§415A-10  Death or disqualification of a
shareholder.  (a)  Upon the death of a shareholder of a professional
corporation, or if a shareholder of a professional corporation becomes a
disqualified person, or if shares of a professional corporation are transferred
by operation of law or court decree to a disqualified person, the shares of the
deceased shareholder or of the disqualified person may be transferred to a
qualified person and, if not so transferred, shall be purchased or redeemed by
the corporation to the extent of funds which may be legally made available for
such purchase; provided that upon the death of a sole shareholder of a
professional corporation, the personal representative of the estate of the
deceased sole shareholder may elect to dissolve the professional corporation,
by delivering for filing articles of dissolution signed by the personal
representative and the surviving officer of the professional corporation.  If
the personal representative elects to dissolve the professional corporation,
the personal representative may publish a notice to creditors.



(b)  If the price for the shares of the
corporation is not fixed by its articles of incorporation or bylaws or by
private agreement, the corporation within six months after such death or thirty
days after such disqualification or transfer, as the case may be, shall make a
written offer to pay for the shares at a specified price deemed by the
corporation to be the fair value thereof as of the date of the death,
disqualification, or transfer.  The offer shall be given to the personal
representative of the estate of a deceased shareholder or to the disqualified
shareholder or transferee and shall be accompanied by a balance sheet of the
corporation, as of the latest available date and not more than twelve months
prior to the making of the offer, and a profit and loss statement of the
corporation for the twelve-month period ended on the date of that balance
sheet.



(c)  If within thirty days after the date of
the written offer from the corporation the fair value of the shares is agreed
upon between the disqualified person and the corporation, payment therefor
shall be made within sixty days, or such other period as the parties may fix by
agreement, after the date of the offer, upon surrender of the certificate or
certificates representing the shares.  Upon payment of the agreed value the
disqualified person shall cease to have any interest in the shares.



(d)  If within such period of thirty days the
disqualified person and the corporation do not so agree, then the corporation,
within thirty days after receipt of written demand from the disqualified person
given within sixty days after the date of the corporation's written offer or at
its election at any time within such period of sixty days, shall file a
petition in any court of competent jurisdiction in the circuit where the
principal office of the corporation is located requesting that the fair value
of the shares be found and determined.  If the corporation fails to file a
petition as provided in this subsection, the disqualified person may file a
petition within sixty days after delivery of a written demand to the
corporation.  The disqualified person, wherever residing, shall be made a party
to the proceeding as an action against the person's shares quasi in rem.  A
copy of the petition shall be served on the disqualified person, if a resident
of this State, and shall be served by registered or certified mail on the
disqualified person, if a nonresident.  Service on nonresidents shall also be made
by publication as provided by law.  The jurisdiction of the court shall be
plenary and exclusive.  The disqualified person shall be entitled to judgment
against the corporation for the amount of the fair value of the person's shares
as of the date of death, disqualification, or transfer upon surrender to the
corporation of the certificate or certificates representing the shares.  The
court, in its discretion, may order that the judgment be paid in such
installments as the court may determine.  The court, if it so elects, may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value.  The appraisers shall have such power
and authority as shall be specified in the order of their appointment or an amendment
thereof.



(e)  The judgment shall include an allowance
for interest at such rate as the court may find to be fair and equitable in all
of the circumstances, from the date of death, disqualification, or transfer.



(f)  The costs and expenses of any such
proceeding shall be determined by the court and shall be assessed against the
corporation, but all or any part of the costs and expenses may be apportioned
and assessed as the court may deem equitable against the disqualified person if
the court finds that the action of the disqualified person in failing to accept
the offer was arbitrary or vexatious or not in good faith.  Such expenses shall
include reasonable compensation for and reasonable expenses of the appraisers,
but shall exclude the fees and expenses of counsel for and experts employed by
any party; but if the fair value of the shares as determined materially exceeds
the amount which the corporation offered to pay therefor, or if no offer was
made, the court in its discretion may award to the disqualified person such sum
as the court may determine to be reasonable compensation to any expert or
experts employed by the disqualified person in the proceeding.



(g)  If a purchase, redemption, or transfer of
the shares of a deceased or disqualified shareholder or of a transferee who is
a disqualified person is not completed within ten months after the death of the
deceased shareholder or five months after the disqualification or transfer, as
the case may be, the corporation shall cancel the shares on its books and the
disqualified person shall have no further interest as a shareholder in the
corporation other than the person's right to payment for the shares under this
section.



(h)  Shares acquired by a corporation pursuant
to payment of the agreed value therefor or to payment of the judgment entered
therefor, as provided in this section, may be held and disposed of by the
corporation as in the case of other treasury shares.



(i)  This section shall not require the
purchase of shares of a disqualified person where the period of
disqualification is for less than five months from the date of disqualification
or transfer.



(j)  Any provision regarding purchase,
redemption, or transfer of shares of a professional corporation contained in
the articles of incorporation, bylaws, or any private agreement shall be
specifically enforceable in the courts of this State.



(k)  Nothing contained herein shall prevent or
relieve a professional corporation from paying pension benefits or other
deferred compensation for services rendered to or on behalf of a former
shareholder as otherwise permitted by law.



(l)  Under this section, unless otherwise
stated, references to a "disqualified person" shall also be construed
to include deceased shareholders and personal representatives of deceased
shareholders. [L 1985, c 259, pt of §1; am L 1987, c 135, §116; am L 2001, c
129, §53; am L 2002, c 130, §74]



 



Cross References



 



  Vexatious litigants, see chapter 634J.