Vermont Statutes Title 11 Sec. 6-40
Terms Used In Vermont Statutes Title 11 Sec. 6-40
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Complaint: A written statement by the plaintiff stating the wrongs allegedly committed by the defendant.
- 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.
- Corporation: means public benefit and mutual benefit corporation. See
- Defendant: In a civil suit, the person complained against; in a criminal case, the person accused of the crime.
- Directors: means individuals, designated in the articles or bylaws or elected by the incorporators, and their successors and individuals elected or appointed by any other name or title to act as members of the board. See
- Domestic: when applied to a corporation, company, association, or copartnership shall mean organized under the laws of this State; "foreign" when so applied, shall mean organized under the laws of another state, government, or country. See
- Member: means (without regard to what a person is called in the articles or bylaws) any person or persons who on more than one occasion, pursuant to a provision of a corporation's articles or bylaws, have the right to vote for the election of a director or directors. See
- Mutual benefit corporation: means a domestic corporation which is required to be a mutual benefit corporation pursuant to section 17. See
- Proceeding: includes civil suit and criminal, administrative, and investigatory action. See
- Public benefit corporation: means a domestic corporation which is required to be a public benefit corporation pursuant to section 17. See
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
- Voting power: means the total number of votes entitled to be cast for the election of directors at the time the determination of voting power is made, excluding a vote which is contingent upon the happening of a condition or event that has not occurred at the time. See
§ 6.40. Derivative suits
(a) A proceeding may be brought in the right of a domestic or foreign corporation to procure a judgment in its favor by:
(1) any member or members having five percent or more of the voting power or by 50 members, whichever is less; or
(2) any director.
(b) In any such proceeding, each complainant shall be a member or director at the time of bringing the proceeding.
(c) A complaint in a proceeding brought in the right of a corporation must be verified and allege with particularity the demand made, if any, to obtain action by the directors and either why the complainants could not obtain the action or why they did not make the demand. If a demand for action was made and the corporation’s investigation of the demand is in progress when the proceeding is filed, the court may stay the suit until the investigation is completed.
(d) On termination of the proceeding the court may require the complainants to pay any defendant‘s reasonable expenses (including counsel fees) incurred in defending the suit if it finds that the proceeding was commenced frivolously or in bad faith.
(e) If the proceeding on behalf of the corporation results in the corporation taking some action requested by the complainants or otherwise was successful, in whole or in part, or if anything was received by the complainants as the result of a judgment, compromise, or settlement of an action or claim, the court may award the complainants reasonable expenses (including counsel fees).
(f) The complainants shall notify the Attorney General within ten days after commencing any proceeding under this section if the proceeding involves a public benefit corporation or assets held in charitable trust by a mutual benefit corporation. (Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.)
Vermont Statutes Title 11 Sec. 6-40
Terms Used In Vermont Statutes Title 11 Sec. 6-40
- Articles of incorporation: include amended and restated articles of incorporation, articles of merger, and special charters. See
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- 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.
- Distribution: means a direct or indirect transfer of money or other property (except its own shares) or incurrence of indebtedness by a corporation to or for the benefit of its shareholders in respect of any of its shares. See
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Record date: means the date established under chapter 6 or 7 of this title on which a corporation determines the identity of shareholders and their shareholdings for purposes of this title. See
- Shareholder: means the person in whose name shares are registered in the records of a corporation or upon presentation for registration are entitled to be registered in the records of a corporation. See
§ 6.40. Distributions to shareholders
(a) A board of directors may authorize and the corporation may make distributions to its shareholders subject to restriction by the articles of incorporation and the limitation in subsection (c) of this section.
(b) If the board of directors does not set the record date for determining shareholders entitled to a distribution (other than one involving a repurchase or reacquisition of shares), it is the date the board of directors authorizes the distribution.
(c) No distribution may be made if, after giving it effect:
(1) the corporation would not be able to pay its debts as they become due in the usual course of business; or
(2) the corporation’s total assets would be less than the sum of its total liabilities plus (unless the articles of incorporation permit otherwise) the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution.
(d) The board of directors may base a determination that a distribution is not prohibited under subsection (c) of this section on financial statements prepared on the basis of generally accepted accounting practices and principles, or on the basis of professional appraisals, or on the basis of any other method that is reasonable under the circumstances.
(e) The effect of a distribution under subsection (c) of this section is measured:
(1) in the case of distribution by purchase, redemption, or other acquisition of the corporation’s shares, as of the earlier of:
(A) the date money or other property is transferred or debt incurred by the corporation; or
(B) the date the shareholder ceases to be a shareholder with respect to the acquired shares;
(2) in the case of any other distribution of indebtedness, as of the date the indebtedness is distributed;
(3) in all other cases, as of:
(A) the date the distribution is authorized if the payment occurs within 120 days after the date of authorization; or
(B) the date the payment is made if it occurs more than 120 days after the date of authorization.
(f) A corporation’s indebtedness to a shareholder incurred by reason of a distribution made in accordance with this section is at parity with the corporation’s indebtedness to its general, unsecured creditors except to the extent subordinated by agreement. (Added 1993, No. 85, § 2, eff. Jan. 1, 1994.)