§ 20.08.
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/vt/20-08A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
§ 20.08. Elimination of board of directors
(a)A close corporation may operate without a board of directors as required by section 8.03 of this title only if its articles of incorporation contain a statement to that effect and contain a statement that the liability of directors imposed by law is instead imposed upon each person in whom the board’s power is vested.
(b)An amendment to the articles of incorporation eliminating a board of directors must be approved by all the shareholders of the corporation, whether or not otherwise entitled to vote on amendments, or if no shares have been issued, by all the subscribers for shares, if any, or if none, by all the incorporators.
(c)While a corporation is operating without a board of directors as authorized by subsection
(a)of this section:
(1)all corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, the shareholders;
(2)unless the articles of incorporation provide otherwise:
(A)action requiring director approval or both directors and shareholder approval is authorized if approved by the shareholders;
(B)action requiring a majority or greater percentage vote of the board of directors is authorized if approved by the majority or greater percentage, respectively as the case may be, of the votes of shareholders entitled to vote on the action;
(3)a shareholder is not liable for his or her act or omission, although a director would be, unless the shareholder was entitled to vote on the action;
(4)a requirement by a state or the United States that a document delivered for filing contain a statement that a specified action has been taken by the board of directors is satisfied by a statement that the corporation is a close corporation without a board of directors and that the action was approved by the shareholders lawfully acting in the place of directors; and
(5)the shareholders by resolution may appoint one or more shareholders to sign documents as “designated directors.”
(d)An amendment to the articles of incorporation deleting the statement eliminating a board of directors shall be approved by the holders of at least two-thirds of the votes of each voting group of the corporation, voting as separate voting groups, whether or not otherwise entitled to vote on amendments. The amendment shall also specify the number, names and addresses of the corporation’s directors or describe who will perform the duties of a board under section 8.01 of this title. (Added 1993, No. 85, § 2, eff. Jan. 1, 1994.)