The Vermont Statutes Online

Title 11A: Vermont Business Corporations

Chapter 002: Incorporation

• § 2.01. Incorporators

  One or more natural persons of majority age may act as the incorporator or incorporators of a corporation by delivering articles of incorporation to the secretary of state for filing. (Added 1993, No. 85, § 2, eff. Jan. 1, 1994.)

• § 2.02. Articles of incorporation

  (a) The articles of incorporation shall set forth:

  (1) a corporate name for the corporation that satisfies the requirements of section 4.01 of this title;

  (2) the classes of shares, if any, and the number of shares in each class that the corporation is authorized to issue;

  (3) the number of shares the corporation is authorized to issue;

  (4) the street address of the corporation’s initial registered office and the name of its initial registered agent at that office;

  (5) the name and address of each incorporator;

  (6) one or more classes of shares that together have unlimited voting rights; and

  (7) one or more classes of shares (which may be the same class or classes as those with voting rights) that together are entitled to receive the net assets of the corporation upon dissolution.

  (b) The articles of incorporation may set forth:

  (1) the names and addresses of the individuals who are to serve as the initial board of directors;

  (2) provisions not inconsistent with law regarding:

  (A) the purpose or purposes for which the corporation is organized;

  (B) managing the business and regulating the affairs of the corporation;

  (C) defining, limiting, and regulating the powers of the corporation, its board of directors, and shareholders, including provisions relating to:

  (i) prescribing shareholder action without a meeting under section 7.04 of this title;

  (ii) authorizing special voting groups of shareholders under section 7.25 of this title;

  (iii) prescribing the number of shareholders constituting a quorum of shareholders for voting on voting groups, under sections 7.26 and 7.27 of this title;

  (iv) requiring a greater than majority vote for action by voting groups of shareholders, under sections 7.27 and 10.21 of this title;

  (v) the election of directors by cumulative voting under section 7.28 of this title;

  (vi) the election of directors by greater than plurality of vote, under section 7.28 of this title;

  (vii) prescribing the qualifications for directors under section 8.02 of this title;

  (viii) fixing or changing the number of directors, in accordance with section 8.03 of this title;

  (ix) the election of directors by class of share, under section 8.04 of this title;

  (x) staggering the terms of directors so that all directors are not elected in the same year, in accordance with section 8.06 of this title;

  (xi) restricting or eliminating the power of shareholders to remove directors without cause, under section 8.08 of this title;

  (xii) prescribing the manner of filling a vacancy on the board of directors, under section 8.10 of this title;

  (xiii) fixing the compensation of the board of directors, or restricting or eliminating such power, under section 8.11 of this title;

  (xiv) action by the board of directors without a board meeting under section 8.21 of this title;

  (xv) notice of regular meetings of the board of directors under section 8.22 of this title;

  (xvi) requiring a greater than majority vote for action taken at a meeting of the board of directors, under section 8.24 of this title;

  (xvii) the creation of committees by the board of directors and the establishment of the powers of such committees under section 8.25 of this title;

  (xviii) restricting the authority of the corporation to indemnify officers, employees, and agents of the corporation under section 8.56 of this title;

  (xix) limiting the power of the board of directors to amend the articles of incorporation under section 10.02 of this title;

  (xx) restricting the power of the board of directors to amend the bylaws of the corporation under sections 10.20 and 10.22 of this title;

  (xxi) dispensing with the board of directors entirely, or in limited circumstances, or restricting the functions of the board, in accordance with the provisions of chapter 20 of this title;

  (D) provisions establishing the designations, preferences, limitations, and relative rights of share classes, including provisions relating to:

  (i) dividing shares into classes and classes of shares into series, under sections 6.01 and 6.02 of this title;

  (ii) redeeming shares at the option of the corporation or the shareholder, under section 6.01 of this title;

  (iii) restricting share dividends under section 6.23 of this title;

  (iv) prohibiting shares to be issued without certificates, under section 6.26 of this title;

  (v) restricting the transfer of shares under section 6.27 of this title;

  (vi) giving shareholders preemptive rights to acquire unissued shares under section 6.30 of this title;

  (vii) prohibiting the reissuance of shares, under section 6.31 of this title;

  (viii) restricting distributions in accordance with section 6.40 of this title;

  (ix) permitting cumulative voting for directors under section 7.28 of this title;

  (x) limiting or denying the voting rights of classes of shares under section 7.21 of this title;

  (xi) giving classes of shares more or less than one vote per share, under section 7.21 of this title;

  (E) a par value for authorized shares or classes of shares;

  (F) the imposition of personal liability on shareholders for the debts of the corporation to a specified extent and upon specified conditions.

  (3) any provision that under this title is required or permitted to be set forth in the bylaws; and

  (4) a provision eliminating or limiting the liability of a director to the corporation or its shareholders for money damages for any action taken, or any failure to take any action, solely as a director, based on a failure to discharge his or her own duties in accordance with section 8.30 of this title, except liability for:

  (A) the amount of a financial benefit received by a director to which the director is not entitled;

  (B) an intentional or reckless infliction of harm on the corporation or the shareholders;

  (C) a violation of section 8.33 of this title; or

  (D) an intentional or reckless criminal act. (Added 1993, No. 85, § 2, eff. Jan. 1, 1994.)

• § 2.03. Incorporation

  (a) Unless a delayed effective date is specified, the corporate existence begins when the Secretary of State issues a certificate of incorporation, after finding that the articles of incorporation conform to law, and that all fees imposed under section 1.22 of this title have been paid.

  (b) The Secretary of State’s filing of the articles of incorporation is conclusive proof that the incorporators satisfied all conditions precedent to incorporation except in a proceeding by the State to cancel or revoke the incorporation or involuntarily dissolve the corporation.

  (c) The Secretary of State shall maintain a separate record of the number of corporations that deliver articles of incorporation to the Secretary for filing by electronic transmission. (Added 1993, No. 85, § 2, eff. Jan. 1, 1994; amended 2009, No. 78 (Adj. Sess.), § 44c, eff. April 15, 2010.)

• § 2.04. Liability for preincorporation transactions

  All persons purporting to act as or on behalf of a corporation, knowing there was no incorporation under this title, are jointly and severally liable for all liabilities created while so acting. (Added 1993, No. 85, § 2, eff. Jan. 1, 1994.)

• § 2.05. Organization of corporation

  (a) After incorporation:

  (1) if initial directors are named in the articles of incorporation, the initial directors shall hold an organizational meeting, at the call of a majority of the directors, to complete the organization of the corporation by appointing officers, adopting bylaws, and carrying on any other business brought before the meeting;

  (2) if initial directors are not named in the articles, the incorporator or incorporators shall hold an organizational meeting at the call of a majority of the incorporators:

  (A) to elect directors and complete the organization of the corporation; or

  (B) to elect a board of directors who shall complete the organization of the corporation.

  (b) Action required or permitted by this title to be taken by incorporators at an organizational meeting may be taken without a meeting each time action taken is evidenced by one or more written consents describing the action taken and signed by each incorporator.

  (c) An organizational meeting may be held in or outside this State. (Added 1993, No. 85, § 2, eff. Jan. 1, 1994.)

• § 2.06. Bylaws

  (a) The incorporators or board of directors of a corporation shall adopt initial bylaws for the corporation.

  (b) The bylaws of a corporation may contain any provisions for managing the business and regulating the affairs of the corporation that are not inconsistent with law or the articles of incorporation, and may be stored or depicted in any tangible or electronic medium. (Added 1993, No. 85, § 2, eff. Jan. 1, 1994; amended 2009, No. 78 (Adj. Sess.), § 38, eff. April 15, 2010.)