State Codes and Statutes
Statutes > Utah > Title-16 > Chapter-10a > 16-10a-73216-10a-732. Shareholder agreements.
(1) An agreement among the shareholders of a corporation that complies with thissection is effective among the shareholders and the corporation even though it is inconsistentwith one or more other provisions of this chapter in that it:
(a) eliminates the board of directors or restricts the discretion or powers of the board ofdirectors;
(b) governs the authorization or making of distributions whether or not in proportion toownership of shares, subject to the limitations in Section 16-10a-640;
(c) establishes who shall be directors or officers of the corporation, or their terms ofoffice or manner of selection or removal;
(d) governs, in general or in regard to specific matters, the exercise or division of votingpower by or between the shareholders and directors or by or among any of them, including use ofweighted voting rights or director proxies;
(e) establishes the terms and conditions of any agreement for the transfer or use ofproperty or the provision of services between the corporation and any shareholder, director,officer or employee of the corporation or among any of them;
(f) transfers to one or more shareholders or other persons all or part of the authority toexercise the corporate powers or to manage the business and affairs of the corporation, includingthe resolution of any issue about which there exists a deadlock among directors or shareholders;
(g) requires dissolution of the corporation at the request of one or more of theshareholders or upon the occurrence of a specified event or contingency; or
(h) otherwise governs the exercise of the corporate powers or the management of thebusiness and affairs of the corporation or the relationship among the shareholders, the directorsand the corporation, or among any of them, and is not contrary to public policy.
(2) An agreement authorized by this section shall be:
(a) set forth:
(i) in the articles of incorporation or bylaws and approved by all persons who areshareholders at the time of the agreement; or
(ii) in a written agreement that is signed by all persons who are shareholders at the timeof the agreement and is made known to the corporation;
(b) subject to amendment only by all persons who are shareholders at the time of theamendment, unless the agreement provides otherwise; and
(c) valid for 10 years, unless the agreement provides otherwise.
(3) The existence of an agreement authorized by this section shall be notedconspicuously on the front or back of each certificate for outstanding shares or on theinformation statement required by Section 16-10a-626(2). If at the time of the agreement thecorporation has shares outstanding represented by certificates, the corporation shall recall theoutstanding certificates and issue substitute certificates that comply with this subsection. Thefailure to note the existence of the agreement on the certificate or information statement does notaffect the validity of the agreement or any action taken pursuant to it. Any purchaser of shareswho, at the time of purchase, did not have knowledge of the existence of the agreement is entitledto rescission of the purchase. A purchaser is considered to have knowledge of the existence ofthe agreement if its existence is noted on the certificate or information statement for the shares incompliance with this subsection and, if the shares are not represented by a certificate, theinformation statement is delivered to the purchaser at or prior to the time of purchase of the
shares. An action to enforce the right of rescission authorized by this subsection shall becommenced within the earlier of 90 days after discovery of the existence of the agreement or twoyears after the time of purchase of the shares.
(4) An agreement authorized by this section shall cease to be effective when shares of thecorporation are listed on a national securities exchange or regularly traded in a market maintainedby one or more members of a national or affiliated securities association. If the agreement ceasesto be effective for any reason, the board of directors may, if the agreement is contained orreferred to in the corporation's articles of incorporation or bylaws, adopt an amendment to thearticles of incorporation or bylaws, without shareholder action, to delete the agreement and anyreferences to it.
(5) An agreement authorized by this section that limits the discretion or powers of theboard of directors shall relieve the directors of, and impose upon the person or persons in whomthe discretion or powers are vested, liability for acts or omissions imposed by laws on directors tothe extent that the discretion or powers of the directors are limited by the agreement.
(6) The existence or performance of an agreement authorized by this section may not bea ground for imposing personal liability on any shareholder for the acts or debts of thecorporation even if the agreement or its performance treats the corporation as if it were apartnership or results in failure to observe the corporate formalities otherwise applicable to thematters governed by the agreement.
(7) Incorporators or subscribers for shares may act as shareholders with respect to anagreement authorized by this section if no shares have been issued when the agreement is made.
Amended by Chapter 378, 2010 General Session
