Utah Code 16-6a-606. Transfers

16-6a-606. Transfers.

(1)

Except as provided in Subsection (3), and unless otherwise provided in the articles of incorporation or the bylaws, a member of a nonprofit corporation may not transfer:

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Terms Used In Utah Code 16-6a-606

Articles of incorporation: include :

(a)	amended articles of incorporation;

(b)	restated articles of incorporation;

(c)	articles of merger; and

(d)

a document of a similar import to the documents described in Subsections (3)(a) through (c). See Utah Code 16-6a-102

Bylaws: includes :

(i)	amended bylaws; and

(ii)

restated bylaws. See Utah Code 16-6a-102

Class: means a group of memberships that has the same right with respect to voting, dissolution, redemption, transfer, or other characteristics. See Utah Code 16-6a-102

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.

Individual: means :

(a)	a natural person;

(b)	the estate of an incompetent individual; or

(c)

the estate of a deceased individual. See Utah Code 16-6a-102

Member: includes :

(i)	"voting member"; and

(ii)

a shareholder in a water company. See Utah Code 16-6a-102

Membership: refers to the rights and obligations of a member or members. See Utah Code 16-6a-102

Shareholder: means a person in whose name a share is registered in the records of a nonprofit corporation. See Utah Code 16-6a-102

Water company: means :

(a)	the same as that term is defined in Subsection 16-4-102(5); or

(b)	a mutual benefit corporation, when the stock in the mutual benefit corporation represents a right to receive a distribution of water for beneficial use. See Utah Code 16-6a-102
(a)	a membership; or

(b)	any right arising from a membership.

(2)

Except as provided in Subsection (3), where transfer rights have been provided in the articles of incorporation or the bylaws of a nonprofit corporation, a restriction on transfer rights may not be binding with respect to a member holding a membership issued before the adoption of the restriction, unless the restriction is approved by the affected member.

(3)

(a)	For a water company, unless otherwise provided by the articles of incorporation or bylaws, ownership of shares is transferrable.

(b)

Any restriction on the transfer of ownership under Subsection (3)(a):

(i)	shall be reasonable;

(ii)	shall be adopted in good faith and for a legitimate purpose;

(iii)

shall be adopted in the best interest of the water company and its shareholders; and

(iv)	may not discriminate against any individual shareholder or class of shareholders, but in a company where there are classes or divisions of stock, restrictions may differ between the classes or divisions.

(c)	Nothing in this section is intended to alter any right or remedy a shareholder may have under Sections 16-6a-612, 16-6a-808, 16-6a-809, 16-6a-822, 16-6a-824, and 16-6a-825, or any other applicable law.

Amended by Chapter 358, 2017 General Session

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