Iowa Code 490.863 – Shareholders’ action
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1. a. Shareholders’ action respecting a director’s conflicting interest transaction is effective for purposes of section 490.861, subsection 2, paragraph “b”, if a majority of the votes cast by the holders of all qualified shares are in favor of the transaction after all of the following occur:
(1) Notice to shareholders describing the action to be taken respecting the transaction.
(2) Provision to the corporation of the information referred to in subsection 2.
(3) Communication to the shareholders entitled to vote on the transaction of the information that is the subject of required disclosure, to the extent the information is not known by them.
b. In the case of shareholders’ action at a meeting, the shareholders entitled to vote shall be determined as of the record date for notice of the meeting.
Terms Used In Iowa Code 490.863
- Articles of incorporation: means the articles of incorporation described in section 490. See Iowa Code 490.140
- Beneficial shareholder: means a person who owns the beneficial interest in shares, which may be a record shareholder or a person on whose behalf shares are registered in the name of an intermediary or nominee. See Iowa Code 490.140
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Interest: means either or both of the following rights under the organic law governing an unincorporated entity:a. See Iowa Code 490.140
- Person: means a person as defined in section 4. See Iowa Code 490.140
- Quorum: The number of legislators that must be present to do business.
- Record date: means the date fixed for determining the identity of the corporation's shareholders and their shareholdings for purposes of this chapter. See Iowa Code 490.140
- Record shareholder: means any of the following:
a. See Iowa Code 490.140- Secretary: means the corporate officer to whom the board of directors has delegated responsibility under section 490. See Iowa Code 490.140
- Shares: means the units into which the proprietary interests in a domestic or foreign corporation are divided. See Iowa Code 490.140
- Unrestricted voting trust beneficial owner: means , with respect to any shareholder rights, a voting trust beneficial owner whose entitlement to exercise the shareholder right in question is not inconsistent with the voting trust agreement. See Iowa Code 490.140
2. A director who has a conflicting interest respecting the transaction shall, before the shareholders’ vote, inform the secretary or other officer or agent of the corporation authorized to tabulate votes, in writing, of the number of shares that the director knows are not qualified shares under subsection 3, and the identity of the holders of those shares.3. As used in this section:a. “Holder” means and “held by” refers to shares held by a record shareholder, a beneficial shareholder, or an unrestricted voting trust beneficial owner.b. “Qualified shares” means all shares entitled to be voted with respect to the transaction except for shares that the secretary or other officer or agent of the corporation authorized to tabulate votes either knows, or under subsection 2 is notified, are held by any of the following:(1) A director who has a conflicting interest respecting the transaction.(2) A related person of the director, excluding a person described in section 490.860, subsection 5, paragraph “f”.4. A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of compliance with this section. Subject to the provisions of subsection 5, shareholders’ action that otherwise complies with this section is not affected by the presence of holders, or by the voting, of shares that are not qualified shares.5. If a shareholders’ vote does not comply with subsection 1 solely because of a director’s failure to comply with subsection 2, and if the director establishes that the failure was not intended to influence and did not in fact determine the outcome of the vote, the court may take such action respecting the transaction and the director, and may give such effect, if any, to the shareholders’ vote, as the court considers appropriate in the circumstances.6. Where shareholders’ action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the transaction by reason of the articles of incorporation or bylaws, or a provision of law, independent action to satisfy those authorization requirements shall be taken by the shareholders, in which action shares that are not qualified shares may participate.