CHAPTER 307
S.P. 285 - L.D. 893
An Act to Conform the Provisions of the Maine Business Corporation Act Regarding Derivative Proceedings to the Provisions of the Revised Model Business Corporation Act
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 13-A MRSA §627, as amended by PL 1973, c. 455, is repealed.
Sec. 2. 13-A MRSA §§628 to 635 are enacted to read:
As used in sections 628 to 635, unless the context otherwise indicates, the following terms have the following meanings.
1. Derivative proceeding. "Derivative proceeding" means a civil suit in the right of a domestic corporation or, to the extent provided in section 635, in the right of a foreign corporation.
2. Shareholder. "Shareholder," in addition to the meaning set forth in section 102, subsection 17, includes a beneficial owner whose shares are held in a voting trust or held by a nominee on the beneficial owner's behalf.
A shareholder may not commence or maintain a derivative proceeding unless the shareholder:
1. Shareholder; time became. Was a shareholder of the corporation at the time of the act or omission complained of or became a shareholder through transfer by operation of law from one who was a shareholder at that time; and
2. Represents corporation. Fairly and adequately represents the interests of the corporation in enforcing the right of the corporation.
A shareholder may not commence a derivative proceeding until:
1. Written demand. A written demand has been made upon the corporation to take suitable action; and
2. Expiration period. Ninety days have expired from the date that demand was made unless the shareholder has earlier been notified that the demand has been rejected by the corporation or unless irreparable injury to the corporation would result by waiting for the expiration of the 90-day period.
If the corporation commences an inquiry into the allegations made in the demand or complaint, the court may stay any derivative proceeding for a period the court determines appropriate.
1. Dismissal of proceeding. A derivative proceeding must be dismissed by the court on motion by the corporation if one of the groups specified in subsection 2 or 6 has determined in good faith after conducting a reasonable inquiry that the maintenance of the derivative proceeding is not in the best interest of the corporation.
2. Determination. Unless a panel is appointed pursuant to subsection 6, the determination in subsection 1 must be made by:
A. A majority vote of independent directors present at a meeting of the board of directors if the independent directors constitute a quorum; or
B. A majority vote of a committee consisting of 2 or more independent directors appointed by majority vote of independent directors present at a meeting of the board of directors, whether or not the independent directors constitute a quorum.
3. Director; independent. None of the following by itself cause a director to be considered not independent for purposes of this section:
A. The nomination or election of the director by persons who are defendants in the derivative proceeding or against whom action is demanded;
B. The naming of the director as a defendant in the derivative proceeding or as a person against whom action is demanded; or
C. The approval by the director of the act being challenged in the derivative proceeding or demand if the act resulted in no personal benefit to the director.
4. Derivative proceeding. 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 directors at the time the determination was made or that the requirements of subsection 1 have not been met.
5. Burden of proof. If a majority of the board of directors does not consist of independent directors at the time the determination is made, the corporation has the burden of proving that the requirements of subsection 1 have been met. If a majority of the board of directors consists of independent directors at the time the determination is made, the plaintiff has the burden of proving that the requirements of subsection 1 have not been met.
6. Panel. The court may appoint a panel of one or more independent persons upon motion by the corporation to make a determination whether the maintenance of the derivative proceeding is in the best interests of the corporation. The plaintiff has the burden of proving that the requirements of subsection 1 have not been met.
§633. Discontinuance or settlement
A derivative proceeding may not be discontinued or settled without the court's approval. If the court determines that a proposed discontinuance or settlement substantially affects the interest of the corporation's shareholders or a class of shareholders, the court shall direct that notice be given to the shareholders affected.
On termination of a derivative proceeding the court may:
1. Corporation pay plaintiff's expenses. Order the corporation to pay the plaintiff's reasonable expenses, including attorney's fees, incurred in the proceeding if the court finds that the proceeding has resulted in a substantial benefit to the corporation; or
2. Plaintiff pay defendant's expenses. Order the plaintiff to pay any defendant's reasonable expenses, including attorney's fees, incurred in defending the proceeding if the court finds that the proceeding was commenced or maintained without reasonable cause or for an improper purpose.
§635. Applicability to foreign corporations
In a derivative proceeding in the right of a foreign corporation, the matters covered by this chapter are governed by the laws of the jurisdiction of incorporation of the foreign corporation except for sections 631, 633 and 634.
Effective September 19, 1997, unless otherwise indicated.
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