An Act To Update the Maine Business Corporation Act
Maine Legislature, Session 123, LD 1741
Committee: Judiciary
Sponsors: HOBBINS, SIMPSON, BRYANT, CASA VANT, DILL
Amends: 13-C MRSA §102, 13-C MRSA §104, 13-C MRSA §701, 13-C MRSA §703, 13-C MRSA §704, 13-C MRSA §730, 13-C MRSA §731, 13-C MRSA §757, 13-C MRSA §801, 13-C MRSA §805, 13-C MRSA §810, 13-C MRSA §831, 13-C MRSA §832, 13-C MRSA §842, 13-C MRSA §843, 13-C MRSA §8, 13-C MRSA §854, 13-C MRSA §871, 13-C MRSA §872, 13-C MRSA §873, 13-C MRSA §874, 13-C MRSA §1303, 13-C MRSA §1321, 13-C MRSA §1322-A, 13-C MRSA §1324, 13-C MRSA §1325, 13-C MRSA §1430, 13-C MRSA §1432, 13-C MRSA §1434, 13-C MRSA §1604, 13-C MRSA §1605

Legislative Document 
No. 1741 
S.P.608 
March 27,2007 
An Act To Update the Maine Business Corporation Act 
Reference to the Committee on Judiciary suggested and ordered printed. 
Presented by Senator HOBBINS of York. 
JOY J. O'BRIEN 
Secretary of the Senate 
Cosponsored by Representative SIMPSON of Auburn and Representatives: BRYANT of 
Windham, CASA VANT of Biddeford, DILL of Cape Elizabeth. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 13-C MRSA §102, sub-§l1-A is enacted to read: 
ll-A. Expenses. 
"Expenses" means reasonable expenses of any kind that are 
incurred in connection with a matter. 
Sec. 2. 13-C MRSA §102, sub-§30-A is enacted to read: 
30-A. Public corporation. "Public corporation" means a corporation that has shares 
listed on a national securities exchange or has a class of equity securities registered under 
Section 12 of the federal Securities Exchange Act of 1934, as amended. 
Sec.3. 13-C MRSA §102, sub-§32-A is enacted to read: 
32-A. Qualified director. "Qualified director" is defined in this subsection. 
A. As used in this subsection, unless the context otherwise indicates, the following 
terms have the following meanings: 
(1) 
"Director's conflicting-interest transaction" has the same meaning as in 
section 871; 
(2) "Material interest" means an actual or potential benefit or detriment, other 
than one that would devolve on the corporation or the shareholders generally, that 
would reasonably be expected to impair the objectivity of the director's judgment 
when participating in the action to be taken; and 
(3) "Material relationship" means a familial. financial, professional, employment 
or other relationship that would reasonably be expected to impair the objectivity 
of the director's judgment when participating in the action to be taken. 
B. "Qualified director" means a person who. at the time action is to be taken under: 
(1) Section 755, does not have: 
(a) A material interest in the outcome ofthe proceeding; or 
(b) A matmal relationship with a person who has such an interest; 
(2) SectiolllJ 854 or 856: 
(a) Is not a party to the proceeding; 
(b) I'S: not a director as to whom a transaction is a director's conflicting-
interest transaction or who sought a disclaimer of the corporation's interest in 
a business: opportunity under section 881, which transaction or disclaimer is 
challenged in the proceeding; and 
(c) 
Does not have a material relationship with a director described in 
division (a) or (b); 
(3) Section 873, is not a director: 
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(a) As to whom the transaction is a director's conflicting-interest transaction; 
or 
(b) Who has a material relationship with another director as to whom the 
transaction is a director's conflicting-interest transaction; or 
(4) Section 881, would be a qualified director under subparagraph (3) if the 
business opportunity was a director's conflicting-interest transaction. 
C. 
The presence of one or more of the following circumstances does not 
automatically prevent a director from being a qualified director: 
(1) Nomination or election of the director to the board by a director who is not a 
qualified director with respect to the matter, or by any person who has a material 
relationship with that director, acting alone or participating with others; 
(2) Service as a director of another corporation of which a director who is not a 
qualified director with respect to the matter or any individual who has a material 
relationship with that director is or was also a director; or 
(3) With respect to action to be taken under section 755, status as a named 
defendant, as a director against whom action is demanded or as a director who 
approved the conduct being challenged. 
Sec. 4. 13-C MRSA §104, as enacted by PL 2001, c. 640, Pt. A, §2 and as 
affected by Pt. B, §7, is amended to read: 
§104. Number of shareholders; householding 
1. Identified as one shareholder. For purposes of this Act, the following identified 
as a shareholder in a corporation's current record of shareholders constitutes one 
shareholder: 
A. 
Three or fewer co-owners; 
B. 
A corporation, partnership, trust, estate or other entity; and 
C. 
The trustees, guardians, custodians or other fiduciaries of a single trust, estate, or 
account. 
2. 
Registered in substantially similar names. 
For purposes of this Act, 
sharcholdings registered in substantially similar names constitute one shareholder if it is 
reasonable to believe that the names represent the same person. 
3. Householding. A corporation is considered to have delivered written notice or 
mlY other report or statement under this Act, the articles of incorporation or the bylaws to 
all shareholders who share a common address if: 
A. 
The corporation delivers one copy of the notice, report or statement to the 
common address; 
B. The corporation addresses the notice, report or statement to those shareholders 
either as a~p or to each of those shareholders individually or to the shareholders 
in a form to which each of those shareholders has consented; and 
C. Each of those shareholders consents to delivery of a single copy of such notice, 
report or statement to the shareholders' common address. 
Consent given under paragraph C is revocable by any shareholder who delivers written 
notice of revocation to the comoration. If written notice of revocation is delivered, the 
comoration shall begin providing individual notices, reports or other statements to the 
revoking shareholder no later than 30 days after delivery of the written notice of 
revocation. 
A shareholder who fails to object by written notice to the corporation within 60 days of 
written notice by the comoration of its intention to send single copies of notices, reports 
or statements to shareholders who share a common address as permitted by paragraph A 
is deemed to have consented to receiving a single copy at the common address. 
Sec.5. 13-C MRSA §701, sub-§l, as enacted by PL 2001, c. 640, Pt. A, §2 and 
as affected by Pt. B, § 7, is amended to read: 
1. Annual meeting required; exceptions. 
A Unless directors are elected by 
written consent in lieu of an annual meeting as permitted by section 704, a corporation 
shall hold a meeting of shareholders annually at a time stated in or fixed in accordance 
with its byla\vs the bylaws, except that, if a corporation's articles of incorporation 
authorize shareholders to cumulate their votes when electing directors pursuant to section 
730, subsection 3, directors may not be elected by less than unanimous written consent. 
Sec. 6. 13-C MRSA §703, sub-§l, ~A, as enacted by PL 2001, c. 640, Pt. A, §2 
and as affected by Pt. B, §7, is amended to read: 
A. 
On application of any shareholder of the corporation entitled to participate in an 
annual meeting if an annual meeting was not held or action by written consent in lieu 
of an annual meeting did not become effective within the earlier of 6 months after the 
end of the corporation's fiscal year or 15 months after its last annual meeting; or 
Sec. 7. 13-C MRSA §704, as enacted by PL 2001, c. 640, Pt. A, §2 and as 
affected by Pt. B, §7, is amended to read: 
§704. Action without meeting 
1. Permissible action by unanimous consent. Action required or permitted by this 
Act to be taken at a shareholders' meeting may be taken without a meeting if the action is 
taken by all the shareholders entitled to vote on the action. The action must be evidenced 
by one or more written consents bearing the date of signature and describing the action 
taken, signed by all the shareholders entitled to vote on the action and delivered to the 
corporation for inclusion in the minutes or filing with the corporate records. 
I-A. Permissible action by majority consent. The articles of incorporation mav 
provide that any action required or permitted by this Act to be taken at a shareholders' 
meeting may be taken without a meeting, and without prior notice, if consent in writing 
setting forth the action so taken is signed by the holders of outstanding shares having not 
less than the minimum number of votes that would be required to authorize or take the 
action at a meeting at which all shares entitled to vote on the action were present and 
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voted. The written consent must bear the date of signature of the shareholder who signs 
the consent and be delivered to the corporation for inclusion in the minutes or filing with 
the corporate records. 
2. Record date. If not otherwise fixed under section 703 or 707, and if prior board 
action is not required regarding the action to be taken without a meeting, the record date 
for determining the shareholders entitled to take action without a meeting is the date the 
first shareholder signs the consent under subsection 1. Written oonsent is not first date on 
which a signed written consent is delivered to the corporation. If not otherwise fixed 
under section 707 and if prior board action is required regarding the action to be taken 
without a meeting, the record date is the close of business on the day the resolution of the 
board taking such prior action is adopted. Written consent is not effective to take the 
corporate action referred to in the consent unless, within 60 days of the earliest date 
appearing on which a consent delivered to the corporation in the maooer as required by 
this section was signed, written consents signed by all a sufficient number of shareholders 
entitled to yote on to take the action are reoeiyed by have been delivered to the 
corporation. A written consent may be revoked by a writing to that effect reoeiyed by the 
oorporation prior to receipt by delivered to the corporation ef before unrevoked written 
consents sufficient in number to take the corporate action are delivered to the corporation. 
3. Effect of signed consent. A consent signed under pursuant to the provisions of 
this section has the effect of a vote taken at a meeting ¥ete and may be described as such 
in any document. Unless the articles of incorporation, the bylaws or a resolution of the 
board of directors provides for a reasonable delay to permit tabulation of written 
consents, the action taken by written consent is effective when written consents signed by 
a sufficient number of shareholders to take the action are delivered to the corporation. 
4. Notice to nonvoting shareholders. If this Act requires that notice of a proposed 
action be given to nonvoting shareholders and the action is to be taken by unanimous 
written consent of the voting shareholders, the corporation must give its nonvoting 
shareholders written notice of the proposed action at least 10 days before the action is 
taken. The notice must contain or be accornpanied by the same material that, Uflder this 
Act, would have Been required to Be sent to nonvoting shareholders in a notice of meeting 
at which the proposed action would haye Been sUBrrHtted to the shareholders for aotion. 
not more than 10 days after: 
A. 
Written consents sufficient to take the action have been delivered to the 
corporation; or 
B. The date that tabulation of consents is completed pursuant to an authorization 
under subsection 3, as long as that date is later than that in paragraph A. 
The notice must reasonably describe the action taken and contain or be accompanied by 
the same material that, under any provision of this Act, would have been required to be 
sent to nonvoting shareholders in a notice of a meeting at which the proposed action 
would have been ~ubmitted to the shareholders for action. 
5. Notice of action to nonconsenting voting shareholders. If action is taken by 
less than unanimous written consent of the voting shareholders, the corporation must give 
its nonconsenting voting shareholders written notice of the action not more than 10 days 
after: 
A. 
Written consents sufficient to take the action have been delivered to the 
corporation; or 
B. The date that tabulation of consents is completed pursuant to an authorization 
under subsection 3, as long as that date is later than that in paragraph A. 
The notice must reasonably describe the action taken and contain or be accompanied by 
the same material that, under any provision of this Act, would have been required to be 
sent to voting shareholders in a notice of a meeting at which the action would have been 
submitted to the shareholders for action. 
6. Effect of failure to provide notice. The notice requirements in subsections 4 and 
may not delay the effectiveness of actions taken by written consent. A failure to 
comply with such notice requirements does not invalidate actions taken by written 
consent. This subsection may not be construed to limit judicial power to fashion any 
appropriate remedy in favor of a shareholder adversely affected by a failure to give such 
notice within the required time period. 
7. Consent by electronic transmission. An electronic transmission may be used to 
consent to an action if the electronic transmission contains or is accompanied by 
information from which the corporation can determine the date on which the electronic 
transmission was signed and that the electronic transmission was authorized by the 
shareholder, the shareholder's agent or the shareholder's attorney-in-fact. 
8. Delivery of a written consent. Delivery of a written consent to the corporation's 
clerk or registered agent at its registered office or to the corporation at its principal office 
is considered delivery to the corporation for purposes of this section. 
Sec. 8. 13-C MRSA §730, sub-§3, as enacted by PL 2001, c. 640, Pt. A, §2 and 
as affected by Pt. B, § 7, is amended to read: 
3. Cumulate votes; method. A statement included in a corporation's articles of 
incorporation that .!!.all or a designated voting group of shareholders ~are entitled to 
cumulate their votes for directors," or containing words of similar import, means that the 
shareholders designated are entitled to multiply the number of votes they are entitled to 
cast by the number of directors for whom they are entitled to vote and cast the product for 
a single candidate or distribute the product among 2 or more candidates. 
Sec. 9. 13-C MRSA §731, sub-§l, as enacted by PL 2001, c. 640, Pt. A, §2 and 
as affected by Pt. B, § 7, is amended to read: 
1. Appointment of inspector. A public corporation flaying allY sbares listed on a 
national seeurities exebange or regHlarly traded in a market maintained by one or more 
members of a national or affiliated seeHrities assoeiation shall, and any other corporation 
may, appoint one or more inspectors to act at a meeting of shareholders and make a 
written report of the inspectors' determinations. Each inspector shall take and sign an 
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loath faithfully to execute the duties of inspector with strict impartiality and according to 
the best of the inspector's ability. 
Sec. 10. 13-C MRS A §743, sub-§4, as enacted by PL 2001, c. 640, Pt. A, §2 and 
as affected by Pt. B, §7, is amended to read: 
4. Agreement ceases to be effective. An agreement authorized by this section 
ceases to be effective when shares of the corporation are listed on a national securities 
exchange or regularly traded in a market maintained by one or more members of a 
national or affiliated securities association the corporation becomes a public corporation. 
If the agreement ceases to be effective for any reason, the board of directors may, if the 
agreement is contained or referred to in the corporation's articles of incorporation or 
bylaws, adopt an amendment to the articles of incorporation or bylaws, without 
shareholder action, to delete the agreement and any references to it. 
Sec. 11. 13-C MRS A §755, as enacted by PL 2001, c. 640, Pt. A, §2 and as 
affected by Pt. B, § 7, is amended to read: 
§755. Dismissal 
1. Dismissal of proceeding. The court, on motion by the corporation, shall dismiss 
a derivative proceeding if one of the groups specified in paragraphs A to C determines, in 
good faith, after conducting a reasonable inquiry upon which its conclusions are based, 
that the maintenance of the derivative proceeding is not in the best interests of the 
corporation: 
A. 
A panel of one or more independent persons individuals appointed by the court 
on motion of the corporation. The plaintiff has the burden of proving that the panel 
or the determination did not meet the standards required in this subsection; 
B. 
A majority of independent qualified directors present and voting at a meeting of 
the board of directors if the independent qualified directors constitute a quorum; or 
C. 
A majority of a committee consisting of 2 or more independent qualified 
directors appointed by majority vote of independent qualified directors present and 
voting at a meeting of the board of directors, whether or not such indepeadent 
qualified directors constituted a quorum. 
2. 
lodepeodeoee of diFeetoF. 
Grouads for a director to be considered not 
independent for purposes of this seetion do not inelude: 
A. 
The nemination or eleetion of the director by persons who are defendants in the 
derivative proceeding-eragainst '""hom action is demanded; 
B. 
The naming of the director as a defeadant in the deri ... 'atil,'e proceeding or as a 
perSOfJ against , .. "hom action if) demanded; or 
b. 
The approval by the direotor of the aot being challeaged in the derivative 
proceeding or demand if the act resulted in no personal benefit to the director. 
3. 
Complaint must allege with particularity. 
If a derivative proceeding is 
commenced after a determination has been made rejecting a demand by a shareholder, the 
complaint must allege with particularity facts establishing either that a majority of the 
board of directors did not consist of independent qualified directors at the time the 
determination was made or that the requirements of subsection 1 have not been met. 
4. Burden of proof. If a majority of the board of directors dees net eensist consisted 
of independent qualified directors at the time the determination is made, the eefl3eratien 
has the am:den ef flrelling that the reqHirements ef suaseetien 1 Halle aeen met. If a 
majerity ef the aeard ef direeters eensists ef independent direeters at the time the 
determinatien is was made, the plaintiff has the burden of proving that the requirements 
of subsection 1 have not been met; otherwise, the corporation has the burden of proving 
that the requirements of subsection 1 have been met. 
Sec. 12. 13-C MRSA §757, as enacted by PL 2001, c. 640, Pt. A, §2 and as 
affected by Pt. B, §7, is amended to read: 
§757. Payment of expenses 
On termination of the derivative proceeding the court may: 
1. Corporation to pay plaintiffs expenses. Order the corporation to pay the 
plaintiffs reasenaale expenses, ineluding attemey's fees, incurred in the proceeding if it 
finds that the proceeding has resulted in a substantial benefit to the corporation; 
2. Plaintiff to pay defendant's expenses. Order the plaintiff to pay any defendant's 
reasenaale expenses, ineluding attemey's fees, incurred in defending the proceeding if it 
finds that the proceeding was commenced or maintained without reasonable cause or for 
an improper purpose; or 
3. 
Improper purpose. 
Order a party to pay an opposing party's reasenaale 
expenses, ineluding atteme;"s fees, incurred because of the filing of a pleading, motion or 
other paper, if it finds after reasonable inquiry that the pleading, motion or other paper 
was not well grounded in fact or warranted by existing law or a good faith argument for 
the extension, modification or reversal of existing law and was interposed for an improper 
purpose, such as to harass or cause unnecessary delay or needless increase in the cost of 
litigation. 
Sec. 13. 13-C MRSA §801, as enacted by PL 2001, c. 640, Pt. A, §2 and as 
affected by Pt. B, §7, is amended to read: 
§801. Requirement; functions of board of directors 
1. Board of directors. Except as provided in section 743, a corporation must have a 
board of directors. 
2. Corporate powers. All corporate powers and functions must be exercised by or 
under the authority of, and the business and affairs of the corporation managed under the 
direction of, the corporation's board of directors, subject to any limitation set forth in an 
agreement authorized under section 743 or in the corporation's articles of incorporation. 
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Sec. 14. 13-C MRSA §805, sub-§2, as enacted by PL 2001, c. 640, Pt. A, §2 and 
as affected by Pt. B, §7, is amended to read: 
2. Terms of subsequent directors. The terms of all other directors expire at the 
next, or if their terms are staggered in accordance with section 806, at the applicable 2nd 
or 3rd, annual shareholders' meeting following their election uflless their tt!IffH:S are 
staggered uflder seotiofl 806. 
Sec. 15. 13-C MRS A §807, as enacted by PL 2001, c. 640, Pt. A, §2 and as 
affected by Pt. B, §7, is amended to read: 
§807. Resignation of directors 
1. Notice of resignation. A director may resign at any time by delivering ~ written 
Hetiee resignation to the corporation's board of directors or its chair or to the clerk of the 
corporation. 
2. Effective. A resignation is effective when the Hetiee resignation is delivered 
unless the Hetiee resignation specifies a later effective date, including, but not limited to, 
the date on which some specified future event occurs. 
A resignation that is conditioned upon failing to receive a specified vote for election as a 
director may provide that the resignation is irrevocable. 
Sec. 16. 13-C MRSA §810, sub-§2, as enacted by PL 2001, c. 640, Pt. A, §2 and 
as affected by Pt. B, § 7, is amended to read: 
2. Voting group. If the vacant office was held by a director elected by a voting 
group of shareholders, only the holders of shares of that voting group are entitled to vote 
to fill the vacancy if it is filled by the shareholders and only the directors elected by that 
voting group are entitled to fill the vacancy if it is filled by the directors. 
Sec. 17. 13-C MRSA §831, sub-§7 is enacted to read: 
7. Disclosure. In discharging board or committee duties, a director shall disclose, or 
cause to be disclosed, to the other board or committee members information not already 
known by them but known by the director to be material to the discharge of their 
decision-making or oversight functions, except that disclosure is not required to the 
extent that the director reasonably believes that doing so would violate a duty imposed 
under law, a legally enforceable obligation of confidentiality or a professional ethics rule. 
Sec. 18. 13-C MRSA §832, sub-§l, ~A, as enacted by PL 2001, c. 640, Pt. A, §2 
and as affected by Pt. B, §7, is repealed and the following enacted in its place: 
A. A defense interposed by the director does not preclude liability if the defense is 
based on: 
(1) Any provision in the corporation's articles of incorporation authorized by 
section 202, subsection 2, paragraph D; 
(2) The protection afforded by section 872 for action taken in compliance with 
section 873 or 874; or 
(3) The protection afforded by section 881; and 
Sec. 19. 13-C MRSA §842, as enacted by PL 2001, c. 640, Pt. A, §2 and as 
affected by Pt. B, §7, is amended to read: 
§842. Functions of officers 
1. Sources of duties. An officer has the authority and shall perform the duties set 
forth in the bylaws or, to the extent consistent with the bylaws, the ffiHi6s functions 
prescribed by the corporation's board of directors or by direction of an officer authorized 
by the corporation's board of directors to prescribe the ffiHi6s functions of other officers. 
2. 
President's duties. 
Unless otherwise provided by the bylaws, the officer 
designated as president has authority to institute or defend legal proceedings whenever 
the directors or shareholders are deadlocked. 
Unless they have reason to believe 
otherwise, persons dealing with a corporation are entitled to assume that the officer 
designated as president has authority to make, on the corporation's behalf, all contracts 
that are within the ordinary course of those businesses in which the corporation is already 
engaged. 
Sec. 20. 13-C MRSA §843, sub-§I, as enacted by PL 2001, c. 640, Pt. A, §2 and 
as affected by Pt. B, § 7, is amended to read: 
1. Basic standard of conduct. An officer~ when performing in the capacity of an 
officer shall, has the duty to act: 
A. 
In good faith; 
B. 
With the care that a person in a like position would reasonably exercise under 
similar circumstances; and 
C. 
In a manner the officer reasonably believes to be in the best interests of the 
corporation. 
Sec. 21. 13-C MRSA §8S1, sub-§3, as enacted by PL 2001, c. 640, Pt. A, §2 and 
as affected by Pt. B, § 7, is repealed. 
Sec. 22. 13-C MRSA §8S1, sub-§4, as enacted by PL 2001, c. 640, Pt. A, §2 and 
as affected by Pt. B, §7, is repealed. 
Sec. 23. 13-C MRSA §8S1, sub-§S, as enacted by PL 2001, c. 640, Pt. A, §2 and 
as affected by Pt. B, § 7, is amended to read: 
5. Liability. "Liability" means the obligation to pay a judgment, settlement, penalty, 
fine, including an excise tax assessed with respect to an employee benefit plan, or 
reasonable expenses incurred with respect to a proceeding. 
Sec. 24. 13-C MRSA §8S4, sub-§I, as amended by PL 2003, c. 344, Pt. B, §68, 
is further amended to read: 
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1. Conditions. A corporation may, before final disposition of a proceeding, advance 
funds to pay for or reimburse the reasoaable expenses incurred by a direct Of in 
connection with the proceeding by an individual who is a party to a the proceeding 
because the director is a director of that corporatioa that individual is a member of the 
board of directors, if the director individual delivers to the corporation: 
A. 
A written affirmation of the director's individual's good faith belief that the 
director individual has met the relevant standard of conduct described in section 852, 
subsection 1 or that the proceeding involves conduct for which liability has been 
eliminated under a provision of the corporation's articles of incorporation as 
authorized by section 202, subsection 2, paragraph D; and 
B. 
The director's individual's written undertaking to repay any funds advanced if the 
director individual is not entitled to mandatory indemnification under section 853 and 
it is ultimately determined under section 855 or 856 that the director individual has 
not met the relevant standard of conduct described in section 852. 
Sec. 25. 13-C MRSA §854, sub-§3, as amended by PL 2003, c. 344, Pt. B, §68, 
is further amended to read: 
3. Authorization process. Authorizations under this section may be made: 
A. 
By the corporation's board of directors: 
(1) If there are 2 or more disiaterested qualified directors, by a majority vote of 
all the disiaterested qualified directors, a majority of whom for this purpose 
constitutes a quorum, or by a majority of the members of a committee of 2 or 
more disirnerested qualified directors appointed by a majority vote of all the 
disiaterested qualified directors; or 
(2) 
If there are fewer than 2 disirnerested qualified directors, by the vote 
necessary for action by the corporation's board of directors in accordance with 
section 825, subsection 3, in which authorization directors who do not qualify as 
disiaterested qualified directors may participate; or 
B. 
By the shareholders, but shares owned by or voted under the control of a director 
who at the time dees is not q~alify as a disiaterested a qualified director may not be 
voted on the authorization. 
Sec. 26. 13-C MRS A §856, sub-§2, as amended by PL 2003, c. 344, Pt. B, §68, 
is further amended to read: 
2. 
Determination of permissibility. 
A determination under subsection 1 that 
indemnification is permissible must be made: 
A. 
If there are 2 or more disiaterested qualified directors, by the corporation's board 
of directors by a majority vote of all the disinterested qualified directors, a majority 
of whom for this purpose constitutes a quorum, or by a majority of the members of a 
committee of 2 or more disiaterested qualified directors appointed by a majority vote 
of all the disiaterested qualified directors; 
B. 
By special legal counsel: 
(1) Selected in the manner prescribed in paragraph A; or 
(2) If there are fewer than 2 disinterested qualified directors, selected by the 
corporation's board of directors in which selection directors who de are not 
qualify as disinterested qualified directors may participate; or 
C. 
By the shareholders, but shares owned by or voted under the control of a director 
who at the time dees ~ not qualify as a disinterested a qualified director may not be 
voted on the determination. 
Sec. 27. 13-C MRS A §856, sub-§3, as amended by PL 2003, c. 344, Pt. B, §68, 
is further amended to read: 
3. Authorization process. Authorization of indemnification must be made in the 
same manner as the determination that indemnification is permissible, except that if there 
are fewer than 2 disinterested qualified directors or if the determination is made by 
special legal counsel, authorization of indemnification must be made by those entitled to 
select special legal counsel under subsection 2, paragraph B, subparagraph (2) to select 
sJ3eciallegal cOUflsel. 
Sec. 28. 13-C MRSA §871, as corrected by RR 2001, c. 2, Pt. A, §20 and as 
affected by §21, is amended to read: 
§871. Definitions 
As used in this subchapter, unless the context otherwise indicates, the following 
terms have the following meanings. 
1. COBtlietiBg iBterest. "Conflicting interest" with resJ3ect to a cOfJ3oration means 
the interest a director of the cOfJ3oration has resJ3ecting a transaction effected or J3roJ3osed 
to be effected by the cOfJ3oration or by a subsidiary of the cOfJ3oration or any other entity 
in which the cOfJ3oration has a controlling interest if: 
A. 
Whether or not the transaction is brought before the cOfJ3oration's board of 
directors for action, the director knows at the time of comInitment that the director or 
a related J3erson is a J3arty to the transaction or has a beneficial financial interest in or 
so closely liaked to the traflsaction and of such financial significance to the director 
or a related J3erson that the interest would reasonably be e~(J3ected to exert an 
influence on the director's judgment if the director were called UJ30n to ... 'ote on the 
transaction; or 
B. 
The transaction is brought, or is of such character and significance to the 
cOfJ3oration that it would in the normal course be brought, before the cOfJ3oration's 
board of directors for action, and the director knows at the time of commitment that 
any of the following J3ersons is either a J38fty to the transaction or has a beneficial 
financial interest in or so closely !iaked to the transaction and of such financial 
significance to the J3erson that the interest would reasonably be eXJ3ected to exert an 
influence on the director's judgment if the director were called UJ30n to vote on the 
transaction: 
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(l) An entity, other than the corporation, of which the director is a director, 
general partner, agent or employee; 
(2) A person that controls one or more of the entities specified in subparagraph 
(1) or an entity that is controlled by, or is under common control with, one or 
more ofthe entities specified in subparagraph (1); or 
(3) An individual who is a general partner, principal or employer of the director. 
I-A. Control. "Control" means: 
A. Having the power, directly or indirectly, to elect or remove a majority of the 
members of the board of directors or other governing body of an entity, whether 
through the ownership of voting shares or interests, by contract or otherwise; or 
B. 
Being subject to a majority of the risk of loss from the entity's activities or 
entitled to receive a majority of the entity's residual returns. 
I-B. Controlled by. "Controlled by" means a person subject to control by another 
person. 
2. 
Director's conflicting-interest transaction. 
"Director's conflicting-interest 
transaction" 'Nith respect to a corporation means a transaction effected or proposed to be 
effected by the corporation or by a subsidiary of the corporation or any other entity in 
which the corporation has a controlling interest respecting which a director of the 
corporation has a conflicting interest. means, as effected or proposed to be effected by a 
corporation or by an entity controlled by a corporation, a transaction: 
A. To which, at the relevant time, the director is a party; 
B. That the director knew of, at the relevant time, and in which the director had a 
material financial interest, known by the director; or 
C. To which a related person was a party or had a material financial interest in, 
known, at the relevant time, by the director. 
2-A. Material financial interest. "Material financial interest" means a financial 
interest in a transaction that would reasonably be expected to impair the objectivity of the 
director's judgment when participating in action on the authorization of the transaction. 
3. Related person. "Related person" means: 
A. 
The director's spouse, or the parent or sibling of the spouse; the director's child, 
grandchild, sibling or parent, or the spouse of that child, grandchild, sibling or parent; 
an individual haying the same home as the director; or a trust or estate of ,<, .. hich an 
indiyidual specified in this paragraph is a substantial beneficiary; er 
B. 
A trust, estate, incapacitated person, conservatee or minor of which the director 
is a fiduciary. 
C. 
A child, stepchild, grandchild, parent, stepparent, grandparent, sibling, 
stepsibling, half sibling, aunt, uncle, niece or nephew, or spouse of any of those 
persons, of the director or of the director's spouse; 
D. An individual living in the same home as the director; 
E. An entity, other than the corporation or an entity controlled by the corporation, 
controlled by the director or any person specified in paragraph A, C or D; 
F. A domestic or foreign: 
(1) Business or nonprofit corporation, other than the corporation or an entity 
controlled by the corporation, of which the director is a director; 
(2) Unincorporated entity of which the director is a general partner or a member 
of the governing body; or 
(3) Individual, trust or estate for whom or of which the director is a trustee, 
guardian, personal representative or like fiduciary; or 
G. A person that is, or an entity that is controlled by, an employer of the director. 
3-A. Relevant time. "Relevant time," with regards to a transaction, means: 
A. 
The time at which the directors' action regarding the transaction is taken m 
compliance with section 873; or 
B. Ifthe transaction is not brought before the board of directors of the corporation, or 
its committee, for action under section 873, the time at which the corporation or an 
entity controlled by the corporation becomes legally obligated to consummate the 
transaction. 
4. Required disclosure. "Required disclosure" means disclosure by the director 
'Nho has a cOflflictiflg imerest of: 
A. 
The existence and nature of the director's conflicting interest; and 
B. 
All facts known to the director reSpe6tiflg regarding the subject matter of the 
transaction that afl ordiJlaFily prudeflt persofl a director without such conflicting 
interest would reasonably believe to be material to a judgmeflt about in deciding 
whether e-F-ilffi to proceed with the transaction. 
s. Time af eammitmeHt. "Time of commitmeflt" respectiflg a traflsactiofl meaflS the 
time whefl the traflsaetiofl is consummated or, if made pursuant to contract, the time when 
the corporatiofl or its subsidiary or the efltity ifl which it has a cOfltrolliflg iflterest 
becomes contraotually obligated so that its unilateral withdra'Nal from the traflsactiofl 
would email sigaificam loss, liability or other damage. 
Sec. 29. 13-C MRSA §872, as amended by PL 2003, c. 344, Pt. B, §69, is further 
amended to read: 
§872. Judicial action 
1. Nonconflicting-interest transaction not actionable. A transaction effected or 
proposed to be effected by a corporation or by a subsidiary of the corporatiofl or aflY other 
efltity ifl which the corporatiofl has a cOfltrolliflg iflterest that is flOt a director's 
cOflflictiflg iflterest traflsaetiofl may flOt be enj oifled, set aside or give rise to afl award of 
damages or other sanetiofls ifl a proceediflg by a shareholder or by or ifl the right of the 
• 
• 
corporation because a director of the corporation or any person with 'Nhom or 'Nhich the 
director has a personal, economic or other association has an interest in the transaction~ 
by an entity controlled by a corporation, may not be the subject of equitable relief, or give 
rise to an award of damages or other sanctions against a director of the corporation, in a 
proceeding by a shareholder or by or in the right of the corporation on the ground that the 
director has an interest regarding the transaction if it is not a director's conflicting-interest 
transaction. 
2. Conflicting-interest transaction not actionable if standards met. A director's 
conflicting-interest transaction may not be enjoined, set aside the subject of equitable 
relief or give rise to an award of damages or other sanctions in a proceeding by a 
shareholder or by or in the right of the corporation because the director or any person 
'Nith whom or which the director has a personal, economic or other association has an 
interest in against a director of the corporation, in a proceeding by a shareholder or by or 
in the right of the corporation, on the ground that the director has an interest regarding the 
transaction~ if: 
A. 
Directors' action respecting regarding the transaction was at any time taken in 
compliance with section 873 at any time; 
B. 
Shareholders' action respecting regarding the transaction was at any time taken 
in compliance with section 874 at any time; or 
C. 
The transaction, judged according to the circumstances at the relevant time ef 
commitment, is established to have been fair to the corporation. For purposes of this 
paragraph, a transaction is fair to a corporation if, taken as a whole, the transaction 
was beneficial to the corporation, taking into appropriate account whether the 
transaction was: 
(1) Fair in terms of the director's dealings with the corporation; and 
(2) Comparable to what might have been obtained in an arms-length transaction, 
given the consideration paid or received by the corporation. 
Sec. 30. 13-C MRSA §873, as amended by PL 2003, c. 344, Pt. B, §§70 and 71, is 
further amended to read: 
§873. Directors' action 
1. Action regarding transaction. Directors' action respecting regarding a director's 
conflicting-interest transaction is effective for purposes of section 872, subsection 2, 
paragraph A if the transaction received has been authorized by the affirmative vote of a 
majority, but no fewer than 2, of those qualified directors on the corporation's board of 
directors or on a duly empowered committee of the board of the qualified directors who 
voted on the transaction~ after either required disclosure to them, to Qy the extent the 
conflicted director of information was not already known by them, or those qualified 
directors, or after modified disclosure in compliance with subsection 1 2-A, except that 
action by a committee is effective under this section only if: 
A. 
All of the committee's members are The qualified directors have deliberated and 
voted outside the presence of and without the participation by any other director; and 
B. 
The committee's members are either all the qualified directors on the board or 
are appointed by the affirmative vote of a maj ority of the qualified direotors on the 
beafd.., When the action has been taken by a committee, all members of the committee 
were qualified directors and either: 
(1) The committee was composed of all the qualified directors on the board of 
directors; or 
(2) The members of the committee were appointed by the affirmative vote of a 
majority of the qualified directors on the board. 
2. Diselosure; eOBflietiBg iBterest. If a direotor has a oonflioting interest respeoting 
a transaotion, but neither the direotor nor a related person of the direotor as defined in 
seotion 871, subsection 3, paragraph A is a party to the transaction, and if the direotor has 
a duty under lay/ or professional oanon, or a duty of oonfidentiality to another person, 
respeoting information relating to the transaotion such that the director may not make the 
disclosure described in seotion 871, subseotion 4, paragraph B, then disclosure is 
sufficient for purposes of subsection 1 if the direotor: 
Au 
Disoloses to the direotors voting on the transaction the existence and nature of 
the director's oonflicting interest and informs them of the oharacter and limitations 
imposed by that duty before their vote on the transaction; and 
B. 
Plays no part, directly or indirectly, in their deliberations or vote. 
2-A. 
Disclosure; conflicting interest. 
Notwithstanding subsection I, when a 
transaction is a director's conflicting-interest transaction only because a related person 
described in section 871, subsection 3, paragraph F or G is a party to or has a material 
financial interest in the transaction, the conflicted director is not obligated to make 
required disclosure to the extent that the director reasonably believes that doing so would 
violate a duty imposed under law, a legally enforceable obligation of confidentiality or a 
professional ethics rule, as long as the conflicted director discloses to the qualified 
directors voting on the transaction: 
A. All information required to be disclosed that the director does not believe would 
violate a duty or obligation of the director; 
B. The existence and nature of the director's conflicting interest; and 
C. 
The nature of the conflicted director's duty not to disclose the confidential 
information. 
3. Quorum. A majority, but no fewer than 2, of all the qualified directors on the 
oorporation's board of directors or on a committee of the corporation's board of direotors, 
constitutes a quorum for purposes of action that complies with this section. Direotors' 
aotion that othervlise complies with this section is not affected by the presence or vote of 
a director \.."ho is not a qualified director. 
4. Qualified direetor. l'or purposes of this section, "qualified director" means, with 
respect to a director's conflicting interest transaction, any director '""ho does not have 
eitheF. 
A. 
A conflicting interest respecting the transaction; or 
B. 
A familial, financial, professional or employment relationship with a 2nd 
director who does haye a conflicting interest respecting the transaction when that 
relationship would, in the circumstances, reasonably be expected to exert an influence 
on the first director's judgmest '.vhen 't'ohsg on the transactios. 
5. Authorization when qualified director's action not taken. When directors' 
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 incomoration, the bylaws 
or a provision of law, independent action to satisfy those authorization requirements must 
be taken by the board of directors or a committee, in which action directors who are not 
qualified directors may participate. 
Sec.31. 13-C MRSA §874, as amended by PL 2003, c. 344, Pt. B, §§72 and 73, is 
further amended to read: 
§874. Shareholders' action 
1. 
Shareholders' action. 
Shareholders' action respectisg regarding a director's 
conflicting-interest transaction is effective for purposes of section 872, subsection 2, 
paragraph B if a majority of the votes entitled to be cast by the holders of all qualified 
shares was east are in favor of the transaction after: 
A. 
A sotice 'Has giyen Notice to the shareholders describing the director's 
conflictisg interest action to be taken regarding the transaction; 
B. 
Provision to the secretary or other officer or agent of the corporation of the 
infonnation referred to in subsection 4; and 
C. 
Required disclosure, as defined is section 871, subsection 4, Communication to 
the shareholders who 't'oted entitled to vote on the transaction of the infonnation that 
is the subject of required disclosure, to the extent the infonnation was !§ not known 
by them. 
1. Qualified shares. For purposes of this section, "€}tlalified shares" means any 
shares estitled to yote \vith respect to the director's cosflicting isterest trassaction except 
shares that, to the lrnovlledge, before the Yote, of the clerk, the secretary or other officer 
or agest of the corporatios authori25ed to tabulate Yotes, are beseficially owsed or the 
yoting of which is costrolled by a director 'Nho has a conflicting interest respectisg the 
transaction or by a related person ofthe director, or both. 
3. Quorum. A majority of the votes entitled to be cast by the holders of all qualified 
shares constitutes a quorum for purposes of action that complies compliance with this 
section. Subject to subsections 4 and subsection 5, shareholders' action that otherwise 
complies with this section is not affected by the presence of holders of shares that are not 
qualified shares, or the voting of shares that are not qualified shares. 
4. Identification of holdings. For purposes of compliance with subsection 1, a A 
director who has a conflicting interest respecting regarding the transaction shall, before 
the shareholders' vote, infonn the secretary clerk or other officer or agent of the 
corporation authorized to tabulate votes, in writing, of the number of all shares that the 
director knows are not qualified shares under subsection 3 and the identity of persons 
Pagf; 16 -123LR2219(Ol)-1 
holding or oontrolling the 'fote of all shares that the direotor knows are benefioially 
owned or the 'ioting of whioh is oontrolled by the direotor or by a related person of the 
direotor, or both the holders ofthose shares. 
5. Failure to comply. If a shareholders' vote does not comply with subsection I 
solely because of a faih:1Fe of a direotor director's failure to comply with subsection 4 and 
if the director establishes that the direotor's failure did not determine and was not intended 
by the direotor to influence and did not in fact determine the outcome of the vote, the 
court may, with or witho\lt further prooeedings respeoting seotion 872, s\lbseotion 2, 
paragraph C, take such action respeoting regarding the transaction and the director and 
may give such effect, if any, to the shareholders' vote as it the court considers appropriate 
in the circumstances. 
6. 
Authorization when qualified shareholder action not taken. 
When 
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, the bylaws or a provision of law, independent action to satisfy those 
authorization requirements must be taken by the shareholders, in which action 
shareholders that are not qualified shareholders may participate. 
7. Definitions. As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A. "Holder" means and "held by" refers to shares held by both a record shareholder 
and a beneficial shareholder. 
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 section 873, 
subsection 2-A is notified, are held by: 
(1) A director who has a conflicting interest regarding the transaction; or 
(2) A related person of the director, excluding a person described in section 871, 
subsection 3, paragraph G. 
Sec. 32. 13-C MRSA c. 8, sub-c. 7 is enacted to read: 
SUBCHAPTER 7 
BUSINESS OPPORTUNITIES 
§881. Business opportunities 
1. Business opportunity not actionable if standards met. A director's taking 
advantage, directly or indirectly, of a business opportunity may not be the subject of 
equitable relief, or give rise to an award of damages or other sanctions against the 
director, in a proceeding by or in the right of the corporation on the ground that such 
opportunity should have first been offered to the corporation, if before becoming legally 
obligated regarding the opportunity the director brings it to the attention of the 
corporation and: 
A. 
Action by qualified directors disclaiming the corporation's interest in the 
opportunity is taken in compliance with the procedures set forth in section 873, as if 
. the decision being made concerned a director's conflicting-interest transaction as 
defined in section 871, subsection 2; or 
B. Action by shareholders disclaiming the corporation's interest in the opportunity is 
taken in compliance with the procedures set forth in section 874, as if the decision 
being made concerned a director's conflicting-interest transaction as defined in 
section 871, subsection 2. 
In each case, the director, rather than making a required disclosure as defined in section 
871, subsection 4, must have made prior disclosure to those acting on behalf of the 
corporation of all material facts concerning the business opportunity that are then known 
to the director. 
2. No inference or change in burden of proof. In any proceeding seeking equitable 
relief or other remedies based upon an alleged improper taking advantage of a business 
opportunity by a director, the fact that the director did not employ the procedure 
described in subsection 1 before taking advantage of the opportunity does not create an 
inference that the opportunity should have been first presented to the corporation or alter 
the burden of proof otherwise applicable to establish that the director breached a duty to 
the corporation in the circumstances. 
Sec. 33. 13-C MRSA §1303, sub-§l, as enacted by PL 2001, c. 640, Pt. A, §2 
and as affected by Pt. B, §7, is amended to read: 
1. National listing; specific market value. Appraisal rights are not available for the 
holders of shares of any class or series of shares that: 
A. 
Is listed on the New York Stock EKchange or the American Stock EKchange or 
designated as a national market system security on an interdealer quotation system by 
the National Association of Securities Dealers a covered security under Section 
18(b)(l)(A) or (B) of the federal Securities Act of 1933, as amended; er 
B. 
Has Is traded in an organized market and has at least 2,000 shareholders and the 
outstanding shares of such class or series have a market value of at least $20,000,000 
exclusive of the value of such shares held by a corporation's subsidiaries, senior 
executives, directors and beneficial shareholders owning more than 10% of such 
shares~~ 
C. Is issued by an open end management investment company registered with the 
United States Securities and Exchange Commission under the federal Investment 
Company Act of 1940 and may be redeemed at the option of the holder at net asset 
value. 
Sec. 34. 13-C MRSA §1321, sub-§3 is enacted to read: 
3. Action by written consent. If a corporate action specified in section 1302 is to be 
approved by written consent of the shareholders pursuant to section 704: 
A. Written notice that appraisal rights are, are not or may be available must be given 
to each record shareholder from whom a consent is solicited at the time consent of 
such shareholder is fIrst solicited and, if the corporation has concluded that appraisal 
rights are or may be available, must be accompanied by a copy of this chapter; and 
B. Written notice that appraisal rights are, are not or may be available must be 
delivered together with the notice to nonconsenting voting and nonvoting 
shareholders as required by section 704, subsections 4 and 5, may include the 
materials described in section 1323 and, if the corporation has concluded that 
appraisal rights are or may be available, must be accompanied by a copy of this 
chapter. 
Sec. 35. 13-C MRS A §1322, as enacted by PL 2001, c. 640, Pt. A, §2 and as 
affected by Pt. B, §7, is repealed. 
Sec. 36. 13-C MRSA §1322-A is enacted to read: 
§ 1322-A. Notice of intent to demand payment 
1. Preservation of appraisal rights if action taken at a meeting. If a proposed 
corporate action requiring appraisal rights under sections 1302 to 1304 is submitted to a 
vote at a shareholders' meeting, a shareholder who wishes to assert appraisal rights with 
respect to any class or series of shares: 
A. Shall deliver to the corporation before the vote is taken written notice of the 
shareholder's intent to demand payment if the proposed action is effectuated; and 
B. May not vote, or cause or permit to be voted, any shares of the class or series in 
favor of the proposed action. 
2. Preservation of appraisal rights if action taken by consent. If a corporate 
action specifIed in section 1302 is to be approved by less than unanimous written consent, 
a shareholder who wishes to assert appraisal rights with respect to any class or series of 
shares may not execute a consent in favor of the proposed action with respect to that class 
or series of shares. 
3. Effect of failure to preserve. A shareholder who fails to satisfy the requirements 
of subsection 1 or 2 is not entitled to payment under this chapter. 
Sec. 37. 13-C MRS A §1323, sub-§l, as enacted by PL 2001, c. 640, Pt. A, §2 
and as affected by Pt. B, § 7, is amended to read: 
1. 
Written appraisal notice; form. 
If a proposed corporate action requiring 
appraisal rights under section 1302 becomes effective, a corporation must deliver a 
written appraisal notice and form required by subsection 2, paragraph A to all 
shareholders who satisfied the requirements of section ~ 
l322-A. In the case of a 
merger under section 1105, the parent shall deliver a written appraisal notice and form to 
all record shareholders who may be entitled to assert appraisal rights. 
Sec. 38. 13-C MRS A §1323, sub-§2, ~A, as enacted by PL 2001, c. 640, Pt. A, 
§2 and as affected by Pt. B, §7, is repealed and the following enacted in its place: 
Page) 9 - 123LR2219(Ol)-1 
A. 
Supply a fonn that specifies the first date of any announcement to shareholders, 
made prior to the date the corporate action became effective, of the principal tenns of 
the proposed corporate action, if any. If such announcement was made the fonn 
must: 
(1) 
Require the shareholder asserting appraisal rights to certify whether 
beneficial ownership of those shares for which appraisal rights are asserted was 
acquired before that date; and 
(2) 
Require the shareholder asserting appraisal rights to certify that the 
shareholder did not vote for or consent to the transaction; 
Sec. 39. 13-C MRS A §1323, sub-§3 is enacted to read: 
3. Notice accompanied by financial statements. When corporate action described 
in section 1302, subsection 1 is proposed, or a merger pursuant to section 1105 is 
effected, the notice referred to in subsection 1, if the corporation concludes that appraisal 
rights are or may be available, and in subsection 2 must be accompanied by: 
A. The annual financial statements specified in section 1620, subsection 1 of the 
corporation that issued the shares that may be subject to appraisal, whether or not a 
close corporation, which must be as of a date ending not more than 16 months before 
the date of the notice and must comply with section 1620, subsection 2. If such 
annual financial statements are not reasonably available, the corporation shall provide 
reasonably equivalent financial infonnation; and 
B. The latest available quarterly financial statements of such corporation, if any. 
Sec. 40. 13-C MRSA §1324, sub-§l, as enacted by PL 2001, c. 640, Pt. A, §2 
and as affected by Pt. B, §7, is amended to read: 
1. Perfection of rights. A shareholder who receives notice pursuant to section 1323 
and who wishes to exercise appraisal rights shall eertify 9ft sign and return the fonn sent 
by the corporation and, in the case of certificated shares, deposit the shareholder's 
certificates in accordance with the tenns of the notice by the date referred to in the notice 
pursuant to section 1323, subsection 2, paragraph B, subparagraph (2) and certify whether 
the beneficial owner of the shares acquired beneficial ownership of the shares before the 
date required to be set forth in the notice pursuant to section 1323, subsection 2, 
paragraph A. If a shareholder fails to make this certification, the corporation may elect to 
treat the shareholder's shares as after-acquired shares under section 1326. A shareholder 
who wishes to exercise appraisal rights shall execute and return the fonn and, in the case 
of certificated shares, deposit the shareholder's certificates in accordance with the tenns 
of the notice by the date referred to in the notice pursuant to section 1323, subsection 2, 
paragraph B, subparagraph (2). 
Once a shareholder deposits that shareholder's 
certificates or, in the case of uncertificated shares, returns the executed fonns, that 
shareholder loses all rights as a shareholder, unless the shareholder withdraws pursuant to 
subsection 2. 
Sec. 41. 13-C MRSA §1325, sub-§2, as enacted by PL 2001, c. 640, Pt. A, §2 
and as affected by Pt. B, §7, is amended to read: 
2. Additional information. The payment to each shareholder pursuant to subsection 
must be accompanied by: 
A. 
Finaneial Annual financial statements specified in section 1620, subsection 1 of 
the corporation that issued the shares to be appraised, eonsisting of a balanee sheet as 
of the end of a fiseal year whether or not a close corporation, that must be as of a date 
ending not more than 16 months before the date of payment, an ineome statement for 
that year, a statemeRt of ehanges in shareholders' eql:lity for that year, and the latest 
available interim finaneial statements, if any must comply with section 1620, 
subsection 2. If such annual financial statements are not reasonably available, the 
corporation shall provide reasonably equivalent financial information; ; 
B. 
A statement of the corporation's estimate of the fair value of the shares, which 
estimate must equal or exceed the corporation's estimate given pursuant to section 
1323, subsection 2, paragraph B, subparagraph (3); and 
C. 
A statement that shareholders described in subsection 1 have the right to demand 
further payment under section 1327 and that if any such shareholder does not do so 
within the time period specified in section 1327, that shareholder is deemed to have 
accepted the payment in full satisfaction of the corporation's obligations under this 
chapter~; and 
D. The latest available quarterly financial statements of the corporation, if any. 
Sec. 42. 13-C MRS A §1332, as enacted by PL 2001, c. 640, Pt. A, §2 and as 
affected by Pt. B, § 7, is amended to read: 
§1332. Court costs and counsel fees 
1. Court costs. The court in an appraisal proceeding commenced under section 
1331 shall determine all court costs of the proceeding, including the reasonable 
compensation and expenses of appraisers appointed by the court. The court shall assess 
the court costs against a corporation, except that the court may assess court costs against 
all or some of the shareholders demanding appraisal, in amounts the court finds equitable, 
to the extent the court finds the shareholders acted arbitrarily, vexatiously or not in good 
faith with respect to the rights provided by this chapter. 
2. Counsel; expect fees. The court in an appraisal proceeding under section 1331 
may also assess the fees aftd expenses of eOl:lftsel aftd eJ(perts for the respective parties, in 
amounts the court finds equitable: 
A. 
Against a corporation and in favor of any or all shareholders demanding 
appraisal if the court finds the corporation did not substantially comply with the 
requirements of section 1321, 1323, 1325 or 1326; or 
B. 
Against either a corporation or a shareholder demanding appraisal, in favor of 
any other party, if the court finds that the party against whom the fees and expenses 
are assessed acted arbitrarily, vexatiously or not in good faith with respect to the 
rights provided by this chapter. 
3. Fees awarded from settlement. If the court in an appraisal proceeding under 
section 1331 finds that the serviees of eOl:iflsel for expenses incurred by any shareholder 
were of substantial benefit to other shareholders similarly situated and that the fees fer 
those serviees expenses should not be assessed against a the corporation, the court may 
av;ard to the eOl:Hlsel reasoflaale fees to direct that those expenses be paid out of the 
amounts awarded the shareholders who were benefitted. 
4. Corporation fails to make payment. To the extent a corporation fails to make a 
required payment pursuant to section 1325, 1326 or 1327, a shareholder may sue directly 
for the amount owed and, to the extent successful, is entitled to recover from the 
corporation all eosts afld expenses of the suit, ifleluding eOUflsel fees. 
Sec. 43. 13-C MRS A §1406, as enacted by PL 2001, c. 640, Pt. A, §2 and as 
affected by Pt. B, § 7, is amended to read: 
§ 1406. Effect of dissolution 
1. Extension of corporate existence. A dissolved eorporatiofl eofltiflUes eorporate 
existeflee fer a period flOt exeeediflg 3 years from the effeetive date of the artieles of 
dissolutiofl, exeept that the 3 year period may ee exteflded if the exteflsiofl is approved ey 
2/3 ,tote of the shareholders of the dissolved eorporatiofl aRd flotiee of the exteflSiOfl is 
filed with the Seeretary of State prior to the expiratiofl of the 3 year period. A dissolved 
7 
corporation may not carry on any business except that which is appropriate to wind up 
and liquidate its business and affairs, including: 
A. 
Collecting the corporation's assets; 
B. 
Disposing of properties that will not be distributed in kind to shareholders; 
C. 
Discharging or making provision for discharging its liabilities; 
D. 
Distributing remaining property among shareholders according to their interests; 
and 
E. 
Doing every other act necessary to wind up and liquidate its business and affairs. 
2. Dissolution; exclusions. Dissolution of a corporation does not: 
A. 
Transfer title to the corporation's property; 
B. 
Prevent transfer of its shares or securities, although the authorization to dissolve 
may provide for closing the corporation's share transfer records; 
C. 
Subject the corporation's directors or officers to standards of conduct different 
from those prescribed in chapter 8; 
D. 
Change quorum or voting requirements for the board of directors or 
shareholders; change provisions for selection, resignation or removal of the directors 
or officers or both; or change provisions for amending its bylaws; 
E. 
Prevent commencement of a proceeding by or against the corporation in its 
corporate name; 
F. 
Abate or suspend a proceeding pending by or against the corporation on the 
effective date of dissolution; or 
G. 
Terminate the authority of the clerk of the corporation. 
3. l"':batemeBt of aetioB. 'Nith fespect to any action, s1:lit Of pfOceeding begl ::.~ 
against the cOFpofation priOf to the commencement of Of dl:lFing the 3 yeaf period aftef 
the date of its dissol1:ltion, the action does not abate by feason of the dissol1:ltion of the 
cOFpofation; the cOFpofate e;Jtistence of the dissolved cOFpofation, solely fof p1:lFposes of 
the action, s1:lit Of pfOceeding, contin1:les beyond that period and 1:lntil any j1:ldgments, 
ofdefs Of decfees afe fully exec1:lted. 
4. Transfer of property. Those shareholders of the corporation and their successors 
in interest who, collectively, represent a majority of the voting power of the corporation 
are empowered to act as liquidating trustees to take all actions necessary or appropriate to 
distribute or dispose of any undistributed property of the corporation if: 
A. There are no officers authorized to act on a matter for a dissolved corporation; 
B. There are no directors of the corporation; or 
C. The directors are unable to act on the matter on behalf of the corporation. 
Sec. 44. 13-C MRSA §1430, as enacted by PL 2001, c. 640, Pt. A, §2 and as 
affected by Pt. B, § 7, is amended to read: 
§1430. Grounds for judicial dissolution 
A corporation may be dissolved by a judicial dissolution in a proceeding by: 
1. Attorney General. The Attorney General if it is established that: 
A. 
The corporation obtained its articles of incorporation through fraud; or 
B. 
The corporation has continued to exceed or abuse the authority conferred upon it 
by law; 
2. Shareholder. A shareholder if it is established that: 
A. 
The directors are deadlocked in the management of the corporate affairs, the 
shareholders are unable to break the deadlock and, because of the deadlock, 
irreparable injury to the corporation is threatened or being suffered or the business 
and affairs of the corporation can no longer be conducted to the advantage of the 
shareholders generally; 
B. 
The directors or those in control of the corporation have acted, are acting or will 
act in a manner that is illegal, oppressive or fraudulent; 
C. 
The shareholders are so divided fespecting regarding the management of the 
business and affairs of the corporation that the corporation is suffering or will suffer 
irreparable injury or the business and affairs of the corporation can no longer be 
conducted to the advantage of the shareholders generally; 
D. 
The shareholders are deadlocked in voting power and have failed, for a period 
that includes at least 2 consecutive annual meeting dates, to elect successors to 
directors whose terms have expired; or 
E. 
The corporate assets are being misapplied or wastedt~ 
This subsection does not apply in the case of a corporation that, on the date of the filing 
of the proceeding, is a public corporation or that has a class or series of shares that is a 
covered security under the federal Securities Act of 1933, Section 18(b)(A) or....w~ 
amended; 
3. Creditor. A creditor if it is established that: 
A. 
The creditor's claim has been reduced to judgment, the execution on the 
judgment has been returned unsatisfied and the corporation is insolvent; or 
B. 
The corporation has admitted in writing that the creditor's claim is due and 
owing and the corporation is insolvent; ef 
4. Corporation. The corporation to have its voluntary dissolution continued under 
court supervision";; or 
5. Abandonment of business. A shareholder of the corporation has abandoned its 
business and has failed within a reasonable time to liquidate and distribute its assets and 
dissolve. 
Sec. 45. 13-C MRS A §1432, sub-§l, as enacted by PL 2001, c. 640, Pt. A, §2 
and as affected by Pt. B, §7, is amended to read: 
1. 
Appoint receivers. 
A court in a judicial proceeding brought to dissolve a 
corporation may appoint one or more receivers to manage and to wind up and liquidate 
the business and affairs of the corporation. The court shall hold a hearing, after notifying 
all parties to the proceeding and any interested persons designated by the court, before 
appointing a receiver. The court appointing a receiver has e*elusiye jurisdiction over the 
corporation and all of its property wherever located. 
Sec. 46. 13-C MRSA §1432, sub-§4, as enacted by PL 2001, c. 640, Pt. A, §2 
and as affected by Pt. B, §7, is amended to read: 
4. Compensation; expenses. A court from time to time during a receivership under 
this section may order compensation paid and expense disbUi"sements or reimbursements 
made expenses paid or reimbursed to the receiver and the receiver's counsel from the 
assets of the corporation or proceeds from the sale of the assets. 
Sec. 47. 13-C MRSA §1434, sub-§2, as enacted by PL 2001, c. 640, Pt. A, §2 
and as affected by Pt. B, §7, is amended to read: 
2. Motion of court. On the application of a plaintiff or any other shareholder or on 
the court's own motion in any action filed by a shareholder to dissolve a corporation that 
is not a public corporation on any of the grounds enumerated in section 1430, subsection 
2, or on the court's own motion in any other action to dissolve a corporation, the court 
may make an order or grant relief, other than dissolution, that in its discretion it considers 
appropriate, including, without limitation, an order: 
A. 
Providing for the purchase at their fair value of shares of any shareholder either 
by the corporation or by other shareholders; 
B. 
Providing for the sale of all the property and franchises of the corporation to a 
single purchaser, who succeeds to all the rights and privileges of the corporation and 
may reorganize the same under the direction of the court; 
C. 
Directing or prohibiting any act of the corporation or of shareholders, directors, 
officers or other persons party to the action; 
D. 
Canceling or altering any provision contained in the articles of incorporation, in 
any amendment to the articles of incorporation or in the bylaws of the corporation; 
E. 
Appointing a person who is qualified under the laws of this State to act as a 
receiver and who has no close personal, business or financial relationship to the 
members of any contending faction within the corporation to act as an additional 
director, either in ali matters or in those matters the court directs, and to hold office as 
a director for any period the court orders, but not longer than 2 years. The person 
must be paid by the corporation compensation as ordered by the court and may be 
required to post security for the faithful performance of the director's duties in an 
amount and with any sureties the court orders; or 
F. 
Canceling, altering or enjoining any resolution or other act of the corporation. 
Sec. 48. 13-C MRSA §1604, sub-§3, as enacted by PL 2001, c. 640, Pt. A, §2 
and as affected by Pt. B, § 7, is amended to read: 
3. Refuse inspection; good faith. If the court orders inspection and copying of the 
records demanded under subsection 1 or 2, the court shall also order the corporation to 
pay the shareholder's costs including reasonable counsel fees expenses incurred to obtain 
the order unless the corporation proves that it refused inspection in good faith because it 
had a reasonable basis for doubt about the right of the shareholder to inspect the records 
demanded. 
Sec. 49. 13-C MRSA §1605, sub-§3, as enacted by PL 2001, c. 640, Pt. A, §2 
and as affected by Pt. B, §7, is amended to read: 
3. Provisions to protect corporation. If an order is issued under subsection 2, the 
court may include provisions protecting the corporation from undue burden or expense 
and prohibiting the director from using information obtained upon exercise of the 
inspection rights in a manner that would violate a duty to the corporation, and may also 
order the corporation to reimburse the director for the director's costs, including 
reasonable counsel fees, expenses incurred in connection with the application. 
SUMMARY 
This bill amends the Maine Business Corporation Act to reflect changes made by the 
American Bar Association to the Model Business Corporation Act, on which the Maine 
Business Corporation Act is based. 
This bill also makes other changes to the Maine Business Corporation Act, including: 
l. Adding definitions of "expenses," "public corporation" and "qualified director"; 
• 
2. Allowing the delivery by a corporation of one copy of a notice, the articles of 
incorporation or bylaws to be delivered to a common address occupied by more than one 
shareholder and still satisfy the requirements that all shareholders receive the notice, 
articles or bylaws. A shareholder can opt out of this arrangement by providing written 
notice to the corporation; 
3. Allowing, with the prior consent of shareholders, the inclusion in the articles of 
incorporation of a provision that allows action to be taken regarding the corporation 
without a meeting or notice to the shareholders; and 
4. Changing the class or series of shares held by a shareholder for the purpose of 
limiting the appraisal rights of that shareholder.