, and to use it by causing it or a facsimile to be affixed or impressed
or reproduced in any other manner.
(4) To purchase, receive, take by grant, gift, devise,
bequest, or otherwise, lease or otherwise acquire, own, hold improve, employ,
use and otherwise deal in and with, real or personal property, or any interest
therein, wherever situated.
(5) To sell, convey, lease, exchange, transfer or otherwise
dispose of, or mortgage or pledge, or create a security interest in, all or any
of its real or personal property, or any interest therein.
(6) To purchase, take, receive, subscribe for, or otherwise
acquire, own, hold, vote, employ, sell, lend, lease, exchange, transfer, or
otherwise dispose of, mortgage, and pledge, bonds and other obligations, shares
or other securities or interest issued by others, whether engaged in similar or
different business, governmental, or other activities.
(7) To make contracts, give guarantees and incur liabilities,
borrow money at such rates of interest as the corporation may determine, issue
its notes, bonds, and other obligations, and secure any of its obligations by
mortgage or pledge of all or any of its property or any interest therein,
wherever situated, in any currency.
(8) To lend money, invest and reinvest its funds, and take
and hold real and personal property as security for the payment of funds so
loaned or invested, in any currency.
(9) To do business, carry on its operations, and have offices
and exercise the powers granted by this Part in any jurisdiction within or
without the Republic of New Lemuria.
(10) To elect or appoint officers, managing directors,
employees, and other agents of the corporation, define their duties, fix their
compensation, and the compensation of directors and to indemnify corporate
personnel.
(11) To adopt, amend or repeal bylaws relating to the
business of the corporation the conduct of its affairs, its rights or powers of
the rights of powers of its shareholders, directors or officers.
(12) To make donations for the public welfare or for
charitable, educational, scientific, civic, or similar purposes.
(13) To pay pensions and establish pension plans, pension
trust, profit sharing plans, stock bonus plans, stock option plans and other
incentive plans for any or all of its directors, officers, and employees.
(14) To purchase, receive, take, or otherwise acquire, own,
hold, sell, lend, exchange, transfer or otherwise dispose of, pledge, use and
otherwise deal in and with its own shares.
(15) To be a promoter, incorporator, partner, member,
associate, or manager of any partnership, corporation, joint venture, trust or
other enterprise.
(16) To have and exercise all powers necessary or convenient
to effect any or all of the purposes for which the corporation is formed.
(17) To be recognized and to be domiciled or domesticated
within or without the Republic of New Lemuria, and to change the situs of said
domicile or domestication from time to time.
Guarantee Authorized by Shareholders
13. A guarantee may be given by a corporation not in
furtherance of its corporate purposes when authorized at a meeting of
shareholder by vote of the holders of a majority of all outstanding shares
entitled to vote thereon. If authorized by a like vote, such guarantee may be
secured by a mortgage or pledge of, or the creation of a security interest in,
all or any part of the corporate property, or any interest therein, wherever
situated.
Defense of Ultra Vires
14. No act of a corporation and no transfer of real or
personal property to or by a corporation, otherwise lawful, shall be invalid by
reason of the fact that the corporation was without capacity or power to do such
act or to make or receive such transfer, but such lack of capacity or power may
be asserted.
(i) In an action by a shareholder against the corporation to
enjoin the doing of any act or the transfer of real or personal property by or
to the corporation. If the unauthorized act or transfer sought to be enjoined is
being, or is to be, performed or made under any contract to which the
corporation is a party, the court may, if all of the parties to the contract are
parties to the action and if it deems the same to be equitable, set aside and
enjoin the performance of such contract, and in so doing may allow to the
corporation or to the other parties to the contract, as the case may be, such
compensation as may be equitable for the loss or damage sustained by any of them
from the action of the court in setting aside and enjoining the performance of
such contract; provided that anticipated profits to be derived from the
performance of the contract shall not be awarded by the court as a loss or
damage sustained;
(ii) In an action by the corporation, whether acting directly
or through a receiver, trustee, or other legal representative, or through
shareholders in a derivative suit against the incumbent or former officers or
directors of the corporation for loss or damage due to their unauthorized act:
and,
(iii) In a proceeding by the High Court to dissolve the
corporation, or to enjoin it from the doing of unauthorized business.
Effect of Incorporation; Corporation as Proper Party to
Action
15. A corporation shall be a legal entity considered in law a
fictional person with separate rights and liabilities, distinct from its
shareholder or members. The corporation shall be proper plaintiff in a suit to
assert a legal right of the corporation and a proper defendant in a suit to
assert a legal right against the corporation; and the naming of a shareholder,
member, director, officer or employee of the corporation as a party to a suit in
the Republic of New Lemuria, or elsewhere to represent the corporation is
subject to a motion to dismiss if such party is the sole party to sue or defend,
or subject to a motion for misjoinder if such party is joined with another party
who is a proper party and has been jointed only to represent the corporation.
Liability of Directors, Officers, and Shareholders
16. Unless otherwise provided by law, the directors,
officers, employees and shareholders of a corporation shall not be liable for
corporate debts and obligations.
Part III.
Service of Process; Registered Agent
Registered Agent for Service of Process
17. (1) Every corporation subject to this Ordinance shall
designate a registered agent incorporated under the laws of the Republic of New Lemuria, upon whom process against such corporation or any notice or demand
required or permitted by law to be served may be served; such registered agent
shall be a corporation having a paid-in capital of at least $500,000 USD, and
which is licensed by the Government of the Republic of New Lemuria, to act as
registered agent for such corporation. A Corporation which fails to maintain a
registered agent shall be dissolved or its authority to do business or
registration shall be revoked, as the case may be in accordance with section 99
of Part XI.
(2) Service of process on a registered agent may be made by
registered mail addressed to the registered agent or in any other manner
provided by law for the service of summons as if the registered agent were a
defendant.
(3) Any registered agent of a corporation may resign as such
agent upon filing a written notice thereof, executed in duplicate, with the
Registrar of Companies, who shall cause a copy thereof to be sent by registered
mail to the corporation at the address of the office of the corporation or, if
none, at the last known address of a person at whose request the corporation was
formed. No designation of a new registered agent shall be accepted for filing
unless all charges owing to former agent shall have been paid.
(4) A designation of a registered agent under this section
may be made, revoked, or changed by filing an appropriate notification with the
registrar of Companies.
(5) The designation of a registered agent shall terminate
upon the expiration of thirty days written notice of resignation directed to the
corporation and the filing of a copy of said notice of resignation with the
Registrar of Companies; or sooner if a successor agent is designated.
(6) A registered agent, when served with process, notice or
demand for the corporation which he represents, shall transmit the same to the
corporation by personal notification or in the following manner: Upon receipt of
the process, notice or demand, the registered agent shall cause a copy of such
paper to be mailed to the corporation named therein at its last known address.
Such mailing shall be by registered/certified mail. As soon thereafter as
possible if process was issued in the Republic of New Lemuria, the registered
agent may file with the clerk of the court issuing the process either the
receipt of such registered mailing or an affidavit stating that such mailing has
been made, signed by the registered agent, or if the agent is a corporation, by
an officer of the same, properly notarized. Compliance with the provisions of
this section shall relieve the registered agent from any further obligation to
the corporation for service of the process, notice or demand, but the agent's
failure to comply with the provisions of this section shall in no way affect the
validity of the service of the process, notice or demand.
Minister of Finance or His Appointee as Agent for Service of
Process
18. (1) Wherever a corporation subject to this Ordinance
fails to maintain an authorized agent in the Republic of New Lemuria, or
whenever said registered agent cannot with reasonable diligence be found at his
business address, then the Minister of Finance or his appointee shall be an
agent of such corporation upon whom any process or notice or demand required or
permitted by law to be served may be served.
(2) Service on the Minister of Finance or his appointee as
agent of a corporation shall be made by personally delivering to and leaving
with him or his deputy or with any person authorized by the Minister of Finance
to receive such service, at the office of the Minister of Finance, duplicate
copies of such process together with the statutory fee. The Minister of Finance
or his appointee shall promptly send one of such copies by registered/certified
mail, return receipt requested, to such corporation at the business address of
its registered agent, or if there is no such office, then the Minister of
Finance or his appointee shall mail such copy in care of any director named in
the articles of incorporation at his address stated therein or at the address of
the corporation without the Republic of New Lemuria, or if none, at the last
known address of a person at whose request the corporation was formed or in any
other manner permitted by law.
Records and Certificates of Minister of Finance
19. The Minister of Finance shall keep a record of each
process served upon the Minister of Finance or his appointee under this Part,
including the date of service. It shall, upon request made within five years of
such service, issue a certificate under its seal certifying as to the receipt of
the process by an authorized person, the date and place of such service and the
receipt of the statutory fee.
Limitation on Effect of Part
20. Nothing contained in this Part shall affect the validity
of service of process on a corporation effected in any other manner permitted by
law.
Part IV
Formation of Corporations; Corporate Names
Incorporators
21. Any person, partnership, association or corporation,
singly, or jointly with others, and without regard to his or their residence,
domicile, or jurisdiction of incorporation, may incorporate or organize a
corporation under this Ordinance.
Corporate Name
22. (1) Except as otherwise provided in subsection (2) of
this section, the name of a corporation:
(i) Shall contain the word "Corporation", "Incorporation",
"Company", or "Limited", or other words or an abbreviation of one of such or
other words as will clearly indicate that it is a corporation as distinguished
from a natural person or partnership; and,
(ii) Shall not be the same as the name of a corporation of
any type or kind, as such name appears on the index of names of existing
corporations or companies or on the reserved name list maintained by the
Registrar of Companies or a name so similar to any such name as to tend to
confuse or deceive.
(2) The provisions of subsection (1) of this section shall
not:
(i) Require any corporation, existing or authorized to do
business on the effective date of this ordinance, to add to, modify or otherwise
change its corporate name; and,
(ii) Prevent a corporation with which another corporation,
domestic or foreign, is merged, or which is formed by the reorganization or
consolidation of one or more domestic or foreign corporations, or upon a sale,
lease or other disposition to or exchange with, a domestic corporation of all or
substantially all the assets of another domestic corporation, including its
name, from having the same name as any of such corporations if at the time such
other corporation was existing under the laws of the Republic of New Lemuria or
was authorized to do business in the Republic of New Lemuria.
Index of Names of Corporations
23. The Registrar of Companies shall keep an alphabetical
index of all reserved names and those of all corporations subject to his
Ordinance together with those other names required to be kept by the Registrar
of Companies by law.
Reservation of Name
24. (1) Any person, natural or corporate, or any agent
thereof may reserve a name with the registrar of companies provided said
reservation is made in accordance with this Part and is made in good faith for
subsequent use in formation of a corporation under this Ordinance or for use in
changing the name of a corporation already subject to this Ordinance. A name may
be reserved under Parts XII or XIII by a non- Republic of New Lemuria
corporation which has filed for a transfer of domicile thereunder. Such name
reservation shall not be subject to the time limitation and fee requirements of
section 24.(4) of this chapter.
(2) An application to reserve a name shall be delivered to
the Registrar of Companies together with the required fee. Said application
shall set forth:
(i) the name to be reserved;
(ii) the name and address of the applicant;
(iii) a statement of the reasons for the application in
accordance with section (1) above; and,
(iv) the name in which the Certificate of Name Reservation
is to be issued.
(3) Provided the name to be reserved is available for use,
the Registrar of Companies shall enter the name upon the reserved name list and
issue a Certificate of Name Reservation in the name of the applicant or in the
name designated by the applicant. The Certificate of Name Reservation shall set
forth:
(i) the information contained in the application therefor;
and, (ii) the date the name was entered upon the reserved name list; which date
shall be the date of reservation.
(4) Beginning upon the date of reservation, the name reserved
will be maintained upon the reserved name list by the Registrar of Companies and
shall not be used except by the person, natural or corporate, in whose name the
Certificate of Name Reservation has been issued. Said reservation shall
terminate upon the expiration of one hundred twenty days next following the date
of reservation unless sooner renewed. Upon payment of the required fees, the
reservation shall be renewed with the Registrar of Companies for no more than
two like periods. An appropriate receipt for the required fees shall be taken
along with the Certificate of Name Reservation to be proof of the extension of
the reservation.
(5) The Certificate of Name Reservation and any renewals
thereof shall be evidenced to the Registrar of Companies at the time the name
reserved is utilized by the person, natural or corporate, in whose name said
Certificate of Name Reservation has been issued.
Contents of Articles of Incorporation
25. The articles of incorporation shall set forth, at
minimum, the following:
(1) Name of Corporation (2) Purpose of Corporation (3)
Duration of Corporation (4) Capital Structure (5) Statement that the corporation
is formed under this ordinance. (6) Name/Number of the initial directors
including the minimum and maximum number thereof. (7) Name/Number of the initial
shareholders including any limitation thereof (8) Address of Corporation's
Registered Office or Agent (9) Name/Address of Incorporator/s
Powers and Rights of Bondholders
26. The articles of incorporation may confer upon the holders
of any bonds, debentures, or other obligations issued or to be issued by the
corporation, whether secured by mortgage or otherwise or unsecured, any one or
more of the following powers and rights:
(i) The power to vote on the election of directors, or other
matters specified in the articles; (ii) The right of inspection of books of
account, minutes, and other corporate records; (iii) Any other rights to
information concerning the financial condition of the corporation which its
shareholders have or may have.
Execution and Filing of Articles of Incorporation
27. Articles of Incorporation shall be signed and
acknowledged by each incorporator and filed with the Registrar of Companies in
conformity with the provisions of Part I of this Ordinance.
Effect of Filing Articles of Incorporation
28. The corporate existence shall, upon filing the articles
of incorporation, be effective as of the filing date stated thereon. The
endorsement by the Registrar of Companies, as required by Section 4 of Part I,
shall be conclusive evidence that all conditions precedent required to be
performed by the incorporators have been complied with and that the corporation
has been incorporated under this Ordinance.
Organizational Meeting
29. (1) Within a reasonable time after the filing of the
articles of incorporation, an organization meeting shall be held either within
or without the Republic of New Lemuria. The said organization meeting shall be
held, in person or by proxy, by the initial directors named in the articles of
incorporation or by the incorporator or incorporators or their transferees
pursuant to subsection (2) hereof. The purpose of the meeting shall be to adopt
bylaws, transact such business as may come before the meeting , do such acts to
perfect the organization of the corporation as are deemed appropriate and, if
the initial directors are not named in the articles of incorporation, elect
directors to serve or hold office until the first annual meeting of shareholders
or until their successors are elected and qualify.
(2) If the articles of incorporation state that the
incorporators have subscribed for stock, such subscriptions may be transferred
prior to the organization meeting of directors and such transferees may hold the
organization meeting of incorporators.
(3) Any action permitted to be taken at the organization
meeting may be taken without a meeting if each incorporator, transferee, or
director signs an instrument setting forth the action so taken.
Bylaws
30. (1) Every corporation formed under this Ordinance shall
have bylaws.
(2) The initial bylaws of a corporation may be adopted by its
board of directors. Except as otherwise provided in the articles of
incorporation, bylaws may be amended, repealed or adopted by vote of the
shareholders. If so provided in the articles of incorporation or a bylaw adopted
by the shareholders, bylaws may also be amended, repealed or adopted by the
board of directors may be amended or repealed by shareholders entitled to vote
thereon.
(3) The bylaws shall contain appropriate procedural
provisions respecting the rights and obligations of bearer shareholders as set
forth in section 25 of this Part IV in the event the articles of incorporation
do not contain such provisions.
(4) The bylaws may contain any provision relating to the
business of the corporation, the conduct of its affairs, its rights or powers or
the rights or powers of its shareholders, directors or officers, not
inconsistent with this Ordinance or any other Law of the Republic of New Lemuria
or the articles of incorporation.
Part V.
Corporate Finance
Classes and Series of Shares
31. (1) Every corporation shall have power to issue the
number of shares stated in its articles of incorporation. Such shares may be of
one or more classes or one or more series within any class thereof, any or all
of which classes may be of shares with par value or shares without par value,
and may be registered or bearer shares, with such voting powers, full or
limited, or without voting powers and in such series and with such designations,
preferences and relative, participating, options or special rights and
qualifications, limitations or restrictions thereof as shall be stated in the
articles of incorporation or in the resolution providing for the issue of such
shares adopted by the board of directors pursuant to authority expressly vesting
it by the provisions of the articles of incorporation.
(2) The articles of incorporation or the resolution providing
for the issue of shares adopted by the board of directors may provide that
shares of any class of shares or of any series of shares within any class
thereof shall be convertible into the shares of one or more other classes of
shares or series except into shares of a class or series having rights or
preferences as to dividends or distribution of assets upon liquidation which are
prior or superior in rank to those of the shares being converted.
(3) A corporation may provide in its articles of
incorporation for one or more classes or series of shares which are redeemable,
in whole or in part, at the option of the corporation at such price or prices,
within such period and under such conditions as are stated in the articles of
incorporation or in the resolution providing for the issue of such shares
adopted by the board of directors pursuant to authority expressly vested in it
by the provisions of the articles of incorporation.
(4) A corporation may issue fractional shares.
(5) Before any corporation shall issue any shares of any
class or of any series of any class of which the voting powers, designations,
preferences and relative, participating, optional or other rights, if any, or
the qualifications, limitations, or restrictions thereof, if any, have not been
set forth in the articles of incorporation, but are provided for in a resolution
adopted by the board of directors pursuant to authority expressly vested in it
by the provisions of the articles of incorporation, a statement setting forth a
copy of such resolution and the number of shares of the class or series to be
issued shall be executed, acknowledged, and filed in accordance with section 4
of Part I of this Ordinance. Upon the filing of such statement, the resolution
establishing and designating the class or series and fixing the relative rights
and preferences thereof shall become effective and shall constitute an amendment
of the articles of incorporation.
Restrictions on Transfer of Shares
32. (1) A restriction on the transfer of shares of a
corporation may be imposed either by the articles of incorporation or by the
bylaws or by an agreement among any number of shareholders or among such
shareholders and the corporation. No restriction so imposed shall be binding
with respect to shares issued prior to the adoption of the restriction unless
the holders of such shares are parties to an agreement or voted in favor of the
restriction. Any restriction which absolutely prohibits the transfer of shares
shall be null and void.
(2) Restrictions on the transfer of shares include those
which:
(i) Obligate the holder of the restricted shares to offer to
the corporation or to any other holders of securities of the corporation or to
any person or to any combination of the foregoing, a prior opportunity, to be
exercised within a reasonable time, to acquire the restricted shares; or
(ii) Obligate the corporation or any holder of shares of the
corporation or any other person or any combination of the foregoing, to purchase
at a specified price the shares which are the subject of an agreement respecting
the purchase and sale of the restricted securities.
(3) Any transfer restriction adopted under this section shall
be noted on the face or the back of the stock certificate.
Subscription for Shares
33. (1) A subscription for shares of a corporation to be
organized shall be irrevocable for a period of six months from its date unless
otherwise provided by the terms of the subscription agreement or unless all of
the subscribers consent to the revocation of such subscription.
(2) A subscription, whether made before or after the
formation of a corporation, shall not be enforceable unless in writing and
signed by the subscriber.
(3) Unless otherwise provided in the subscription agreement,
subscriptions for shares, whether made before or after the organization of a
corporation, shall be paid in full at such time, or in such installments and at
such times, as shall be determined by the board of directors. Any call made by
the board of directors for payment on subscriptions shall be uniform as to all
shares of the class or as to all shares of the same series, as the case may be.
(4) In case of default in the payment of any installment or
call when such payment is due, the corporation may proceed to collect the amount
due in the same manner as any debt due the corporation. The bylaws may prescribe
a penalty for failure to pay installments or calls that may become due, but no
penalty working a forfeiture of a subscription, or of the amounts paid thereon,
shall be declared as against any subscriber unless the amount due thereon shall
remain unpaid for a period of thirty days after written demand has been made
therefor. If mailed, such written demand shall be deemed to be made when sent by
registered mail addressed to the subscriber at his last post office address
known to the corporation. In the event of the sale of any shares by reason of
any forfeiture, the excess of proceeds realized over the amount due and unpaid
on such shares shall be paid to the delinquent subscriber or to his legal
representative. If no prospective purchaser offers a cash price sufficient to
pay the full balance owned by the delinquent subscriber plus the expenses
incidental to such sale, the shares subscribed for shall be cancelled and
restored to the status of authorized but unissued shares and all previous
payments thereof shall be forfeited to the corporation and transferred to
surplus.
(5) Subscriptions for shares of stock are transferable unless
otherwise provided in a subscription agreement.
Consideration for Shares
34. (1) Consideration for the issue of shares shall consist
of money or other property, tangible or intangible, or labor or services
actually received by or performed for the corporation or for its benefit or in
its formation or reorganization, or a combination thereof. In the absence of
fraud in the transaction, the judgment of the board of directors or
shareholders, as the case may be as to the value of the consideration received
for shares shall be conclusive.
(2) Shares with par value may be issued for such
consideration, not less than the par value thereof, as is fixed from time to
time by the board.
(3) Shares without par value may be issued for such
consideration as is fixed from time to time by the board unless the articles of
incorporation reserve to the shareholders the right to fix the consideration. If
such right is reserved as to any shares, a vote of the shareholders shall either
fix the consideration to be received for the shares or authorize the board to
fix such consideration.
(4) Treasury shares may be disposed of by a corporation on
such terms and conditions as are fixed from time to time by the board.
(5) That part of the surplus of a corporation which is
transferred to stated capital upon the issuance of shares as a share dividend
shall be deemed to be the consideration for the issuance of such shares.
Payment for Shares
35. (1) Neither obligations of the subscriber for future
payments nor future service shall constitute payment or part payment for shares
of a corporation.
(2) Certificates for shares may not be issued until the full
amount of consideration therefor has been paid.
(3) When the consideration for shares has been paid in full,
the subscriber shall be entitled to all rights and privileges of a holder of
such shares and to a certificate representing his shares, and such shares shall
be deemed fully paid and non-assessable.
Compensation, for Formation, Reorganization, and Financing
36. The reasonable charges and expenses of formation or
reorganization of a corporation, and the reasonable expenses of and compensation
for the sale or underwriting of its shares may be paid or allowed by the
corporation out of the consideration received by it in payment for its shares
without thereby rendering such shares not fully paid or assessable.
Determination of Stated Capital
37. (1) Upon issue by a corporation of shares with a par
value not in excess of the authorized shares, the consideration received
therefor shall constitute stated capital to the extent of the par value of such
shares, and the excess, if any of such consideration shall constitute surplus.
(2) Upon issue by a corporation of shares without par value
not in excess of the authorized shares, the entire consideration received
therefor shall constitute stated capital unless the board within a period of
sixty days after issue allocates to surplus a portion, but not all, of the
consideration received for such shares. No such allocation shall be made of any
portion of the consideration received for shares without par value having a
preference in the assets of the corporation upon involuntary liquidation except
all or part of the amount, if any, of such consideration in excess of such
preference, nor shall such allocation be made of any portion of the
consideration for the issue of shares without par value which is fixed by the
shareholders pursuant to a right reserved in the articles of incorporation
unless such allocation is authorized by vote of the shareholders.
(3) The stated capital of a corporation may be increased from
time to time by resolution of the board of directors transferring all or part of
surplus of the corporation to stated capital.
Form and Content of Certificates
38. (1) The shares of a corporation shall be represented by
certificates signed by the president, vice president, or managing director and
the secretary or an assistant secretary or the treasurer or an assistant
treasurer or director of the corporation, and may be sealed with the seal of the
corporation, if any, or a facsimile thereof. The signatures of the officers upon
a certificate may be facsimiles if the certificate is countersigned by a
transfer agent or registered by a registrar other than the corporation itself or
its employees. In case any officer who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer at the date of issue.
(2) Shares may be issued either in registered form or in
bearer form provided that the articles of incorporation or bylaws prescribe the
manner in which any required notice is to be given to shareholders of bearer
shares in conformity with section 25 of Part IV. The transfer of bearer shares
shall be by delivery of the certificates. The articles of incorporation may
provide that on request of a shareholder his bearer shares shall be exchanged
for registered shares or his registered shares exchanged for bearer shares.
(3) Each certificate representing shares issued by a
corporation which is authorized to issue shares of more than one class shall set
forth upon the face or back of the certificate, or shall state that the
corporation will furnish to any shareholder upon request and without charge, a
full statement of the designation, relative rights, preferences and limitations
of the shares of each class authorized to be issued and, if the corporation is
authorized to issue any class of preferred shares in series, the designation,
relative rights, preferences and limitations of each such series so far as the
same have been fixed and the authority of the board to designate and fix the
relative rights, preferences and limitations of other series.
(i) That the corporation is formed under the laws of the
Republic of New Lemuria;
(ii) The name of the person or persons to whom issued if a
registered share;
(iii) The number and class of shares, and the designation of
the series, if any, which such certificate represents;
(iv) The par value of each share represented by such
certificate, or a statement that the shares are without par value; and,
(v) If the share does not entitle the holder to vote that it
is nonvoting, or if the right to vote exists only under certain circumstances,
that the right to vote is limited.
Dividends in Cash, Stock, and/or Other Property
39. (1) A corporation may declare and pay dividends in cash,
stock, or other property on its outstanding shares, except when currently the
corporation is insolvent or would thereby become insolvent or when the
declaration or payment would be contrary to any restrictions contained in the
articles of incorporation. Dividends may be declared and paid out of surplus
only; but in case there is no surplus, dividends may be declared or paid out of
the net profits for the fiscal year in which the dividend is declared and for
the preceding fiscal year.
(2) A corporation engaged in the exploitation of natural
resources, or other wasting assets, including patents, or formed primarily for
the liquidation of specific assets may declare and pay dividends regardless of
any surplus from the net profits derived from the liquidation or exploitation of
such assets without making any deduction for the depletion of such assets
resulting from lapse of item, consumption, liquidation or exploitation of such
assets if the net assets remaining after such dividends are sufficient to cover
the liquidation preferences of shares having such preferences involuntary
liquidation.
Share Dividends
40. (1) A corporation may make pro rata distribution of its
authorized but unissued shares to holders of any class or series of its
outstanding shares subject to the following conditions:
(i) If a distribution of shares having a par value is made,
such shares shall be issued at not less than the par value thereof and there
shall be transferred to stated capital at the time of such distribution an
amount of surplus equal to the aggregate par value of such shares; and,
(ii) If a distribution of shares without par value is made,
the amount of stated capital to be represented by each such share shall be fixed
by the board, unless the articles of incorporation reserved to the shareholders
the right to fix the consideration for the issue of such shares; and there shall
be transferred to stated capital at the time of such distribution an amount of
surplus equal to the aggregate stated capital represented by such shares.
(2) Unrealized appreciation of assets, if any shall not be
included in the computation of surplus available for a share dividend.
(3) Upon the payment of a dividend payable in shares, notice
shall be given to the shareholders of the amount per share transferred from
surplus.
(4) No dividend payable in shares of any class shall be paid
unless the share dividend is specifically authorized by the vote of two-thirds
of the shares of each class that might be adversely affected by such a share
dividend.
(5) A split-up or division of the issued shares of any class
into a greater number of shares of the same class without increasing the stated
capital of the corporation shall not be construed to be a share dividend within
the meaning of this section.
Purchase or Redemption by Corporation of its Own Shares
41. (1) a corporation, subject to any restrictions contained
in its articles of incorporation, may purchase its own shares or redeem its
redeemable shares out of surplus except when currently the corporation is
insolvent or would thereby be made insolvent.
(2) A corporation may purchase its own shares out of stated
capital except when currently the corporation is insolvent or would thereby be
made insolvent, if the purchase is made for the purpose of:
(i) Eliminating fractions of shares; (ii) Collecting or
compromising indebtedness to the corporation; or, (iii) Paying dissenting
shareholders entitled to receive payment for their shares under Parts IX or X.
(3) A corporation, subject to any restrictions contained in
its articles of incorporation, may redeem or purchase its redeemable shares out
of stated capital except when currently the corporation is insolvent or would
thereby be made insolvent and except when such redemption or purchase would
reduce net assets below the stated capital remaining after giving effect to the
cancellation of such redeemable shares.
(4) When its redeemable shares are purchased by a corporation
within the period of redeemability, the purchase price thereof share not exceed
the applicable redemption price stated in the articles of incorporation. Upon a
call for redemption, the amount payable by the corporation for shares having a
cumulative preference on dividends may include the stated redemption price plus
accrued dividends to the next dividend date of redemption of such shares.
Reacquired Shares
42. (1) Shares that have been issued and have been purchased,
redeemed or otherwise reacquired by a corporation shall be canceled if they are
reacquired out of stated capital or if they are converted shares, or if the
articles of incorporation require that such shares be canceled upon
reacquisition.
(2) Any shares reacquired by the corporation and not
reacquired to be canceled may be either retained as treasury shares or canceled
by the board at the time of reacquisition or at any time thereafter.
(3) Neither the retention of reacquired shares as treasury
shares, nor their subsequent distribution to shareholders or disposition for a
consideration shall change the stated capital. Treasury shares may be disposed
of for such consideration as the directors may fix. When treasury shares are
disposed of for a consideration, the surplus shall be increased by the full
amount of the consideration received.
(4) When reacquired shares other than converted shares are
canceled, the stated capital of the corporation shall be reduced by the amount
of stated capital then represented by the shares so canceled. The amount by
which stated capital has been reduced by cancellation of reacquired shares
during a stated period of time shall be disclosed in the next financial
statement covering such period that is furnished by the corporation to all its
shareholders, or, if practicable, in the first notice of dividend or share
distribution that is furnished to the holders of each class or series of its
shares between the end of the period and the next such financial statement, and
in any event to all its shareholders within six months of the date of the
reduction of capital.
(5) Shares canceled under this section shall be restored to
the status of authorized but unissued shares, except that if the articles of
incorporation prohibit the reissue of any shares required or permitted to be
canceled under this section, the board shall approve and deliver to the
Registrar of Companies articles of amendment under Part IX eliminating such
shares from the number of authorized shares.
Reduction of Stated Capital by action of the Board.
43. (1) Except as otherwise provided in the articles of
incorporation, the board may at any time reduce the stated capital of a
corporation by eliminating from stated capital amounts previously transferred by
the board from surplus to stated capital and not allocated to any designated
class or series of shares, or by eliminating any amount of stated capital
represented by issued shares having a par value to the extent that the stated
capital exceeds the aggregate par value of such shares, or by reducing the
amount of stated capital represented by issued shares without par value. If,
however, the consideration for the issue of shares without par value is fixed by
the shareholders under this Part V, the board shall not reduce the stated
capital represented by such shares except to the extent, if any, that the board
was authorized by the shareholders to allocate any portion of such consideration
to surplus.
(2) No reduction of stated capital shall be made under this
section unless after such reduction the stated capital exceeds the aggregate
preferential amounts payable upon involuntary liquidation upon all issued shares
having preferential rights in the assets plus the par value of all other issued
shares with par value.
(3) When a reduction of stated capital has been effected
under this section, the amount of such reduction shall be disclosed in the next
financial statement covering the period which such reduction is made that is
furnished by the corporation to all its shareholders, or, if practicable, in the
first notice of dividend or share distribution that is furnished to the holder
of each class or series of its shares between the date of such reduction and the
next such financial statement, and in any event to all its shareholders within
six months of the date of such reduction.
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