That it is better 100 guilty Persons should escape than that one innocent Person should suffer, is a Maxim that has been long and generally approved. -- Benjamin Franklin


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NEVADA REVISED STATUTES ("NRS")
CHAPTER 78
Private Corporations

[ These were revised in 1997 and should remain effective at least until fall 1999. - staff ]


CHAPTER 78
PRIVATE CORPORATIONS

GENERAL PROVISIONS
NRS 78.010   Definitions; construction.CH. 78
NRS 78.015   Applicability of chapter; effect on corporations existing before April 1, 1925.
NRS 78.020   Limitations on incorporation under chapter; compliance with other laws.
NRS 78.025   Reserved power of state to amend or repeal chapter; chapter part of corporation's charter.
NRS 78.027   Corporate documents: Microfilming and return.
NRS 78.028   Filing of documents written in language other than English.
NRS 78.029   Procedure to submit replacement page to secretary of state before filing of document.
NRS 78.0295   Incorrect or defective document: Certificate of correction; effective date of correction.

FORMATION
NRS 78.030   Filing of articles of incorporation and certificate of acceptance of appointment of resident agent.
NRS 78.035   Articles of incorporation: Required provisions.
NRS 78.037   Articles of incorporation: Optional provisions.
NRS 78.039   Name of corporation: Distinguishable name required; availability of name of revoked, terminated or merged corporation.
NRS 78.040   Name of corporation: Reservation; injunctive relief.
NRS 78.045   Articles of incorporation: Approval or certification required before filing of certain articles or amendments.
NRS 78.050   Commencement of corporate existence.
NRS 78.055   Acceptable evidence of incorporation.

POWERS
NRS 78.060   General powers.
NRS 78.065   Adoption and use of corporate seal or stamp.
NRS 78.070   Specific powers.
NRS 78.075   Railroad companies: Powers.
NRS 78.080   Railroad companies: Rights of way granted by the state, counties and municipalities; limitations; reversion on abandonment; duties of companies.
NRS 78.085   Railroad companies: Filing of certified maps and profiles.

REGISTERED OFFICE AND RESIDENT AGENT
NRS 78.090   Resident agent required; address of registered office; powers of bank or corporation who is resident agent; penalty for noncompliance; service of documents on resident agent.
NRS 78.095   Change of address of resident agent and registered office.
NRS 78.097   Resignation of resident agent; notice to corporation of resignation; appointment of successor.
NRS 78.105   Maintenance of records at registered office; inspection and copying of records; civil liability; penalties.
NRS 78.107   Denial of request for inspection of records; defense to action for penalties or damages; authority of court to compel production of records.
NRS 78.110   Change of resident agent or location of registered office.

DIRECTORS AND OFFICERS
NRS 78.115   Board of directors: Number and qualifications.
NRS 78.120   Board of directors: General powers.
NRS 78.125   Committees of board of directors: Designation; powers; names; membership.
NRS 78.130   Officers of corporation: Selection; qualifications; terms; powers and duties; filling of vacancies.
NRS 78.135   Authority of directors and representatives of corporation.
NRS 78.138   Directors and officers: Exercise of powers and performance of duties.
NRS 78.140   Restrictions on transactions involving interested directors or officers; compensation of directors.

ANNUAL LIST OF OFFICERS AND DIRECTORS; DEFAULTING CORPORATIONS
NRS 78.150   Filing requirements; fee; forms. [Effective until July 1, 1998.]
NRS 78.150   Filing requirements; fee; forms. [Effective July 1, 1998.]
NRS 78.155   Certificate of authorization to transact business.
NRS 78.165   Addresses of officers and directors required; failure to file.
NRS 78.170   Defaulting corporations: Identification; penalty.
NRS 78.175   Defaulting corporations: Duties of secretary of state; revocation of charter and forfeiture of right to transact business; distribution of assets.
NRS 78.180   Defaulting corporations: Conditions and procedure for reinstatement.
NRS 78.185   Defaulting corporations: Reinstatement under old or new name.

STOCK AND OTHER SECURITIES; DISTRIBUTIONS
NRS 78.191   "Distribution" defined.
NRS 78.195   Issuance of more than one class or series of stock; rights of stockholders.
NRS 78.1955   Establishment of matters regarding class or series of stock by resolution of board of directors.
NRS 78.196   Required and authorized classes of stock.
NRS 78.197   Rights of persons holding obligations of corporation.
NRS 78.200   Rights or options to purchase stock.
NRS 78.205   Fractions of shares: Issuance; alternatives to issuance.
NRS 78.207   Increase or decrease in number of authorized shares of class and series: Resolution by board of directors; vote of stockholders required under certain circumstances.
NRS 78.209   Filing certificate of change in number of authorized shares of class and series; contents of certificate; articles of incorporation deemed amended.
NRS 78.211   Consideration for shares: Types; adequacy; effect of receipt; actions of corporation pending receipt in future.
NRS 78.215   Issuance of shares for consideration or as share dividend.
NRS 78.220   Subscription for corporate shares: Payment; collection on default; irrevocability.
NRS 78.225   Stockholder's liability: No individual liability except for payment for which shares were authorized to be issued or which was specified in subscription agreement.
NRS 78.230   Liability of holder of stock as collateral security; liability of executors, administrators, guardians and trustees.
NRS 78.235   Stock certificates: Validation; facsimile signatures; uncertificated shares and informational statements.
NRS 78.240   Shares of stock are personal property; transfers.
NRS 78.242   Restrictions on transfer of stock.
NRS 78.245   Corporate stocks, bonds and securities not taxed when owned by nonresidents or foreign corporations.
NRS 78.250   Cancellation of outstanding certificates or change in informational statements: Issuance of new certificates or statements; order for surrender of certificates; penalties for failure to comply.
NRS 78.257   Right of stockholders to inspect and audit financial records; exceptions.
NRS 78.265   Preemptive rights of stockholders in corporations organized before October 1, 1991.
NRS 78.267   Preemptive rights of stockholders in corporations organized on or after October 1, 1991.
NRS 78.275   Assessments on stock: Levy and collection; sale after default in payment.
NRS 78.280   Purchase by corporation of its own stock at assessment sale when no other available purchaser.
NRS 78.283   Treasury shares: Definition; limitations; retirement and disposal.
NRS 78.288   Distributions to stockholders.
NRS 78.295   Liability of directors for declaration of distributions.
NRS 78.300   Liability of directors for unlawful distributions.
NRS 78.307   "Investment company" and "open-end investment company" defined; redemption of shares by open-end investment company.

MEETINGS, ELECTIONS, VOTING AND NOTICE
NRS 78.310   Place of stockholders' and directors' meetings.
NRS 78.315   Directors' meetings: Quorum; consent for actions taken without meeting; participation by telephone or similar method.
NRS 78.320   Stockholders' meetings: Quorum; consent for actions taken without meeting; participation by telephone or similar method.
NRS 78.325   Actions at meetings not regularly called: Ratification and approval.
NRS 78.330   Directors: Election; classification; voting power.
NRS 78.335   Directors: Removal; filling of vacancies.
NRS 78.340   Failure to hold election of directors on regular day does not dissolve corporation.
NRS 78.345   Election of directors by order of court upon failure of regular election.
NRS 78.347   Application by stockholder for order of court appointing custodian or receiver; authority of custodian.
NRS 78.350   Voting rights of stockholders; determination of stockholders entitled to notice of and to vote at meeting.
NRS 78.355   Stockholders' proxies.
NRS 78.360   Cumulative voting.
NRS 78.365   Voting trusts.
NRS 78.370   Notice to stockholders.
NRS 78.375   Waiver of notice.

ACQUISITION OF CONTROLLING INTEREST
NRS 78.378   Applicability; imposition of stricter requirements; protection of corporation and its stockholders.
NRS 78.3781   Definitions.
NRS 78.3782   "Acquiring person" defined.
NRS 78.3783   "Acquisition" defined.
NRS 78.3784   "Control shares" defined.
NRS 78.3785   "Controlling interest" defined.
NRS 78.3786   "Fair value" defined.
NRS 78.3787   "Interested stockholder" defined.
NRS 78.3788   "Issuing corporation" defined.
NRS 78.3789   Delivery of offeror's statement by acquiring person; contents of statement.
NRS 78.379   Voting rights of acquiring person; meeting of stockholders; statements to accompany notice of meeting.
NRS 78.3791   Approval of voting rights of acquiring person.
NRS 78.3792   Redemption of control shares.
NRS 78.3793   Notice to stockholders; purchase of shares by corporation.

AMENDMENT AND RESTATEMENT OF ARTICLES OF INCORPORATION
NRS 78.380   Amendment of articles before issuing stock.
NRS 78.385   Amendment of articles after issuing stock: Scope of amendments.
NRS 78.390   Amendment of articles after issuing stock: Procedure.
NRS 78.403   Restatement of articles.

COMBINATIONS WITH INTERESTED STOCKHOLDERS
NRS 78.411   Definitions.
NRS 78.412   "Affiliate" defined.
NRS 78.413   "Associate" defined.
NRS 78.414   "Beneficial owner" defined.
NRS 78.416   "Combination" defined.
NRS 78.417   "Common shares" defined.
NRS 78.418   "Control," "controlling," "controlled by" and "under common control with" defined; presumption of control.
NRS 78.419   "Date of acquiring shares" defined.
NRS 78.421   "Date of announcement" defined.
NRS 78.422   "Date of consummation" defined.
NRS 78.423   "Interested stockholder" defined.
NRS 78.424   "Market value" defined.
NRS 78.426   "Preferred shares" defined.
NRS 78.427   "Resident domestic corporation" defined.
NRS 78.428   "Securities Exchange Act" defined.
NRS 78.429   "Share" defined.
NRS 78.431   "Subsidiary" defined.
NRS 78.432   "Voting shares" defined.
NRS 78.433   Applicability: Generally.
NRS 78.434   Applicability: Election not to be governed by provisions.
NRS 78.436   Applicability: Combination with inadvertent interested stockholder.
NRS 78.437   Applicability: Combination with stockholder who became interested before January 1, 1991.
NRS 78.438   Combination prohibited within 3 years after stockholder becomes interested; exception; action on proposal.
NRS 78.439   Authorized combinations: General requirements.
NRS 78.441   Authorized combinations: Consideration to be received by disinterested holders of common shares.
NRS 78.442   Authorized combinations: Consideration to be received by disinterested holders of class or series of shares other than common shares.
NRS 78.443   Authorized combinations: Required form and distribution of consideration.
NRS 78.444   Authorized combinations: Restrictions on beneficial ownership of additional voting shares by interested stockholder.

SALE OF ASSETS; DISSOLUTION AND WINDING UP
NRS 78.565   Sale, lease or exchange of assets: Conditions.
NRS 78.570   Sale of property and franchise under decree of court.
NRS 78.575   Procedure for dissolution before payment of capital and beginning of business.
NRS 78.580   Procedure for dissolution after issuance of stock or beginning of business.
NRS 78.585   Continuation of corporation after dissolution for winding up business; limitation on actions by or against dissolved corporation.
NRS 78.590   Trustees of dissolved corporation: Powers of directors.
NRS 78.595   Trustees of dissolved corporation: Authority to sue and be sued; joint and several responsibility.
NRS 78.600   Trustees or receivers for dissolved corporations: Appointment; powers.
NRS 78.605   Jurisdiction of district court.
NRS 78.610   Duties of trustees or receivers; payment and distribution to creditors and stockholders.
NRS 78.615   Abatement of pending actions; substitution of dissolution trustees or receivers.
NRS 78.620   Dissolution or forfeiture of charter by decree of court; filing.

INSOLVENCY; RECEIVERS AND TRUSTEES
NRS 78.622   Reorganization under federal law: Powers of corporation.
NRS 78.626   Notice: Petition in bankruptcy.
NRS 78.627   Notice: Application for appointment of receiver or trustee.
NRS 78.628   Notice: Application for dissolution of corporation.
NRS 78.630   Application of creditors or stockholders of insolvent corporation for injunction and appointment of receiver or trustee; hearing.
NRS 78.635   Appointment of receiver or trustee of insolvent corporation: Powers.
NRS 78.640   Property and privileges of insolvent corporation vest in appointed receiver.
NRS 78.645   Corporation may resume control upon payment of debts and receipt of capital to conduct business; order of court dissolving corporation and forfeiting charter.
NRS 78.650   Stockholders' application for injunction and appointment of receiver when corporation mismanaged.
NRS 78.655   Reorganization of corporation by majority of stockholders during receivership.
NRS 78.660   Powers of district court.
NRS 78.665   Receiver to take possession of corporate assets upon court order.
NRS 78.670   Inventory, list of debts and reports by receiver.
NRS 78.675   Creditors' proofs of claims; when participation barred; notice.
NRS 78.680   Creditors' claims to be in writing under oath; examination of claimants.
NRS 78.685   Action on creditors' claims; appeal of disallowed claims.
NRS 78.695   Substitution of receiver as a party; abatement of actions.
NRS 78.700   Sales of encumbered or deteriorating property.
NRS 78.705   Compensation, costs and expenses of receiver.
NRS 78.710   Distribution of money to creditors and stockholders.
NRS 78.715   Acts of majority of receivers effectual; removal and vacancies.
NRS 78.720   Employees' liens for wages when corporation insolvent.

REINCORPORATION; RENEWAL AND REVIVAL OF CHARTERS
NRS 78.725   Domestic corporations in existence on April 1, 1925, may reincorporate under this chapter.
NRS 78.730   Renewal or revival: Procedure; fee; certificate as evidence.
NRS 78.740   Renewal or revival: Status of corporation.

SUITS AGAINST CORPORATIONS, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND STOCKHOLDERS
NRS 78.745   Action against stockholder for unpaid subscriptions; limitation of action.
NRS 78.750   Service of process on corporations.
NRS 78.7502   Discretionary and mandatory indemnification of officers, directors, employees and agents: General provisions.
NRS 78.751   Authorization required for discretionary indemnification; advancement of expenses; limitation on indemnification and advancement of expenses.
NRS 78.752   Insurance and other financial arrangements against liability of directors, officers, employees and agents.

SECRETARY OF STATE: DUTIES AND FEES
NRS 78.755   Duties: Collection of fees; employment of new technology to aid in performance.
NRS 78.760   Filing fees: Articles of incorporation.
NRS 78.765   Filing fees: Certificate changing number of authorized shares; amendment of articles; certificate of correction.
NRS 78.767   Filing fees: Certificates of restated articles of incorporation.
NRS 78.770   Filing fees: Articles of merger; articles of exchange.
NRS 78.780   Filing fees: Certificates of extension and dissolution.
NRS 78.785   Miscellaneous fees.

MISCELLANEOUS PROVISIONS
NRS 78.795   Registration of natural person or corporation willing to serve as resident agent for corporation, limited-liability company or limited partnership.

CHAPTER 78
PRIVATE CORPORATIONS

CROSS REFERENCES

Abandoned or unclaimed property, NRS ch. 120A
Administrators, corporations may act as, NRS 138.050, 142.010
Advertising and sales practices, liability for false, deceptive or misleading, NRS 207.170-207.177
Banking corporations

Corporate requirements, NRS ch. 661
Organization, NRS ch. 659

Campground, association for memberships in, NRS 119B.300
Charitable Corporation Act, NRS 81.550-81.660
Criminal actions

Existence proved by general reputation, NRS 175.241
Misdemeanor penalty when not fixed by statute, NRS 193.160
Summons, NRS 171.112

Development corporations, NRS ch. 670
Dissolution, deceptive trade practices, NRS 598.0999
Economic revitalization and diversification, corporations for, NRS ch. 670A
Eminent domain powers, NRS 37.230
Executors, corporations may act as, NRS 138.050, 142.010
Fictitious name, filing certificate prerequisite to transacting business, NRS 602.010, 602.020
Foreign trade zones, establishment, NRS ch. 237A
Formation by special act prohibited, Const. Art. 8 1
Gaming corporations, NRS ch. 463
Insurance companies

Corporate powers, NRS ch. 693A
Formation, NRS ch. 692B
Insider trading of equity securities, NRS ch. 694A

Insurance Holding Company Law, NRS ch. 692C
Investment securities, Uniform Commercial Code, NRS 104.8101-104.8408
Liability for injuries caused by employees, NRS 41.130
License fees may be imposed by cities, NRS 266.600
Merger or exchange of interest, NRS ch. 92A
Mining corporations, NRS ch. 520
Mortgage includes deed of trust, NRS 0.037
Officers and directors

Actions against directors, limitations of actions, NRS 11.380
Arrest of corporate officer for misapplication or conversion of funds to his own use, NRS 31.480
Director ousted by quo warranto proceedings, NRS 35.130, 35.230
Industrial insurance coverage, NRS 616B.624, 617.207
Liability of directors for misconduct of director, NRS 35.230
Verification of pleadings by corporate officer, NRS 15.010

Powers

Capacity to sue and be sued, Const. Art. 8 5; N.R.C.P. 17(b); JCRCP 17(b)
General law, subject to alteration or repeal, Const. Art. 8 1

Process, service on, N.R.C.P. 4(d); JCRCP 4(d)
Professional corporations and associations, NRS ch. 89
Public utility includes parent corporation and affiliated corporation, NRS 704.855
Quo warranto proceedings

Action by state for nonuse or misuse of franchise, NRS 35.020
Attorney general begins action, NRS 35.030
De facto corporations, NRS 35.010
Dissolution, restraint of corporation, NRS 35.150
Trustee for creditors and stockholders appointed, NRS 35.160, 35.220

Real estate law inapplicable, NRS 645.240
Real property transfer tax, exemption, NRS 375.090
Receiver appointed when corporation dissolved or insolvent, NRS 32.010
Savings and loan associations, loans, NRS 673.3244
Securities, regulation of sales, NRS ch. 90
Shareholders

Actions against shareholders, limitation of actions, NRS 11.380
Derivative actions by shareholders, NRS 41.520; N.R.C.P. 23.1
Dissenters' rights, NRS 92A.300-92A.500
Liabilities of shareholders, Const. Art. 8 3

Special legislation prohibited, Const. Art. 8 1
Stock

Assessment of, NRS 361.235
Forgery of certificates unlawful, NRS 205.090
Fraudulent issue unlawful, NRS 205.435
Publication of false statements to affect market price unlawful, NRS 205.440
Shares liable for execution, NRS 21.080
Unpaid subscription subject to garnishment, NRS 31.293

Taxation

License tax may be imposed by cities, NRS 266.600
Property taxed in county where situated, Const. Art. 8 2; NRS 361.235

Time-share project, association for, NRS 119A.520

NEVADA CASES.

Holder and owner of stock are both stockholders. Under ch. 111, Stats. 1865 (cf. NRS ch. 78), relating to corporations, one who holds shares of stock is recognized as stockholder as well as one who owns them. State ex rel. Rankin v. Leete, 16 Nev. 242 (1881)

Receiver appointed for corporation needs further authority to handle affairs of different corporation. Receiver appointed under NRS ch. 78 to handle affairs of one private corporation may not, without additional authority from court, handle affairs of another private corporation. Jones v. Free, 83 Nev. 31, 422 P.2d 551 (1967)

ATTORNEY GENERAL'S OPINIONS.

Certain nonprofit corporations must file new articles to become for profit. Nonstock, nonprofit, cooperative corporation organized under NRS 81.410-81.540 does not have power either through its bylaws or through general powers granted to corporations to change nature of entity to profit corporation by amendment, but must instead file new articles of incorporation as profit corporation under NRS ch. 78. AGO 134 (5-5-1964) Corporation may not practice medicine unless physicians incorporate under NRS ch. 89. No corporation organized under state's general corporation law (see NRS ch. 78) may lawfully engage in practice of medicine as defined in NRS 630.020, but one or more licensed physicians may practice medicine in corporate form if they are incorporated under NRS ch. 89 (Professional Corporations and Associations Act) and strictly comply with its provisions. AGO 219 (10-3-1977)

GENERAL PROVISIONS

NRS 78.010   Definitions; construction.

1.   As used in this chapter:

(a) "Approval" and "vote" as describing action by the directors or stockholders mean the vote of directors in person or by written consent or of stockholders in person, by proxy or by written consent.
(b) "Articles," "articles of incorporation" and "certificate of incorporation" are synonymous terms and unless the context otherwise requires, include all certificates filed pursuant to NRS 78.030, 78.195, 78.209, 78.380, 78.385 and 78.390 and any articles of merger or exchange filed pursuant to NRS 92A.200 to 92A.240, inclusive. Unless the context otherwise requires, these terms include restated articles and certificates of incorporation.
(c) "Directors" and "trustees" are synonymous terms.
(d) "Receiver" includes receivers and trustees appointed by a court as provided in this chapter or in chapter 32 of NRS.
(e) "Registered office" means the office maintained at the street address of the resident agent.
(f) "Resident agent" means the agent appointed by the corporation upon whom process or a notice or demand authorized by law to be served upon the corporation may be served.
(g) "Stockholder of record" means a person whose name appears on the stock ledger of the corporation.

2.   General terms and powers given in this chapter are not restricted by the use of special terms, or by any grant of special powers contained in this chapter.
  [Part 47:177:1925; NCL 1646] + [83:177:1925; A 1931, 415; 1931 NCL 1682](NRS A 1965, 216; 1977, 184; 1989, 871; 1991, 1207; 1993, 944; 1995, 2093; 1997, 695)

NRS 78.015   Applicability of chapter; effect on corporations existing before April 1, 1925.

1.   The provisions of this chapter apply to:

(a) Corporations organized in this state on or after October 1, 1991, except: (1) Where the provisions of chapters 80, 84 and 89 of NRS are inconsistent with the provisions of this chapter;

(2) Corporations expressly excluded by the provisions of this chapter; and
(3) Corporations governed by the provisions of NRS 81.170 to 81.540, inclusive, and chapter 82 of NRS.

(b) Corporations whose charters are renewed or revived in the manner provided in NRS 78.730.
(c) Corporations organized and still existing under this chapter before October 1, 1991, or any prior act or any amendment thereto.
(d) Close corporations, unless otherwise provided in chapter 78A of NRS.
(e) All insurance companies, mutual fire insurance companies, surety companies, express companies, railroad companies, and public utility companies now existing and formed before October 1, 1991, under any other act or law of this state, subject to any special provisions concerning any class of corporations inconsistent with the provisions of this chapter, in which case the special provisions continue to apply.

2.   Neither the existence of corporations formed or existing before April 1, 1925, nor any liability, cause of action, right, privilege or immunity validly existing in favor of or against any such corporation on April 1, 1925, are affected, abridged, taken away or impaired by this chapter, or by any change in the requirements for the formation of corporations provided by this chapter, nor by the amendment or repeal of any laws under which such prior existing corporations were formed or created.
  [1:177:1925; A 1935, 146; 1937, 4; 1945, 196; 1943 NCL 1600](NRS A 1989, 948; 1991, 1207; 1995, 2094)

ATTORNEY GENERAL'S OPINIONS.

Secretary of state may not determine merits of application but may determine rights of corporation. Although secretary of state has no discretion to determine merits of application for incorporation, he may consider statutes dealing with corporations and in applying these may determine rights of corporation as shown on face of its articles. AGO 677 (9-22-1948)

Assessment of stock permitted by corporation organized under prior law. Corporation organized under 1885 law authorizing assessment of capital stock may make such assessments notwithstanding fact that present statutes prohibit them. AGO 165 (5-6-1952)

NRS 78.020   Limitations on incorporation under chapter; compliance with other laws.

1.   Insurance companies, mutual fire insurance companies, surety companies, express companies and railroad companies may be formed under this chapter, but such a corporation may not:

(a) Transact any such business within this state until it has first complied with all laws concerning or affecting the right to engage in such business.
(b) Infringe the laws of any other state or country in which it may intend to engage in business, by so incorporating under this chapter.

2.   No trust company, savings and loan association, thrift company or corporation organized for the purpose of conducting a banking business may be organized under this chapter.
  [Part 4:177:1925; A 1929, 413; 1931, 415; 1949, 158; 1955, 402](NRS A 1975, 1; 1983, 117; 1997, 1014)

ATTORNEY GENERAL'S OPINIONS.

Foreign trust company must qualify under banking law to deal in mortgages. Foreign trust company, in order to buy, sell mortgages on real estate in Nevada, must qualify under banking laws rather than general corporation laws. AGO 709 (12-17-1948)

NRS 78.025   Reserved power of state to amend or repeal chapter; chapter part of corporation's charter.   This chapter may be amended or repealed at the pleasure of the legislature, and every corporation created under this chapter, or availing itself of any of the provisions of this chapter, and all stockholders of such corporation shall be bound by such amendment; but such amendment or repeal shall not take away or impair any remedy against any corporation, or its officers, for any liability which shall have been previously incurred. This chapter, and all amendments thereof, shall be a part of the charter of every corporation, except so far as the same are inapplicable and inappropriate to the objects of the corporation.
  [2:177:1925; NCL 1601]

ATTORNEY GENERAL'S OPINIONS.

No vested right to immunity from further regulation. Reservation of right to change corporation laws by legislature means that no corporation can claim any vested right to be immune from further regulation. AGO 91 (8-4-1955)

NRS 78.027   Corporate documents: Microfilming and return.   The secretary of state may microfilm any document which is filed in his office by a corporation pursuant to this chapter and may return the original document to the corporation.
  (Added to NRS by 1977, 572)

NRS 78.028   Filing of documents written in language other than English.   No document which is written in a language other than English may be filed or submitted for filing in the office of the secretary of state pursuant to the provisions of this chapter unless it is accompanied by a verified translation of that document into the English language.
  (Added to NRS by 1995, 1112)

NRS 78.029   Procedure to submit replacement page to secretary of state before filing of document.   An incorporator or officer of a corporation may authorize the secretary of state in writing to replace any page of a document submitted for filing on an expedited basis, before the actual filing, and to accept the page as if it were part of the originally signed filing. The signed authorization of the incorporator or officer to the secretary of state permits, but does not require, the secretary of state to alter the original document as requested.
  (Added to NRS by 1997, 2807)

NRS 78.0295   Incorrect or defective document: Certificate of correction; effective date of correction.

1.   A corporation may correct a document filed by the secretary of state if the document contains an incorrect statement or was defectively executed, attested, sealed, verified or acknowledged.
2.   To correct a document, the corporation shall:

(a) Prepare a certificate of correction which:

(1) States the name of the corporation;
(2) Describes the document, including, without limitation, its filing date;
(3) Specifies the incorrect statement and the reason it is incorrect or the manner in which the execution or other formal authentication was defective;
(4) Corrects the incorrect statement or defective execution; and
(5) Is signed by an officer of the corporation; and

(b) Deliver the certificate to the secretary of state for filing.

3.   A certificate of correction is effective on the effective date of the document it corrects except as to persons relying on the uncorrected document and adversely affected by the correction. As to those persons, the certificate is effective when filed.
  (Added to NRS by 1997, 693)

FORMATION

NRS 78.030   Filing of articles of incorporation and certificate of acceptance of appointment of resident agent.

1.   One or more persons may establish a corporation for the transaction of any lawful business, or to promote or conduct any legitimate object or purpose, pursuant and subject to the requirements of this chapter, by:

(a) Executing, acknowledging and filing in the office of the secretary of state articles of incorporation; and
(b) Filing a certificate of acceptance of appointment, executed by the resident agent of the corporation, in the office of the secretary of state.

2.   The articles of incorporation must be as provided in NRS 78.035, and the secretary of state shall require them to be in the form prescribed. If any articles are defective in this respect, the secretary of state shall return them for correction.
  [3:177:1925; A 1931, 415; 1931 NCL 1602](NRS A 1963, 70; 1979, 394; 1981, 1888; 1989, 948; 1991, 1208; 1995, 2095)

FEDERAL AND OTHER CASES.

Restriction to lawful purposes. In proceeding by judgment creditor of one corporation against assets of another which was bankrupt, principle that corporate identity could not be used to perpetrate fraud or illegal acts because NRS 78.030 only permits formation of corporation for lawful business did not apply to minor transfers by corporation to stockholders which were not shown to be fraudulent conveyances. In re Twin Lakes Village, Inc., 2 B.R. 532 (Bankr. D. Nev. 1980)

ATTORNEY GENERAL'S OPINIONS.

Incorporator cannot take own acknowledgment. Incorporator cannot take his own acknowledgment on articles or incorporation. AGO 110 (1-9-1914)

County clerk cannot charge recording fee to file articles. County clerk not required to record articles of incorporation. Thus he cannot charge recording fee at time articles filed. AGO 25 (3-29-1917)

Within discretion of secretary of state to determine compliance with law. It is within discretion of secretary of state to determine whether articles of incorporation submitted to him comply, on their face, with statutory requirements. AGO 29 (3-29-1955)

NRS 78.035   Articles of incorporation: Required provisions.   The articles of incorporation must set forth:

1.   The name of the corporation. A name appearing to be that of a natural person and containing a given name or initials must not be used as a corporate name except with an additional word or words such as "Incorporated," "Limited," "Inc.," "Ltd.," "Company," "Co.," "Corporation," "Corp.," or other word which identifies it as not being a natural person.
2.   The name of the person designated as the corporation's resident agent, the street address of the resident agent where process may be served upon the corporation, and the mailing address of the resident agent if different from the street address.
3.   The number of shares the corporation is authorized to issue and, if more than one class or series of stock is authorized, the classes, the series and the number of shares of each class or series which the corporation is authorized to issue, unless the articles authorize the board of directors to fix and determine in a resolution the classes, series and numbers of each class or series as provided in NRS 78.195 and 78.196.
4.   Whether the members of the governing board are styled as directors or trustees of the corporation, and the number, names and post office box or street addresses, either residence or business, of the first board of directors or trustees, together with any desired provisions relative to the right to change the number of directors as provided in NRS 78.115.
5.   The name and post office box or street address, either residence or business of each of the incorporators executing the articles of incorporation.
  [Part 4:177:1925; A 1929, 413; 1931, 415; 1949, 158; 1955, 402](NRS A 1957, 75; 1967, 769; 1981, 1888; 1985, 1785; 1987, 81, 574, 1054; 1991, 1208; 1993, 945; 1995, 2095)

NEVADA CASES.

Effect on venue. Where official corporate documents designated Washoe County as principal place of business of corporation but actual location of business conducted by corporation was in Pershing County, motion by defendant corporation under NRS 13.040 to change venue from Washoe County to Pershing County was improperly granted, although motion under NRS 13.050 on ground of convenience of witnesses might have been granted, because one purpose of statute requiring corporation to designate location of principal office or place of business was to fix its location or residence under venue statutes, and corporation would not be permitted to contradict its official documents on file with secretary of state. (See NRS 78.055 and 78.090 and former provisions of NRS 78.035 and 78.110.) Flournoy v. McKinnon Ford Sales, 90 Nev. 119, 520 P.2d 600 (1974)

ATTORNEY GENERAL'S OPINIONS.

GENERAL

Articles are contract. Articles of incorporation constitute contract between incorporators and state and between incorporators and shareholders. AGO 43 (4-14-1955)

SECRETARY OF STATE

Ministerial duty of filing. Secretary of state's duty in connection with filing corporate papers is ministerial. AGO 193 (9-4-1925)

Must file articles that comply with law. Duties of secretary of state with respect to filing articles of incorporation are ministerial; if articles comply with statute, he has no discretion and may be compelled by mandamus to file them. AGO 33 (5-28-1931)

Clear invalidity required to refuse articles; corporation with similar name may seek injunction. Secretary of state not authorized to refuse to file articles of incorporation unless clearly invalid. Thus, where there is problem as to similarity of names secretary of state has duty to file articles; injured corporation's remedy is injunction. AGO A-52 (2-15-1940)

May not determine merits of application; may determine rights of corporation. Although secretary of state has no discretion to determine merits of application for incorporation, he may consider statutes dealing with corporations and in applying these may determine rights of corporation as shown on face of its articles. AGO 677 (9-22-1948)

Powers limited to specific grants. Secretary of state is ministerial officer concerning corporations; can exercise only such powers as specifically granted by statute. AGO 776 (7-14-1949)

May determine facial compliance with law. It is within discretion of secretary of state to determine whether articles of incorporation submitted to him comply, on their face, with statutory requirements. AGO 29 (3-29-1955)

STOCK

Articles invalid that authorize directors to issue stock without providing for stock. Under NCL 1610 (cf. NRS 78.195) corporate directors may be authorized to issue various classes of stock upon their own resolution. However, such classes of stock must be already provided for in the articles as required by NCL. Articles authorizing directors to issue such stock without specifically providing for such stock are invalid. AGO 100 (9-8-1955)

MISCELLANEOUS

Valid to provide for variable number of directors. Statement in articles of incorporation that board of directors shall not be less than three nor more than seven is valid. AGO 280 (9-29-1927)

Religious or charitable corporations not required to adopt or file articles. Religious or charitable corporations are not required to adopt articles of incorporation or file them with secretary of state. AGO B-30 (1-7-1941)

No certificate of qualification when subordinate in authority to domestic organization. The Most Worshipful St. Andrew's Lodge A.F. & A.M. Scottish Rite of California is not entitled to file and receive certificate of qualification as it is subordinate in authority to Free and Accepted Masons of Nevada. AGO 677 (9-22-1948)

NRS 78.037   Articles of incorporation: Optional provisions.   The articles of incorporation may also contain:

1.   A provision eliminating or limiting the personal liability of a director or officer to the corporation or its stockholders for damages for breach of fiduciary duty as a director or officer, but such a provision must not eliminate or limit the liability of a director or officer for:

(a) Acts or omissions which involve intentional misconduct, fraud or a knowing violation of law; or
(b) The payment of distributions in violation of NRS 78.300.

2.   Any provision, not contrary to the laws of this state, for the management of the business and for the conduct of the affairs of the corporation, and any provision creating, defining, limiting or regulating the powers of the corporation or the rights, powers or duties of the directors, and the stockholders, or any class of the stockholders, or the holders of bonds or other obligations of the corporation, or governing the distribution or division of the profits of the corporation.
  (Added to NRS by 1987, 80; A 1991, 1210; 1993, 945)

NRS 78.039   Name of corporation: Distinguishable name required; availability of name of revoked, terminated or merged corporation.

1.   The name proposed for a corporation must be distinguishable from the names of all other artificial persons organized or registered under chapter 78, 78A, 80, 81, 82, 84, 86, 87, 88 or 89 of NRS whose names are on file in the office of the secretary of state. If a proposed name is not so distinguishable, the secretary of state shall return the articles of incorporation containing the proposed name to the incorporator, unless the written acknowledged consent of the holder of the registered or reserved name to use the same name or the requested similar name accompanies the articles of incorporation.
2.   For the purposes of this section and NRS 78.040, a proposed name is not distinguished from a registered or reserved name solely because one or the other contains distinctive lettering, a distinctive mark, a trade-mark or a trade name or any combination of these.
3.   The name of a corporation whose charter has been revoked, whose existence has terminated, which has merged and is not the surviving corporation, or which for any other reason is no longer in good standing in this state is available for use by any other artificial person.
  (Added to NRS by 1975, 477; A 1987, 1056; 1991, 1210; 1993, 945; 1997, 2807)

FEDERAL AND OTHER CASES.

Common law of unfair competition applicable under circumstances where statutes inapplicable. In diversity action against Nevada corporation for trade-mark infringement, because (1) provisions of former NRS 600.010 et seq. (cf. NRS 600.240 et seq.), relating to protection of trade-marks, were inapplicable because plaintiff foreign corporation had not registered trade-mark with secretary of state, and (2) protection under former provisions of NRS 78.035 (cf. NRS 78.039), prohibiting use of same or deceptively similar corporate name, was not available because foreign corporation was not authorized to do business in Nevada, claim was brought under Nevada's common law of unfair competition because of deceptive similarity between corporate names. Wells Fargo & Co. v. Wells Fargo Express Co., 358 F. Supp. 1065 (1973)

ATTORNEY GENERAL'S OPINIONS.

Reorganized corporation may adopt name similar to original. Statute prohibiting similar names does not apply to reorganized corporation desirous of adopting name similar to that of original corporation. AGO 110 (1-9-1914)

Conflicts in names determined by records of secretary of state. Secretary of state should stand on records in his office in determining whether name of proposed corporation conflicts with name of existing corporation. AGO 134 (5-19-1920)

May use name inferring different business than authorized. Use of words "Investment Trust" or "Trust Company" in name of corporation organized under general corporation law does not make name invalid merely because such words infer different business than that authorized. AGO 33 (5-28-1931)

Certain similarity in names permissible. Similarity of corporate names "Peoples Furniture Exchange, Inc." and "Peoples Furniture Company, Inc." is not sufficient to warrant secretary of state to refuse to file articles. AGO A-52 (2-15-1940)

Intent of statute. Intent of NCL 1603 (cf. NRS 78.035 and 80.010) is to prevent confusion, fraud and infringement. AGO 50 (4-26-1951)

Determination of similarity of names based on standard of reasonable person. In determining whether two corporate names are so similar as to be misleading, it is not sufficient that some person may possibly be misled, but similarity must be such that any reasonable person would be likely to mistake one for the other. Thus the names "Nevaco Lumber Co." and "Nevada Lumber Co." may exist together. AGO 50 (4-26-1951)

Secondary meaning required for right to exclusive use of geographical words. Corporation cannot acquire right to exclusive use of geographical words in corporate name unless such words have acquired in mind of public secondary meaning as denoting goods or business of that particular corporation. Thus Nevaco Lumber Co. is valid name even though Nevada Lumber Co. already exists. AGO 50 (4-26-1951)

Certificate of qualification denied for similarity of name. Sovereign council of Independent Free and Accepted Masons, Inc., is not entitled to file and receive certificate of qualification to do business in state because of similarity of name to Grand Lodge of the Ancient Order of Free and Accepted Masons. AGO 226 (1-12-1953)

Corporation must have distinguishable name; test; reason for rule. Corporation must be given name distinguishable from any other corporation. Test to be employed is whether there is sufficient similarity of names as to mislead or produce confusion. Primary reason for the rule is to protect the public and prevent deception as well as to prevent unfair trade practices between corporations. AGO 29 (3-29-1955)

Purposes for prohibiting similar names. Purposes of statute prohibiting deceptively similar names of corporations are: (1) protection of vested rights to corporate names; (2) protection of public from deception, confusion; (3) prevention of unnecessary litigation. AGO 42 (4-14-1955)

Similarity does not require intent. Term "deceptively similar" refers to deception of general public, is not requirement that there be actual intent to deceive. AGO 42 (4-14-1955)

Secretary of state may determine similarity in names; cannot consider unity of ownership or management unless in articles. Secretary of state has discretion to determine whether or not deceptive similarity exists in name of existing corporation and name of proposed corporation, and his decision is final and reviewable only by courts. However, in making such determination he cannot consider information as to unity of ownership of present and proposed corporation, or unity of proposed management, unless such information appears in articles. AGO 42 (4-14-1955)

Test for determining whether name of business is deceptively similar to another name is whether person of average intelligence would be mislead. Secretary of state has authority to determine whether name of business entity filing articles of incorporation is deceptively similar to name of another business entity already on file. In determining whether name is deceptively similar, general rule is to determine whether similarity of names is such as to mislead person of average intelligence. (See NRS 78.039.) AGO 94-11 (5-25-1994)

NRS 78.040   Name of corporation: Reservation; injunctive relief.

1.   The secretary of state, when requested so to do, shall reserve, for a period of 90 days, the right to use any name available under NRS 78.039, for the use of any proposed corporation. During the period, a name so reserved is not available for use by any corporation, limited partnership or limited-liability company without the consent of the person at whose request the reservation was made.
2.   The use by any corporation, limited partnership or limited-liability company of a name in violation of NRS 78.039 or subsection 1 of this section may be enjoined, notwithstanding the fact that the articles of incorporation or organization of the corporation or limited-liability company, or the certificate of limited partnership, may have been filed by the secretary of state.
  [4a:177:1925; added 1931, 415; 1931 NCL 1603.01] + [4b:177:1925; added 1931, 415; 1931 NCL 1603.02](NRS A 1963, 64; 1979, 395; 1981, 472; 1987, 1056; 1993, 946)

ATTORNEY GENERAL'S OPINIONS.

Clear invalidity required to refuse articles; corporation with similar name may seek injunction. Secretary of state not authorized to refuse to file articles of incorporation unless clearly invalid. Thus, where there is problem as to similarity of names secretary of state has duty to file articles; injured corporation's remedy is injunction. AGO A-52 (2-15-1940)

NRS 78.045   Articles of incorporation: Approval or certification required before filing of certain articles or amendments.

1.   The secretary of state shall not accept for filing any articles of incorporation or any certificate of amendment of articles of incorporation of any corporation formed pursuant to the laws of this state which provides that the name of the corporation contain the word "bank" or "trust," unless:

(a) It appears from the articles or the certificate of amendment that the corporation proposes to carry on business as a banking or trust company, exclusively or in connection with its business as a bank or savings and loan association; and
(b) The articles or certificate of amendment is first approved by the commissioner of financial institutions.

2.   The secretary of state shall not accept for filing any articles of incorporation or any certificate of amendment of articles of incorporation of any corporation formed pursuant to the provisions of this chapter when it appears from the articles or the certificate of amendment that the business to be carried on by the corporation is subject to supervision by the commissioner of insurance or by the commissioner of financial institutions, unless the articles or certificate of amendment is first approved by the commissioner who will be supervising the business of the corporation.
3.   Except as otherwise provided in subsection 4, the secretary of state shall not accept for filing any articles of incorporation or any certificate or amendment of articles of incorporation of any corporation formed pursuant to the laws of this state if the name of the corporation contains the words "engineer," "engineered," "engineering," "professional engineer" or "licensed engineer" unless:

(a) The state board of professional engineers and land surveyors certifies that the principals of the corporation are licensed to practice engineering pursuant to the laws of this state; or
(b) The state board of professional engineers and land surveyors certifies that the corporation is exempt from the prohibitions of NRS 625.520.

4.   The provisions of subsection 3 do not apply to any corporation, whose securities are publicly traded and regulated by the Securities Exchange Act of 1934, which does not engage in the practice of professional engineering.
5.   The commissioner of financial institutions and the commissioner of insurance may approve or disapprove the articles or amendments referred to them pursuant to the provisions of this section.
  [4.5:177:1925; added 1949, 520; 1943 NCL 1603.1](NRS A 1977, 1056; 1979, 1102; 1983, 467, 1696; 1987, 1873; 1993, 128; 1995, 1112; 1997, 1058)

NRS 78.050   Commencement of corporate existence.

1.   Upon the filing of the articles of incorporation and the certificate of acceptance pursuant to NRS 78.030, and the payment of the filing fees, the secretary of state shall issue to the corporation a certificate that the articles, containing the required statement of facts, have been filed. From the date the articles are filed, the corporation is a body corporate, by the name set forth in the articles of incorporation, subject to the forfeiture of its charter or dissolution as provided in this chapter.
2.   Neither an incorporator nor a director designated in the articles of incorporation thereby becomes a subscriber or stockholder of the corporation.
3.   The filing of the articles of incorporation does not, by itself, constitute commencement of business by the corporation.
  [Part 5:177:1925; NCL 1604](NRS A 1989, 948; 1991, 1211; 1993, 946)

NRS 78.055   Acceptable evidence of incorporation.   A copy of any articles of incorporation filed pursuant to this chapter, and certified by the secretary of state under his official seal, or, with respect to a corporation organized before October 1, 1991, a copy of the copy thereof, filed with the county clerk, or microfilmed by the county clerk, under the county seal, certified by the clerk, must be received in all courts and places as prima facie evidence of the facts therein stated, and of the existence and incorporation of the corporation therein named.
  [Part 5:177:1925; NCL 1604](NRS A 1963, 70; 1991, 1211)

NEVADA CASES.

Effect on venue. Where official corporate documents designated Washoe County as principal place of business of corporation but actual location of business conducted by corporation was in Pershing County, motion by defendant corporation under NRS 13.040 to change venue from Washoe County to Pershing County was improperly granted, although motion under NRS 13.050 on ground of convenience of witnesses might have been granted, because one purpose of statute requiring corporation to designate location of principal office or place of business was to fix its location or residence under venue statutes, and corporation would not be permitted to contradict its official documents on file with secretary of state. (See NRS 78.055 and 78.090 and former provisions of NRS 78.035 and 78.110.) Flournoy v. McKinnon Ford Sales, 90 Nev. 119, 520 P.2d 600 (1974)

POWERS

NRS 78.060   General powers.

1.   Any corporation organized under the provisions of this chapter:

(a) Has all the rights, privileges and powers conferred by this chapter.
(b) Has such rights, privileges and powers as may be conferred upon corporations by any other existing law.
(c) May at any time exercise those rights, privileges and powers, when not inconsistent with the provisions of this chapter, or with the purposes and objects for which the corporation is organized.
(d) Unless otherwise provided in its articles, has perpetual existence.

2.   Every corporation, by virtue of its existence as such, is entitled:

(a) To have succession by its corporate name until dissolved and its affairs are wound up according to law.
(b) To sue and be sued in any court of law or equity.
(c) To make contracts.
(d) To hold, purchase and convey real and personal estate and to mortgage or lease any such real and personal estate with its franchises. The power to hold real and personal estate includes the power to take it by devise or bequest in this state, or in any other state, territory or country.
(e) To appoint such officers and agents as the affairs of the corporation require, and to allow them suitable compensation.
(f) To make bylaws not inconsistent with the constitution or laws of the United States, or of this state, for the management, regulation and government of its affairs and property, the transfer of its stock, the transaction of its business, and the calling and holding of meetings of its stockholders.
(g) To wind up and dissolve itself, or be wound up or dissolved, in the manner mentioned in this chapter.
(h) Unless otherwise provided in the articles, to engage in any lawful activity.

  [Part 8:177:1925; NCL 1607] + [91:177:1925; NCL 1690](NRS A 1969, 99; 1991, 1211)

NRS CROSS REFERENCES.
  Power to sue and be sued, constitutional guarantee, Const. Art. 8 5

NEVADA CASES.

Corporate real property must be necessary for corporate purposes. Corporation may hold only such real property as is necessary for purposes of corporation, sec. 4, ch. 111, Stats. 1864-1865 (cf. NRS 78.060 and 78.070). Whitman Gold & Silver Mining Co. v. Baker, 3 Nev. 386 (1867)

FEDERAL AND OTHER CASES.

Quorum necessary to amend provision in bylaws for quorum. Under NRS 78.060, 78.115 and 78.315, which relate to powers, boards of directors, and meetings of directors of corporations, bylaw which provided that four of five directors were necessary to constitute quorum was valid, and purported amendment to bylaws of corporation by three of five members of board in absence of other two was void. Olincy v. Merle Norman Cosmetics, Inc., 19 Cal. Rptr. 387 (Dist. Ct. App. 1962)

NRS 78.065   Adoption and use of corporate seal or stamp.

1.   Every corporation, by virtue of its existence as such, shall have power to adopt and use a common seal or stamp, and alter the same at pleasure.
2.   The use of a seal or stamp by a corporation on any corporate documents is not necessary. The corporation may use a seal or stamp, if it desires, but such use or nonuse shall not in any way affect the legality of the document.
  [Part 8:177:1925; NCL 1607] + [85:177:1925; A 1953, 180](NRS A 1967, 102; 1971, 1100)

ATTORNEY GENERAL'S OPINIONS.

Corporate acts valid without seal. Corporation has discretion to adopt seal or not. If seal is adopted, acts of corporation are not invalid merely because seal not used. AGO 121 (12-6-1951)

NRS 78.070   Specific powers.   Subject to such limitations, if any, as may be contained in its articles of incorporation, every corporation has the following powers:

1.   To borrow money and contract debts when necessary for the transaction of its business, or for the exercise of its corporate rights, privileges or franchises, or for any other lawful purpose of its incorporation; to issue bonds, promissory notes, bills of exchange, debentures, and other obligations and evidences of indebtedness, payable at a specified time or times, or payable upon the happening of a specified event or events, whether secured by mortgage, pledge or other security, or unsecured, for money borrowed, or in payment for property purchased, or acquired, or for any other lawful object.
2.   To guarantee, purchase, hold, take, obtain, receive, subscribe for, own, use, dispose of, sell, exchange, lease, lend, assign, mortgage, pledge, or otherwise acquire, transfer or deal in or with bonds or obligations of, or shares, securities or interests in or issued by, any person, government, governmental agency or political subdivision of government, and to exercise all the rights, powers and privileges of ownership of such an interest, including the right to vote, if any.
3.   To purchase, hold, sell, pledge and transfer shares of its own stock, and use therefor its property or money.
4.   To conduct business, have one or more offices, and hold, purchase, mortgage and convey real and personal property in this state, and in any of the several states, territories, possessions and dependencies of the United States, the District of Columbia, Puerto Rico and any foreign countries.
5.   To do everything necessary and proper for the accomplishment of the objects enumerated in its articles of incorporation or necessary or incidental to the protection and benefit of the corporation, and, in general, to carry on any lawful business necessary or incidental to the attainment of the objects of the corporation, whether or not the business is similar in nature to the objects set forth in the articles of incorporation, except that:

(a) A corporation created under the provisions of this chapter does not possess the power of issuing bills, notes or other evidences of debt for circulation of money; and
(b) This chapter does not authorize the formation of banking corporations to issue or circulate money or currency within this state, or outside of this state, or at all, except the federal currency, or the notes of banks authorized under the laws of the United States.

6.   To make donations for the public welfare or for charitable, scientific or educational purposes.
7.   To enter into any relationship with another person in connection with any lawful activities.
  [9:177:1925; A 1931, 415; 1949, 158; 1953, 180](NRS A 1959, 690; 1963, 1146; 1969, 117; 1987, 576; 1991, 1212; 1993, 947; 1997, 696)

NEVADA CASES.

Corporate real property must be necessary for corporate purposes. Corporation may hold only such real property as is necessary for purposes of corporation, sec. 4, ch. 111, Stats. 1864-1865 (cf. NRS 78.060 and 78.070). Whitman Gold & Silver Mining Co. v. Baker, 3 Nev. 386 (1867)

ATTORNEY GENERAL'S OPINIONS.

Surplus funds usable for working capital of insurer; insurer may borrow under certain conditions. Working capital of insurance company may be secured by accumulating surplus funds for purpose, and there is nothing in insurance law to prohibit company from borrowing money, if borrower is not obliged to pay loan except from profit made in use of it and capital of company is not impaired thereby. AGO 729 (3-3-1949)

Insurer cannot use its licensed agents to solicit sales of stock. Under 1931 NCL 3656.82 (cf. NRS 690.050), there is nothing prohibiting sale of stock by foreign insurance company providing the company conforms to statutory manner, but sales cannot be solicited by licensed agents of the insurance company. AGO 823 (11-4-1949)

Corporation may purchase own shares without amending articles. NCL 1608 (cf. NRS 78.070) gave corporation power to purchase own shares out of capital without necessity of filing amendment to articles, so long as such purchase did not impair capital to detriment of shareholders and creditors. (See NRS 78.385.) AGO 923 (5-24-1950)

NRS 78.075   Railroad companies: Powers.   In furtherance of and in addition to the powers which railroad companies organized under this chapter are entitled to exercise, but not in limitation of any of the powers granted by this chapter, every railroad company may:

1.   Cause such examination and surveys for the proposed railroad to be made as may be necessary to the selection of the most advantageous route for the railroad, and for such purposes, by their officers, agents and employees, to enter upon the lands or waters of any persons, but subject to responsibility for all damages which they do thereto.
2.   Receive, hold, take and convey, by deed or otherwise, as a natural person might or could do, such voluntary grants and donations of real estate, and other property of every description, as may be made to it to aid and encourage the construction, maintenance and accommodation of the railroad.
3.   Purchase, and by voluntary grants and donations receive and take, and by its officers, engineers, surveyors and agents, enter upon and take possession of, and hold and use, in any manner they may deem proper, all such lands and real estate, and other property as the directors may deem necessary and proper for the construction and maintenance of the railroad, and for the stations, depots and other accommodations and purposes, deemed necessary to accomplish the object for which the corporation is formed.
4.   Lay out its road or roads, not exceeding 200 feet wide, and construct and maintain the road with such tracks and with such appendages as may be deemed necessary for the convenient use of it. The company may make embankments, excavations, ditches, drains, culverts or otherwise, and procure timber, stone and gravel, or other materials, and may take as much more land, whenever they may think proper, as may be necessary for the purposes aforesaid, in the manner hereinafter provided, for the proper construction and security of the road.
5.   Construct their road across, along or upon any stream of water, watercourse, roadstead, bay, navigable stream, street, avenue or highway, or across any railway, canal, ditch or flume which the route of its road intersects, crosses or runs along, in such manner as to afford security for life and property. The corporation shall restore the stream or watercourse, road, street, avenue, highway, railroad, canal, ditch or flume thus intersected to its former state, as near as may be, or in a sufficient manner not to have impaired unnecessarily its usefulness or injured its franchises.
6.   Cross, intersect, join and unite its railroad with any other railroad, either before or after constructed, at any point upon its route, and upon the grounds of such other railroad company, with the necessary turnouts, sidings and switches, and other conveniences, in furtherance of the objects of its connections; and every company whose railroad is, or will be hereafter, intersected by any new railroad in forming such intersections and connection, and grant the facilities aforesaid. If the two corporations cannot agree upon the amount of compensation to be made therefor, or the points or the manner of such crossings, intersections and connections, the same must be ascertained and determined by commissioners, to be appointed as is provided hereinafter in respect to the taking of lands, but this section is not to affect the rights and franchises heretofore granted.
7.   Purchase lands, timber, stone, gravel or other materials to be used in the construction and maintenance of its road, or take them in the manner provided by this chapter. The railroad company may change the line of its road, in whole or in part, whenever a majority of the directors determine, as is provided hereinafter, but no such change may vary the general route of a road, as contemplated in the articles of incorporation of the company.
8.   Receive by purchase, donation or otherwise, any lands, or other property, of any description, and hold and convey it in any manner the directors may think proper, the same as natural persons might or could do, that may be necessary for the construction and maintenance of its road, or for the erection of depots, turnouts, workshops, warehouses or for any other purposes necessary for the convenience of railroad companies, in order to transact the business usual for railroad companies.
9.   Take, transport, carry and convey persons and property on their railroad, by the force and power of steam, of animals, or any mechanical power, or by any combinations of them, and receive tolls or compensation therefor.
10.   Erect and maintain all necessary and convenient buildings, stations, depots and fixtures and machinery for the accommodation and use of their passengers, freight and business, obtain and hold the lands and other property necessary therefor, and acquire additional lands and rights of way and build and operate extensions or branches of its line of railroad.
11.   Regulate the time and manner in which passengers and property are transported, and the tolls and compensation to be paid therefor, within the limits prescribed by law.
12.   Regulate the force and speed of their locomotives, cars, trains or other machinery used and employed on their road, and establish, execute and enforce all needful and proper rules and regulations fully and completely for the management of its business transactions usual and proper for railroad companies.
13.   Purchase, hold, sell and transfer shares of its own stock, bonds, debentures, or other securities issued by it, except that:

(a) No corporation may use its funds or property for the purchase of its own shares of stock when such use would cause any impairment of the capital of the corporation; and
(b) Shares of its own stock belonging to the corporation must not be voted upon, directly or indirectly, nor counted as outstanding for the purpose of any stockholders' quorum or vote.

14.   Acquire, own, and operate motor vehicles, and air transportation facilities, and transport persons and property along and over the streets and highways of this state, for the transportation, for hire, of passengers, property and freight, either directly or through a subsidiary company or companies, subject to all relevant provisions of law concerning permits, licenses, franchises and the regulation of such form of transportation by motor vehicles or other agencies.

Whenever the track of a railroad crosses a railroad or highway, such railroad or highway may be carried under, over or on a level with the track, as may be most expedient, and in cases where an embankment or cutting makes a change in the line of such railroad or highway desirable, with a view to a more easy ascent or descent, the company may take such additional lands and materials, if needed for the construction of such road or highway, on such new line, as may be deemed requisite by the railroad. Unless the lands and materials so taken are purchased, or voluntarily given for the purpose aforesaid, compensation therefor must be ascertained in the manner provided by law.
  [9(a):177:1925; added 1945, 196; 1943 NCL 1608.01](NRS A 1993, 2762)

NRS CROSS REFERENCES.
  Eminent domain powers, NRS 37.230

REVISER'S NOTE.
  The original section, added in 1945, was taken from sec. 17a of ch. 146, Stats. 1865, concerning the incorporation of railway companies. Sec. 17a was added to the 1865 act in 1929. Although the original section is inartistically drafted, the reviser left the section as enacted without material change. In subsection 4 of the revised section "or other materials, may take" was replaced with "or other materials, and may take." Attention is invited to the difficult language of subsection 6, reading "and every company whose railroad is, or shall be hereafter intersected by any new railroad in forming such intersections and connection, and grant the facilities aforesaid;". In subsection 15 of the original section "the said company make take such additional lands" was changed to read "the company may take such additional lands."

NEVADA CASES.

Railroad not protected in use of steam whistle resulting in injury. Sec. 17, ch. 146, Stats. 1865 (cf. NRS 78.075), authorizing railroad corporations to erect and maintain all necessary and convenient buildings, stations, depots, fixtures and machinery for accommodation of its business, did not protect railroad incorporated under Nevada Laws in use of steam whistle in its railroad yards within city where sounding of such whistle resulted in injury to another. Powell v. Nevada, Cal. & Ore. Ry., 28 Nev. 40, 78 Pac. 978 (1904)

NRS 78.080   Railroad companies: Rights of way granted by the state, counties and municipalities; limitations; reversion on abandonment; duties of companies.

1.   The right of way is hereby given and granted to all railroad companies that are now organized, or may be organized under the provisions of this chapter, or under the laws of any other state or territory, or under any act of Congress, to locate, construct and maintain their roads, or any part or parcel thereof, over and through any of the swamp or overflowed lands belonging to this state, or any other public lands which are now or may be the property of the state, at the time of constructing the railroad.
2.   Such railroad companies are hereby authorized to survey and mark through the lands of the state, to be held by them for the track of their respective railroads, 200 feet in width, for the whole length the roads may be located over the lands of the state; and the right is hereby further given and granted to the companies to locate, occupy and hold all necessary sites and grounds for watering places, depots or other buildings, for the convenient use of the same, along the line of the road or roads, so far as the places convenient for the same may fall upon the lands belonging to the state, except within the limits of any incorporated city or town, or within 3 miles where the same shall be taken, on paying to the state the value of the same.
3.   No one depot, watering place, machine or workshop, or other buildings for the convenient use of such roads, shall cover over 6 acres each, and the sites or places on the lands of this state shall not be nearer to each other than 5 miles along the line of the roads.
4.   The right is hereby further given and granted to the companies to take from any of the lands belonging to this state all such materials of earth, wood, stone or other materials whatever, as may be necessary or convenient, from time to time, for the first construction or equipment of the road or roads, or any part thereof.
5.   If any road, at any time after its location, shall be discontinued or abandoned by the company or companies, or the location of any part thereof be so changed as not to cover the lands of the state thus previously occupied, then the lands so abandoned or left shall revert to this state.
6.   When the location of the route of either of the railroads, or sites or places for depots, watering places, machine or workshops or other buildings for the convenient use of the same, shall be selected, the secretary of the company shall transmit to the director of the state department of conservation and natural resources, and to the state controller, and to the recorder of the county in which the lands so selected are situated, to each of the officers, a correct plot of the location of the railroad, or sites or places, before such selection shall become operative.
7.   When any such company shall, for its purposes aforesaid, require any of the lands belonging to any of the counties, cities or towns in this state, the county, city and town officers, respectively, having charge of such lands, may grant and convey such land to such company, for a compensation which shall be agreed upon between them, or may donate and convey the same without any compensation; and if they shall not agree upon the sale and price, the same may be taken by the company as is provided in other cases of taking lands by condemnation.
8.   Before any corporation incorporated or organized otherwise than under the laws of this state shall be entitled to any of the rights granted by this chapter, it shall file in the office of the county recorder of each county in which the railroad, or any part, extension or branch thereof shall be situate, a copy of its certificate or articles of incorporation, or of the act or law by which it was created, with the certified list of its officers, in the manner and form required by law.
  [9(b):177:1925; added 1945, 196; 1943 NCL 1608.02](NRS A 1957, 653)

ATTORNEY GENERAL'S OPINIONS.

Land granted to state by Congress did not include land already granted to railroad. Under Pacific Railroads Act, Congress not only granted rights of way to railroad lines across Nevada, but also granted title to land comprising rights of way. Thus, when lands were later granted to state, grants did not include land already granted to railroads and state cannot purport to convey such land by patent. AGO 139 (5-4-1944)

Purchaser of public land entitled to reversion of right of way retained by state. Where state has granted right of way to railroad with reversion to state in event of abandonment, purchaser of public land containing such right of way is entitled to reversion if such occurs. AGO 139 (5-4-1944)

NRS 78.085   Railroad companies: Filing of certified maps and profiles.

1.   Every railroad company in this state shall, within 90 days after its road is finally located:

(a) Cause to be made a map and profile thereof, and of the land taken and obtained for the use thereof, and the boundaries of the several counties through which the road may run;
(b) File the same in the office of the secretary of state and a duplicate thereof with the public utilities commission of Nevada; and
(c) Cause to be made like maps of the parts thereof located in different counties, and file the same in the office of the recorder of the county in which such parts of the road are located.

2.   The maps and profiles must be certified by the chief engineer, the acting president, and secretary of such company and copies of the same, so certified and filed as required by subsection 1, must be kept in the office of the company, subject to examination by all interested persons.
  [9(d):177:1925; added 1945, 196; 1943 NCL 1608.04](NRS A 1997, 1963)

REVISER'S NOTE.
  In revised subsection 2 "subject to examination by all interested persons." replaced "subject to examination by all parties interested." The word "parties" has been used in NRS where the word is descriptive of persons interested in actions or proceedings; otherwise "persons" is used.

REGISTERED OFFICE AND RESIDENT AGENT

NRS 78.090   Resident agent required; address of registered office; powers of bank or corporation who is resident agent; penalty for noncompliance; service of documents on resident agent.

1.   Except during any period of vacancy described in NRS 78.097, every corporation must have a resident agent who resides or is located in this state. Every resident agent must have a street address for the service of process, and may have a separate mailing address such as a post office box, which may be different from the street address. The street address of the resident agent is the registered office of the corporation in this state.
2.   If the resident agent is a bank or corporation, it may:

(a) Act as the fiscal or transfer agent of any state, municipality, body politic or corporation and in that capacity may receive and disburse money.
(b) Transfer, register and countersign certificates of stock, bonds or other evidences of indebtedness and act as agent of any corporation, foreign or domestic, for any purpose required by statute, or otherwise.
(c) Act as trustee under any mortgage or bond issued by any municipality, body politic or corporation, and accept and execute any other municipal or corporate trust not inconsistent with the laws of this state.
(d) Receive and manage any sinking fund of any corporation, upon such terms as may be agreed upon between the corporation and those dealing with it.

3.   Every corporation organized pursuant to this chapter which fails or refuses to comply with the requirements of this section is subject to a fine of not less than $100 nor more than $500, to be recovered with costs by the state, before any court of competent jurisdiction, by action at law prosecuted by the attorney general or by the district attorney of the county in which the action or proceeding to recover the fine is prosecuted.
4.   All legal process and any demand or notice authorized by law to be served upon a corporation may be served upon the resident agent of the corporation in the manner provided in subsection 2 of NRS 14.020. If any demand, notice or legal process, other than a summons and complaint, cannot be served upon the resident agent, it may be served in the manner provided in NRS 14.030. These manners and modes of service are in addition to any other service authorized by law.
  [78:177:1925; A 1929, 413; NCL 1677] + [Part 79:177:1925; NCL 1678](NRS A 1959, 682; 1969, 571; 1987, 1057; 1989, 949, 975, 1971; 1991, 1213; 1993, 948; 1995, 2095)

NEVADA CASES.

Effect on venue. Where official corporate documents designated Washoe County as principal place of business of corporation but actual location of business conducted by corporation was in Pershing County, motion by defendant corporation under NRS 13.040 to change venue from Washoe County to Pershing County was improperly granted, although motion under NRS 13.050 on ground of convenience of witnesses might have been granted, because one purpose of statute requiring corporation to designate location of principal office or place of business was to fix its location or residence under venue statutes, and corporation would not be permitted to contradict its official documents on file with secretary of state. (See NRS 78.055 and 78.090 and former provisions of NRS 78.035 and 78.110.) Flournoy v. McKinnon Ford Sales, 90 Nev. 119, 520 P.2d 600 (1974)

ATTORNEY GENERAL'S OPINIONS.

Corporation may serve as its own resident agent. Nevada corporation may serve as its own resident agent pursuant to NRS 78.090 so long as it has physical address within Nevada. AGO 93-30 (11-16-1993)

NRS 78.095   Change of address of resident agent and registered office.

1.   Within 30 days after changing the location of his office from one address to another in this state, a resident agent shall execute a certificate setting forth:

(a) The names of all the corporations represented by the resident agent;
(b) The address at which the resident agent has maintained the registered office for each of such corporations; and
(c) The new address to which the resident agency will be transferred and at which the resident agent will thereafter maintain the registered office for each of the corporations recited in the certificate.

2.   Upon the filing of the certificate in the office of the secretary of state the registered office in this state of each of the corporations recited in the certificate is located at the new address of the resident agent thereof as set forth in the certificate.
  [1:17:1931; 1931 NCL 1677.01](NRS A 1983, 261; 1989, 871; 1991, 1214; 1993, 948; 1995, 1112)

ATTORNEY GENERAL'S OPINIONS.

Three ways to change location of principal office. Change of location of principal office may be effected in one of three ways: Amendment of articles of incorporation; procedure set forth in sec. 89, Corporation Law 1925 (cf. NRS 78.110); procedure set forth in ch. 17, Stats. 1931 (cf. NRS 78.095). AGO 31 (4-24-1943)

NRS 78.097   Resignation of resident agent; notice to corporation of resignation; appointment of successor.

1.   A resident agent who desires to resign shall file with the secretary of state a signed statement for each corporation that he is unwilling to continue to act as the agent of the corporation for the service of process. The execution of the statement must be acknowledged. A resignation is not effective until the signed statement is filed with the secretary of state.
2.   The statement of resignation may contain an acknowledged statement of the affected corporation appointing a successor resident agent for that corporation. A certificate of acceptance executed by the new resident agent, stating the full name, complete street address and, if different from the street address, mailing address of the new resident agent, must accompany the statement appointing a successor resident agent.
3.   Upon the filing of the statement of resignation with the secretary of state the capacity of the resigning person as resident agent terminates. If the statement of resignation contains no statement by the corporation appointing a successor resident agent, the resigning resident agent shall immediately give written notice, by mail, to the corporation of the filing of the statement and its effect. The notice must be addressed to any officer of the corporation other than the resident agent.
4.   If a resident agent dies, resigns or removes from the state, the corporation, within 30 days thereafter, shall file with the secretary of state a certificate of acceptance executed by the new resident agent. The certificate must set forth the full name and complete street address of the new resident agent for the service of process, and may have a separate mailing address, such as post office box, which may be different from the street address.
5.   A corporation that fails to file a certificate of acceptance executed by the new resident agent within 30 days after the death, resignation or removal of its former resident agent shall be deemed in default and is subject to the provisions of NRS 78.170 and 78.175.
  (Added to NRS by 1959, 681; A 1967, 89; 1969, 11; 1989, 949; 1991, 1214; 1993, 949)

NRS 78.105   Maintenance of records at registered office; inspection and copying of records; civil liability; penalties.

1.   A corporation shall keep a copy of the following records at its registered office:

(a) A copy certified by the secretary of state of its articles of incorporation, and all amendments thereto;
(b) A copy certified by an officer of the corporation of its bylaws and all amendments thereto; and
(c) A stock ledger or a duplicate stock ledger, revised annually, containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, if known, and the number of shares held by them respectively. In lieu of the stock ledger or duplicate stock ledger, the corporation may keep a statement setting out the name of the custodian of the stock ledger or duplicate stock ledger, and the present and complete post office address, including street and number, if any, where the stock ledger or duplicate stock ledger specified in this section is kept.

2.   A corporation shall maintain the records required by subsection 1 in written form or in another form capable of conversion into written form within a reasonable time.
3.   Any person who has been a stockholder of record of a corporation for at least 6 months immediately preceding his demand, or any person holding, or thereunto authorized in writing by the holders of, at least 5 percent of all of its outstanding shares, upon at least 5 days' written demand is entitled to inspect in person or by agent or attorney, during usual business hours, the records required by subsection 1 and make copies therefrom. Holders of voting trust certificates representing shares of the corporation must be regarded as stockholders for the purpose of this subsection. Every corporation that neglects or refuses to keep the records required by subsection 1 open for inspection, as required in this subsection, shall forfeit to the state the sum of $25 for every day of such neglect or refusal.
4.   If any corporation willfully neglects or refuses to make any proper entry in the stock ledger or duplicate copy thereof, or neglects or refuses to permit an inspection of the records required by subsection 1 upon demand by a person entitled to inspect them, or refuses to permit copies to be made therefrom, as provided in subsection 3, the corporation is liable to the person injured for all damages resulting to him therefrom.
5.   When the corporation keeps a statement in the manner provided for in paragraph (c) of subsection 1, the information contained thereon must be given to any stockholder of the corporation demanding the information, when the demand is made during business hours. Every corporation that neglects or refuses to keep a statement available, as in this subsection required, shall forfeit to the state the sum of $25 for every day of such neglect or refusal.
6.   In every instance where an attorney or other agent of the stockholder seeks the right of inspection, the demand must be accompanied by a power of attorney executed by the stockholder authorizing the attorney or other agent to inspect on behalf of the stockholder.
7.   The right to copy records under subsection 3 includes, if reasonable, the right to make copies by photographic, xerographic or other means.
8.   The corporation may impose a reasonable charge to recover the costs of labor and materials and the cost of copies of any documents provided to the stockholder.
  [80:177:1925; A 1951, 332](NRS A 1959, 29; 1963, 217; 1965, 978; 1991, 1214; 1997, 697)

NEVADA CASES.

Cause of action for delivery and inspection of corporate records stated under circumstances. Where relator alleged he was stockholder, director and secretary of defendant corporation, and that his demand for delivery or inspection of corporate records had been refused, in violation of bylaws of defendant and in violation of NCL 1679 (cf. NRS 78.105), which provides that stock ledger shall be open to inspection for stockholders, complaint stated facts sufficient to constitute cause of action, both for delivery of books and records to relator as secretary, and for inspection by him as stockholder, and original proceeding in mandamus was proper remedy. State ex rel. Garaventa v. Garaventa Land & Livestock Co., 61 Nev. 110, 118 P.2d 703 (1941)

FEDERAL AND OTHER CASES.

Inspection of stock ledger. In proceeding to gain access to list of corporate stockholders, where plaintiff was beneficial owner but not stockholder of record at time of original demand, and made second demand after becoming stockholder of record, original demand was not valid under NRS 78.105 but affidavit of purpose filed with it was valid for second demand. Purpose of communicating with other stockholders to consider challenge to incumbent management was proper. Intent to solicit proxies was shown by retention of expert for that purpose and proximity of annual meeting. Cenergy Corp. v. Bryson Oil & Gas P.L.C., 662 F. Supp. 1144 (D. Nev. 1987)

Additional information concerning beneficial owners. Upon making valid demand to inspect corporate stock ledger pursuant to NRS 78.105, stockholder was entitled also to inspect any additional information used by corporation to communicate with beneficial owners of its stock, such as list of owners whose stock was held by nominees, but corporation was not compelled to obtain any such information it did not already possess. Cenergy Corp. v. Bryson Oil & Gas P.L.C., 662 F. Supp. 1144 (D. Nev. 1987)

Determination of whether corporation for which tender offer is made is "issuing corporation." Plaintiffs sought to prohibit defendants from enforcing certain provisions of statutes governing takeover bids. Plaintiffs argued that corporation for which tender offer was made was issuing corporation under former provisions of NRS 78.3788 and therefore provisions governing takeover bids were inapplicable. Former provisions of NRS 78.3788 defined issuing corporation as corporation organized in Nevada which had 200 or more shareholders at least 100 of whom, as indicated by stock ledger of corporation, were residents of Nevada. Because (1) NRS 78.105 refers to stock ledger as ledger containing names of all persons who are stockholders of corporation, (2) NRS 78.3788 appears to have been adopted in response to U.S. Supreme Court decision recognizing state's interest in regulating internal affairs of domestic corporation with substantial number of resident shareholders, and (3) intent behind those statutes is to include all stockholders of corporation, court concluded that in determining whether corporation is issuing corporation, legislature intended broad interpretation of "stock ledger" as used in former provisions of NRS 78.3788 to include beneficial owners and employee shareholders participating in employee stock option plans. Batus, Inc. v. McKay, 684 F. Supp. 637 (D. Nev. 1988)

NRS 78.107   Denial of request for inspection of records; defense to action for penalties or damages; authority of court to compel production of records.

1.   An inspection authorized by NRS 78.105 may be denied to a stockholder or other person upon his refusal to furnish to the corporation an affidavit that the inspection is not desired for a purpose which is in the interest of a business or object other than the business of the corporation and that he has not at any time sold or offered for sale any list of stockholders of any domestic or foreign corporation or aided or abetted any person in procuring any such record of stockholders for any such purpose.
2.   It is a defense to any action for penalties or damages under NRS 78.105 that the person suing has at any time sold, or offered for sale, any list of stockholders of the corporation, or any other corporation, or has aided or abetted any person in procuring any such stock list for any such purpose, or that the person suing desired inspection for a purpose which is in the interest of a business or object other than the business of the corporation.
3.   This section does not impair the power or jurisdiction of any court to compel the production for examination of the books of a corporation in any proper case.
  (Added to NRS by 1997, 693)

NRS 78.110   Change of resident agent or location of registered office.   If a corporation created pursuant to this chapter desires to change the location within this state of its registered office, or change its resident agent, or both, the change may be effected by filing with the secretary of state a certificate of change signed by an officer of the corporation which sets forth:

1.   The name of the corporation;
2.   That the change authorized by this section is effective upon the filing of the certificate of change;
3.   The street address of its present registered office;
4.   If the present registered office is to be changed, the street address of the new registered office;
5.   The name of its present resident agent; and
6.   If the present resident agent is to be changed, the name of the new resident agent. A new resident agent's certificate of acceptance must be a part of or attached to the certificate of change.
  [89:177:1925; NCL 1688](NRS A 1959, 683; 1989, 950; 1991, 1216; 1995, 2096)

NEVADA CASES.

Effect on venue. Where official corporate documents designated Washoe County as principal place of business of corporation but actual location of business conducted by corporation was in Pershing County, motion by defendant corporation under NRS 13.040 to change venue from Washoe County to Pershing County was improperly granted, although motion under NRS 13.050 on ground of convenience of witnesses might have been granted, because one purpose of statute requiring corporation to designate location of principal office or place of business was to fix its location or residence under venue statutes, and corporation would not be permitted to contradict its official documents on file with secretary of state. (See NRS 78.055 and 78.090 and former provisions of NRS 78.035 and 78.110.) Flournoy v. McKinnon Ford Sales, 90 Nev. 119, 520 P.2d 600 (1974)

ATTORNEY GENERAL'S OPINIONS.

Change not effective when designated merely on annual list of officers. Corporation cannot change location of principal office merely by designating such change on annual list of officers and designation of resident agent. AGO 140 (6-14-1934)

Three ways to change location of principal office. Change of location of principal office may be effected in one of three ways: Amendment of articles of incorporation; procedure set forth in sec. 89, Corporation Law 1925 (cf. NRS 78.110); procedure set forth in ch. 17, Stats. 1931 (cf. NRS 78.095). AGO 31 (4-24-1943)

DIRECTORS AND OFFICERS

NRS 78.115   Board of directors: Number and qualifications.   The business of every corporation must be managed by a board of directors or trustees, all of whom must be natural persons who are at least 18 years of age. A corporation must have at least one director, and may provide in its articles of incorporation or in its bylaws for a fixed number of directors or a variable number of directors within a fixed minimum and maximum, and for the manner in which the number of directors may be increased or decreased. Unless otherwise provided in the articles of incorporation, directors need not be stockholders.
  [Part 31:177:1925; NCL 1630](NRS A 1965, 1012; 1981, 384; 1987, 577; 1993, 949; 1995, 1113)

NEVADA CASES.

Recipient of gift of stock is stockholder and eligible for office of trustee. Where stockholder of corporation transferred portion of his shares of stock to his son without consideration, under ch. 111, Stats. 1865 (cf. NRS 78.115), which requires that corporation trustees be stockholders, son was stockholder and eligible to office of trustee. State ex rel. Rankin v. Leete, 16 Nev. 242 (1881), cited, Orr Water Ditch Co. v. Reno Water Co., 17 Nev. 166, at 170, 30 Pac. 695 (1882)

FEDERAL AND OTHER CASES.

Quorum necessary to amend provision in bylaws for quorum. Under NRS 78.060, 78.115 and 78.315, which relate to powers, boards of directors, and meetings of directors of corporations, bylaw which provided that four of five directors were necessary to constitute quorum was valid, and purported amendment to bylaws of corporation by three of five members of board in absence of other two was void. Olincy v. Merle Norman Cosmetics, Inc., 19 Cal. Rptr. 387 (Dist. Ct. App. 1962)

Management vested in board; stockholders elect directors. Under NRS 78.115 and 78.120, management and control of affairs of private corporation are vested in board of directors. Stockholder, as such, exercises his powers in election of directors. (See NRS 78.330.) Berman v. Riverside Casino Corp., 247 F. Supp. 243 (D. Nev. 1964), aff'd, Berman v. Riverside Casino Corp., 354 F.2d 43 (1965)

NRS 78.120   Board of directors: General powers.

1.   Subject only to such limitations as may be provided by this chapter, or the articles of incorporation of the corporation, the board of directors has full control over the affairs of the corporation.
2.   Subject to the bylaws, if any, adopted by the stockholders, the directors may make the bylaws of the corporation.
3.   The selection of a period for the achievement of corporate goals is the responsibility of the directors.
  [Part 31:177:1925; NCL 1630](NRS A 1991, 1217)

FEDERAL AND OTHER CASES.

Management vested in board; stockholders elect directors. Under NRS 78.115 and 78.120, management and control of affairs of private corporation are vested in board of directors. Stockholder, as such, exercises his powers in election of directors. (See NRS 78.330.) Berman v. Riverside Casino Corp., 247 F. Supp. 243 (D. Nev. 1964), aff'd, Berman v. Riverside Casino Corp., 354 F.2d 43 (1965)

ATTORNEY GENERAL'S OPINIONS.

Adoption of bylaws by directors or stockholders. Directors may adopt bylaws in event shareholders do not, or shareholders may confer right to adopt bylaws on directors. However, shareholders may adopt bylaws superseding those adopted by directors. AGO 75 (4-8-1932)

NRS 78.125   Committees of board of directors: Designation; powers; names; membership.

1.   Unless it is otherwise provided in the articles of incorporation, the board of directors may designate one or more committees which, to the extent provided in the resolution or resolutions or in the bylaws of the corporation, have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may have power to authorize the seal of the corporation to be affixed to all papers on which the corporation desires to place a seal.
2.   The committee or committees must have such name or names as may be stated in the bylaws of the corporation or as may be determined from time to time by resolution adopted by the board of directors.
3.   Each committee must include at least one director. Unless the articles of incorporation or the bylaws provide otherwise, the board of directors may appoint natural persons who are not directors to serve on committees.
  [32:177:1925; A 1929, 413; NCL 1631](NRS A 1971, 1100; 1991, 1217; 1993, 949)

NRS 78.130   Officers of corporation: Selection; qualifications; terms; powers and duties; filling of vacancies.

1.   Every corporation must have a president, a secretary and a treasurer.
2.   Every corporation may also have one or more vice presidents, assistant secretaries and assistant treasurers, and such other officers and agents as may be deemed necessary.
3.   All officers must be natural persons and must be chosen in such manner, hold their offices for such terms and have such powers and duties as may be prescribed by the bylaws or determined by the board of directors. Any natural person may hold two or more offices.
4.   An officer holds office after the expiration of his term until a successor is chosen or until his resignation or removal before the expiration of his term. A failure to elect officers does not require the corporation to be dissolved. Any vacancy occurring in an office of the corporation by death, resignation, removal or otherwise, must be filled as the bylaws provide, or in the absence of such a provision, by the board of directors.
  [36:177:1925; A 1937, 291; 1931 NCL 1635](NRS A 1960, 152; 1991, 1217; 1993, 950)

NEVADA CASES.

Pretrial inspection of corporate records granted to secretary under circumstances. On petition for writ of mandamus to compel delivery or inspection of corporate records, where relator alleged he was stockholder and secretary of defendant corporation, and defendant denied that relator was either stockholder or secretary, relator's motion for pretrial inspection and copying of certain records was granted as to bylaws and minutes of defendant. Secretary, under NCL 1635 (cf. NRS 78.130), is chosen by board of directors, and minutes of board should show who secretary is, and sweeping pretrial inspection of all corporate records was not essential. State ex rel. Garaventa v. Garaventa Land & Livestock Co., 61 Nev. 110, 118 P.2d 703 (1941)

FEDERAL AND OTHER CASES.

No personal liability. Under NRS 78.130, secretary or other officer of private corporation has only authority delegated him by bylaws and board of directors, and is not solely by reason of that office personally liable for debts of corporation. Berman v. Riverside Casino Corp., 247 F. Supp. 243 (D. Nev. 1964), aff'd, Berman v. Riverside Casino Corp., 354 F.2d 43 (1965)

NRS 78.135   Authority of directors and representatives of corporation.

1.   The statement in the articles of incorporation of the objects, purposes, powers and authorized business of the corporation constitutes, as between the corporation and its directors, officers or stockholders, an authorization to the directors and a limitation upon the actual authority of the representatives of the corporation. Such limitations may be asserted in a proceeding by a stockholder or the state to enjoin the doing or continuation of unauthorized business by the corporation or its officers, or both, in cases where third parties have not acquired rights thereby, or to dissolve the corporation, or in a proceeding by the corporation or by the stockholders suing in a representative suit against the officers or directors of the corporation for violation of their authority.
2.   No limitation upon the business, purposes or powers of the corporation or upon the powers of the stockholders, officers or directors, or the manner of exercise of such powers, contained in or implied by the articles may be asserted as between the corporation or any stockholder and any third person.
3.   Any contract or conveyance, otherwise lawful, made in the name of a corporation, which is authorized or ratified by the directors, or is done within the scope of the authority, actual or apparent, given by the directors, binds the corporation, and the corporation acquires rights thereunder, whether the contract is executed or is wholly or in part executory.
  [Part 31(a):177:1925; added 1949, 158; 1943 NCL 1630.01](NRS A 1961, 94; 1993, 950)

NRS 78.138   Directors and officers: Exercise of powers and performance of duties.

1.   Directors and officers shall exercise their powers in good faith and with a view to the interests of the corporation.
2.   In performing their respective duties, directors and officers are entitled to rely on information, opinions, reports, books of account or statements, including financial statements and other financial data, that are prepared or presented by:

(a) One or more directors, officers or employees of the corporation reasonably believed to be reliable and competent in the matters prepared or presented;
(b) Counsel, public accountants, or other persons as to matters reasonably believed to be within the preparer or presenter's professional or expert competence; or
(c) A committee on which the director or officer relying thereon does not serve, established in accordance with NRS 78.125, as to matters within the committee's designated authority and matters on which the committee is reasonably believed to merit confidence, but a director or officer is not entitled to rely on such information, opinions, reports, books of account or statements if he has knowledge concerning the matter in question that would cause reliance thereon to be unwarranted.

3.   Directors and officers, in exercising their respective powers with a view to the interests of the corporation, may consider:

(a) The interests of the corporation's employees, suppliers, creditors and customers;
(b) The economy of the state and nation;
(c) The interests of the community and of society; and
(d) The long-term as well as short-term interests of the corporation and its stockholders, including the possibility that these interests may be best served by the continued independence of the corporation.
This subsection does not create or authorize any causes of action against the corporation or its directors or officers.

4.   Directors may resist a change or potential change in control of the corporation if the directors by a majority vote of a quorum determine that the change or potential change is opposed to or not in the best interest of the corporation:

(a) Upon consideration of the interests of the corporation's stockholders and any of the matters set forth in subsection 3; or
(b) Because the amount or nature of the indebtedness and other obligations to which the corporation or any successor to the property of either may become subject in connection with the change or potential change in control provides reasonable grounds to believe that, within a reasonable time:

(1) The assets of the corporation or any successor would be or become less than its liabilities;
(2) The corporation or any successor would be or become insolvent; or
(3) Any voluntary or involuntary proceeding under the federal bankruptcy laws concerning the corporation or any successor would be commenced by any person.

  (Added to NRS by 1991, 1184; A 1993, 951)

NRS 78.140   Restrictions on transactions involving interested directors or officers; compensation of directors.

1.   A contract or other transaction is not void or voidable solely because:

(a) The contract or transaction is between a corporation and:

(1) One or more of its directors or officers; or
(2) Another corporation, firm or association in which one or more of its directors or officers are directors or officers or are financially interested;

(b) A common or interested director or officer:

(1) Is present at the meeting of the board of directors or a committee thereof which authorizes or approves the contract or transaction; or
(2) Joins in the execution of a written consent which authorizes or approves the contract or transaction pursuant to subsection 2 of NRS 78.315; or

(c) The vote or votes of a common or interested director are counted for the purpose of authorizing or approving the contract or transaction, if one of the circumstances specified in subsection 2 exists.

2.   The circumstances in which a contract or other transaction is not void or voidable pursuant to subsection 1 are:

(a) The fact of the common directorship, office or financial interest is known to the board of directors or committee, and the board or committee authorizes, approves or ratifies the contract or transaction in good faith by a vote sufficient for the purpose without counting the vote or votes of the common or interested director or directors.
(b) The fact of the common directorship, office or financial interest is known to the stockholders, and they approve or ratify the contract or transaction in good faith by a majority vote of stockholders holding a majority of the voting power. The votes of the common or interested directors or officers must be counted in any such vote of stockholders.
(c) The fact of the common directorship, office or financial interest is known to the director or officer at the time the transaction is brought before the board of directors of the corporation for action.
(d) The contract or transaction is fair as to the corporation at the time it is authorized or approved.

3.   Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or a committee thereof which authorizes, approves or ratifies a contract or transaction, and if the votes of the common or interested directors are not counted at the meeting, then a majority of the disinterested directors may authorize, approve or ratify a contract or transaction.
4.   Unless otherwise provided in the articles of incorporation or the bylaws, the board of directors, without regard to personal interest, may establish the compensation of directors for services in any capacity. If the board of directors establishes the compensation of directors pursuant to this subsection, such compensation is presumed to be fair to the corporation unless proven unfair by a preponderance of the evidence.
  [31(b):177:1925; added 1951, 328](NRS A 1959, 683; 1969, 113; 1989, 872; 1991, 1218; 1993, 952; 1997, 698)

NEVADA CASES.

Sale to corporation by director valid under circumstances. In action by receiver of corporation to set aside sale of mining claim to corporation by one of its directors, under NRS 78.140, which provides that transaction between director and corporation is not void or voidable if it is fair to corporation at time it is authorized or approved, where director at time he originally purchased claim was not acting, or under any duty to act, for corporation, whether he made profit on sale was immaterial, as it would have been if property had been acquired by gift or inheritance. Schoff v. Clough, 79 Nev. 193, 380 P.2d 464 (1963)

Showing required. Where corporation had received what it ordered under contract with its president to construct building and there was no showing of profiteering by him, contract was fair to corporation when made and was neither void not voidable simply by reason of relationship of parties. (See NRS 78.140.) Pederson v. Owen, 92 Nev. 648, 556 P.2d 542 (1976), cited, Leavitt v. Leisure Sports Inc., 103 Nev. 81, at 86, 734 P.2d 1221 (1987)

FEDERAL AND OTHER CASES.

Directors interested under circumstances; agreements subject to review for fairness. Directors of corporation who were receiving compensation from majority shareholder at time shareholder and corporation entered into agreements for purchase of stock and assets were interested directors for purposes of NRS 78.140, which restricts transactions involving interested directors or officers. Agreements, therefore, were subject to review for fairness. Drobbin v. Nicolet Instrument Corp., 631 F. Supp. 860 (S.D.N.Y. 1986)

ANNUAL LIST OF OFFICERS AND DIRECTORS; DEFAULTING CORPORATIONS

NRS 78.150   Filing requirements; fee; forms. [Effective until July 1, 1998.]

1.   A corporation organized under the laws of this state shall, on or before the first day of the second month after the filing of its articles of incorporation with the secretary of state, file with the secretary of state a list, on a form furnished by him, containing:

(a) The name of the corporation;
(b) The file number of the corporation, if known;
(c) The names and titles of all of its required officers and the names of all of its directors;
(d) The mailing or street address, either residence or business, of each officer and director listed, following the name of the officer or director; and
(e) The signature of an officer of the corporation certifying that the list is true, complete and accurate.

2.   The corporation shall annually thereafter, on or before the last day of the month in which the anniversary date of incorporation occurs in each year, file with the secretary of state, on a form furnished by him, an amended list containing all of the information required in subsection 1. If the corporation has had no changes in its required officers and directors since its previous list was filed, no amended list need be filed if an officer of the corporation certifies to the secretary of state as a true and accurate statement that no changes in the required officers or directors has occurred.
3.   Upon filing a list of officers and directors, or certifying that no changes have occurred, the corporation shall pay to the secretary of state a fee of $85.
4.   The secretary of state shall, 60 days before the last day for filing the annual list required by subsection 2, cause to be mailed to each corporation which is required to comply with the provisions of NRS 78.150 to 78.185, inclusive, and which has not become delinquent, a notice of the fee due pursuant to subsection 3 and a reminder to file a list of officers and directors or a certification of no change. Failure of any corporation to receive a notice or form does not excuse it from the penalty imposed by law.
5.   If the list to be filed pursuant to the provisions of subsection 1 or 2 is defective in any respect or the fee required by subsection 3 is not paid, the secretary of state may return the list for correction or payment.
6.   An annual list for a corporation not in default which is received by the secretary of state more than 60 days before its due date shall be deemed an amended list for the previous year.
  [Part 1:180:1925; A 1929, 122; 1931, 408; 1931 NCL 1804](NRS A 1957, 315; 1959, 684; 1977, 401; 1979, 185; 1983, 689; 1985, 233; 1989, 976; 1991, 2460; 1993, 952; 1995, 2096; 1997, 2808)

NEVADA CASES.

Requirements for filing and fees are revenue acts and police power acts. Ch. 180, Stats. 1925, as amended by ch. 219, Stats. 1931 (cf. NRS 78.150-78.160, 78.170-78.190, 80.110-80.130 and 80.150-80.180), which provides for annual corporate filing, payment of filing fees, and reinstatement of corporations whose charters have been forfeited, is conceded to be revenue act and also police power act. Porter v. Tempa Mining & Milling Co., 59 Nev. 332, 93 P.2d 741 (1939)

FEDERAL AND OTHER CASES.

Noncompliance with filing requirements ipso facto deprives corporation of rights; exception for winding up affairs. Ch. 180, Stats. 1925 (cf. NRS 78.150-78.175), is self-executing law, and noncompliance with its provisions ipso facto deprives corporation of its charter and its right to do business within state, or bring any suit, except as provided by NCL 1664 (cf. NRS 78.585), which allows suits in winding up corporate affairs. Fidelity Metals Corp. v. Risley, 77 Cal. App.2d 377, 175 P.2d 592 (Dist. Ct. App. 1946)

No evidence under circumstances that corporate officers were not as listed in filing. In proceeding for mandamus, where: (1) appellate court ordered that appointment of receiver of corporation should be vacated and that he should settle his accounts and return corporate property to corporation; (2) trial court refused to order return of property because receiver had not accounted and issued restraining order enjoining president of corporation from attempting to occupy or control corporate property; (3) appellate court then reversed trial court stating that, if there was substantial delay in settling receiver's accounts, return of property should not await settlement of receiver's accounts; and (4) corporation president then died, there was no merit to contention that there were no officers or directors of corporation to whom properties could be returned because there was no evidence in record to support assertion that those persons listed as officers, directors and agents of corporation as filed each year with secretary of state pursuant to NRS 78.150 were not at least de facto what they purported to be. (See NRS 78.340.) Pioche Mines Consol., Inc. v. Foley, 410 F.2d 742 (1969)

ATTORNEY GENERAL'S OPINIONS.

Fraternal and charitable corporations excluded from annual fee. Statute requiring "every" corporation to pay annual fee was not intended to include fraternal and charitable corporations. AGO 67 (6-8-1923)

Strict construction against government. Statute levying annual fee on corporations should be strictly construed against government and in favor of corporations. AGO 170 (3-3-1925)

Annual fee payable a few days before or on July 1. Words "on or before" in statute requiring corporations to pay annual fee on or before July 1, are to be construed as meaning few days before July 1 or on July 1. AGO 170 (3-3-1925)

Annual list of officers not required from certain organizations. Sec. 1, ch. 180, Stats. 1925 (NRS 78.150), which requires all corporations to file annual list of officers, does not apply to nonprofit corporations, fraternal societies, churches. AGO 197 (9-28-1925)

Change not effective when designated merely on annual list of officers. Corporation cannot change location of principal office merely by designating such change on annual list of officers and designation of resident agent. AGO 140 (6-14-1934)

Application to segregate land under Carey Act not invalid for delinquency in filing; invalid if right to transact business forfeited. Application for segregation of Carey Act lands pursuant to NRS 324.120 by corporation which is delinquent in meeting requirements of NRS 78.150 et seq. or 80.110 et seq. is not invalid by reason of such delinquency, but if right of corporation to transact business in this state has been forfeited as provided in former provision of NRS 78.170 (cf. NRS 78.175) or NRS 80.150, application is invalid. AGO 79-30 (12-28-1979)

NRS 78.150   Filing requirements; fee; forms. [Effective July 1, 1998.]

1.   A corporation organized under the laws of this state shall, on or before the first day of the second month after the filing of its articles of incorporation with the secretary of state, file with the secretary of state a list, on a form furnished by him, containing:

(a) The name of the corporation;
(b) The file number of the corporation, if known;
(c) The names and titles of all of its required officers and the names of all of its directors;
(d) The mailing or street address, either residence or business, of each officer and director listed, following the name of the officer or director; and
(e) The signature of an officer of the corporation certifying that the list is true, complete and accurate.

2.   The corporation shall annually thereafter, on or before the last day of the month in which the anniversary date of incorporation occurs in each year, file with the secretary of state, on a form furnished by him, an amended list containing all of the information required in subsection 1. If the corporation has had no changes in its required officers and directors since its previous list was filed, no amended list need be filed if an officer of the corporation certifies to the secretary of state as a true and accurate statement that no changes in the required officers or directors has occurred.
3.   Upon filing a list of officers and directors, or certifying that no changes have occurred, the corporation shall pay to the secretary of state a fee of $85.
4.   The secretary of state shall, 60 days before the last day for filing the annual list required by subsection 2, cause to be mailed to each corporation which is required to comply with the provisions of NRS 78.150 to 78.185, inclusive, and which has not become delinquent, a notice of the fee due pursuant to subsection 3 and a reminder to file a list of officers and directors or a certification of no change. Failure of any corporation to receive a notice or form does not excuse it from the penalty imposed by law.
5.   If the list to be filed pursuant to the provisions of subsection 1 or 2 is defective in any respect or the fee required by subsection 3 or 7 is not paid, the secretary of state may return the list for correction or payment.
6.   An annual list for a corporation not in default which is received by the secretary of state more than 60 days before its due date shall be deemed an amended list for the previous year.
7.   If the corporation is an association as defined in NRS 116.110315, the secretary of state shall not accept the filing required by this section unless it is accompanied by the fee required to be paid pursuant to NRS 116.31155.
  [Part 1:180:1925; A 1929, 122; 1931, 408; 1931 NCL 1804](NRS A 1957, 315; 1959, 684; 1977, 401; 1979, 185; 1983, 689; 1985, 233; 1989, 976; 1991, 2460; 1993, 952; 1995, 2096; 1997, 2808, 3126, effective July 1, 1998)

NRS 78.155   Certificate of authorization to transact business.   When the fee for filing the initial or annual list of officers and directors and designation of resident agent has been paid, the canceled check received by the corporation constitutes a certificate authorizing it to transact its business within this state until the last day of the month in which the anniversary of its incorporation occurs in the next succeeding calendar year. If the corporation desires a formal certificate upon its payment of the initial or annual fee, its payment must be accompanied by a self-addressed, stamped envelope.
  [2:180:1925; A 1931, 408; 1931 NCL 1805](NRS A 1959, 684; 1981, 62; 1983, 689; 1993, 953)

FEDERAL AND OTHER CASES.

Noncompliance with filing requirements ipso facto deprives corporation of rights; exception for winding up affairs. Ch. 180, Stats. 1925 (cf. NRS 78.150-78.175), is self-executing law, and noncompliance with its provisions ipso facto deprives corporation of its charter and its right to do business within state, or bring any suit, except as provided by NCL 1664 (cf. NRS 78.585), which allows suits in winding up corporate affairs. Fidelity Metals Corp. v. Risley, 77 Cal. App.2d 377, 175 P.2d 592 (Dist. Ct. App. 1946)

NRS 78.165   Addresses of officers and directors required; failure to file.

1.   Every list required to be filed under the provisions of NRS 78.150 to 78.185, inclusive, must, after the name of each officer and director listed thereon, set forth the post office box or street address, either residence or business, of each officer and director.
2.   If the addresses are not stated for each person on any list offered for filing, the secretary of state may refuse to file the list, and the corporation for which the list has been offered for filing is subject to all the provisions of NRS 78.150 to 78.185, inclusive, relating to failure to file the list within or at the times therein specified, unless a list is subsequently submitted for filing which conforms to the provisions of NRS 78.150 to 78.185, inclusive.
  [3(a):180:1925; added 1951, 280](NRS A 1959, 685; 1985, 233; 1991, 1219)

NRS 78.170   Defaulting corporations: Identification; penalty.

1.   Each corporation required to make a filing and pay the fee prescribed in NRS 78.150 to 78.185, inclusive, which refuses or neglects to do so within the time provided shall be deemed in default.
2.   For default there must be added to the amount of the fee a penalty of $15. The fee and penalty must be collected as provided in this chapter.
  [4:180:1925; A 1931, 408; 1931 NCL 1807](NRS A 1977, 401, 606; 1979, 185; 1983, 690; 1985, 233; 1989, 976; 1991, 1219; 1995, 1113)

FEDERAL AND OTHER CASES.

Noncompliance with filing requirements ipso facto deprives corporation of rights; exception for winding up affairs. Ch. 180, Stats. 1925 (cf. NRS 78.150-78.175), is self-executing law, and noncompliance with its provisions ipso facto deprives corporation of its charter and its right to do business within state, or bring any suit, except as provided by NCL 1664 (cf. NRS 78.585), which allows suits in winding up corporate affairs. Fidelity Metals Corp. v. Risley, 77 Cal. App.2d 377, 175 P.2d 592 (Dist. Ct. App. 1946)

ATTORNEY GENERAL'S OPINIONS.

Application to segregate land under Carey Act not invalid for delinquency in filing; invalid if right to transact business forfeited. Application for segregation of Carey Act lands pursuant to NRS 324.120 by corporation which is delinquent in meeting requirements of NRS 78.150 et seq. or 80.110 et seq. is not invalid by reason of such delinquency, but if right of corporation to transact business in this state has been forfeited as provided in former provision of NRS 78.170 (cf. NRS 78.175) or NRS 80.150, application is invalid. AGO 79-30 (12-28-1979)

NRS 78.175   Defaulting corporations: Duties of secretary of state; revocation of charter and forfeiture of right to transact business; distribution of assets.

1.   The secretary of state shall notify, by letter addressed to its resident agent, each corporation deemed in default pursuant to NRS 78.170. The notice must be accompanied by a statement indicating the amount of the filing fee, penalties and costs remaining unpaid.
2.   On the first day of the ninth month following the month in which the filing was required, the charter of the corporation is revoked and its right to transact business is forfeited.
3.   The secretary of state shall compile a complete list containing the names of all corporations whose right to do business has been forfeited. The secretary of state shall forthwith notify, by letter addressed to its resident agent, each such corporation of the forfeiture of its charter. The notice must be accompanied by a statement indicating the amount of the filing fee, penalties and costs remaining unpaid.
4.   If the charter of a corporation is revoked and the right to transact business is forfeited as provided in subsection 2, all of the property and assets of the defaulting domestic corporation must be held in trust by the directors of the corporation as for insolvent corporations, and the same proceedings may be had with respect thereto as are applicable to insolvent corporations. Any person interested may institute proceedings at any time after a forfeiture has been declared, but if the secretary of state reinstates the charter the proceedings must at once be dismissed and all property restored to the officers of the corporation.
5.   Where the assets are distributed they must be applied in the following manner:

(a) To the payment of the filing fee, penalties and costs due to the state;
(b) To the payment of the creditors of the corporation; and
(c) Any balance remaining to distribution among the stockholders.

  [Part 5:180:1925; NCL 1808](NRS A 1957, 152; 1959, 59; 1973, 1026; 1977, 606; 1979, 185; 1991, 1219; 1995, 1113)

NEVADA CASES.

Transfer of corporate property after revocation of charter valid under circumstances. In action for restitution and possession of unpatented mining claims, where plaintiff corporation, through its officers rather than through its board of directors as trustees, executed and delivered deed of such claims to third person within 3-year period following revocation of its charter pursuant to purport and intent of NCL 1664 (cf. NRS 78.585), it was unnecessary to construe such statute in pari materia with NCL 1808 (cf. NRS 78.175), which provides that, upon forfeiture of corporate charter, corporate property is held in trust by board of directors, because satisfaction of first mentioned statutory requirement determined validity of such deeds. Porter v. Tempa Mining & Milling Co., 59 Nev. 332, 93 P.2d 741 (1939)

FEDERAL AND OTHER CASES.

Noncompliance with filing requirements ipso facto deprives corporation of rights; exception for winding up affairs. Ch. 180, Stats. 1925 (cf. NRS 78.150-78.175), is self-executing law, and noncompliance with its provisions ipso facto deprives corporation of its charter and its right to do business within state, or bring any suit, except as provided by NCL 1664 (cf. NRS 78.585), which allows suits in winding up corporate affairs. Fidelity Metals Corp. v. Risley, 77 Cal. App.2d 377, 175 P.2d 592 (Dist. Ct. App. 1946)

Title to real property remains in corporation after charter suspended and until corporation dissolved. Title to real property of corporation whose charter was suspended pursuant to NRS 78.175 could not be quieted in sole stockholders because title to such property, no matter how encumbered, remained in corporation until corporation was dissolved. Lewis v. LeBaron, 254 Cal. App.2d 303, 61 Cal. Rptr. 903 (1967)

ATTORNEY GENERAL'S OPINIONS.

Application to segregate land under Carey Act not invalid for delinquency in filing; invalid if right to transact business forfeited. Application for segregation of Carey Act lands pursuant to NRS 324.120 by corporation which is delinquent in meeting requirements of NRS 78.150 et seq. or 80.110 et seq. is not invalid by reason of such delinquency, but if right of corporation to transact business in this state has been forfeited as provided in former provision of NRS 78.170 (cf. NRS 78.175) or NRS 80.150, application is invalid. AGO 79-30 (12-28-1979)

NRS 78.180   Defaulting corporations: Conditions and procedure for reinstatement.

1.   Except as otherwise provided in subsections 3 and 4, the secretary of state shall reinstate a corporation which has forfeited its right to transact business under the provisions of this chapter and restore to the corporation its right to carry on business in this state, and to exercise its corporate privileges and immunities, if it:

(a) Files with the secretary of state the list required by NRS 78.150; and
(b) Pays to the secretary of state:

(1) The annual filing fee and penalty set forth in NRS 78.150 and 78.170 for each year or portion thereof during which its charter was revoked; and
(2) A fee of $50 for reinstatement.

2.   When the secretary of state reinstates the corporation, he shall:

(a) Immediately issue and deliver to the corporation a certificate of reinstatement authorizing it to transact business as if the filing fee had been paid when due; and
(b) Upon demand, issue to the corporation one or more certified copies of the certificate of reinstatement.

3.   The secretary of state shall not order a reinstatement unless all delinquent fees and penalties have been paid, and the revocation of the charter occurred only by reason of failure to pay the fees and penalties.
4.   If a corporate charter has been revoked pursuant to the provisions of this chapter and has remained revoked for a period of 5 consecutive years, the charter must not be reinstated.
  [6:180:1925; A 1927, 42; NCL 1809](NRS A 1959, 60; 1973, 1027; 1975, 477; 1977, 402; 1985, 234, 1871; 1991, 1220; 1993, 953; 1995, 1114; 1997, 2808)

ATTORNEY GENERAL'S OPINIONS.

Reinstatement invalid except as specifically provided. Reinstatement of domestic or foreign corporations can be procured only through method specifically prescribed by statute; reinstatement by any other procedure is invalid. AGO 215 (6-19-1936)

NRS 78.185   Defaulting corporations: Reinstatement under old or new name.

1.   Except as otherwise provided in subsection 2, if a corporation applies to reinstate or revive its charter but its name has been legally acquired by another corporation or other artificial person organized or registered under chapter 78, 78A, 80, 81, 82, 84, 86, 87, 88 or 89 of NRS whose name is on file and in good standing with the secretary of state, the corporation shall in its application for reinstatement submit in writing to the secretary of state some other name under which it desires its corporate existence to be reinstated or revived. If that name is distinguishable from all other names reserved or otherwise on file and in good standing, the secretary of state shall issue to the applying corporation a certificate of reinstatement or revival under that new name.
2.   If the applying corporation submits the written acknowledged consent of the artificial person having a name, or the person who has reserved a name, which is not distinguishable from the old name of the applying corporation or a new name it has submitted, it may be reinstated or revived under that name.
3.   For the purposes of this section, a proposed name is not distinguished from a name used or reserved solely because one or the other contains distinctive lettering, a distinctive mark, a trade-mark or a trade name or any combination of those.
  [7:180:1925; NCL 1810](NRS A 1961, 94; 1987, 1057; 1991, 1221; 1993, 953; 1997, 2809)

STOCK AND OTHER SECURITIES; DISTRIBUTIONS

NRS 78.191   "Distribution" defined.   As used in NRS 78.195 to 78.307, inclusive, unless the context otherwise requires, the word "distribution" means a direct or indirect transfer of money or other property other than its own shares or the incurrence of indebtedness by a corporation to or for the benefit of its stockholders with respect to any of its shares. A distribution may be in the form of a declaration or payment of a dividend, a purchase, redemption or other acquisition of shares, a distribution of indebtedness, or otherwise.
  (Added to NRS by 1991, 1185)

NRS 78.195   Issuance of more than one class or series of stock; rights of stockholders.

1.   If a corporation desires to have more than one class or series of stock, the articles of incorporation must prescribe, or vest authority in the board of directors to prescribe, the classes, series and the number of each class or series of stock and the voting powers, designations, preferences, limitations, restrictions and relative rights of each class or series of stock. If more than one class or series of stock is authorized, the articles of incorporation or the resolution of the board of directors passed pursuant to a provision of the articles must prescribe a distinguishing designation for each class and series. The voting powers, designations, preferences, limitations, restrictions, relative rights and distinguishing designation of each class or series of stock must be described in the articles of incorporation or the resolution of the board of directors before the issuance of shares of that class or series.
2.   All shares of a series must have voting powers, designations, preferences, limitations, restrictions and relative rights identical with those of other shares of the same series and, except to the extent otherwise provided in the description of the series, with those of other series of the same class.
3.   Unless otherwise provided in the articles of incorporation, no stock issued as fully paid up may ever be assessed and the articles of incorporation must not be amended in this particular.
4.   Any rate, condition or time for payment of distributions on any class or series of stock may be made dependent upon any fact or event which may be ascertained outside the articles of incorporation or the resolution providing for the distributions adopted by the board of directors if the manner in which a fact or event may operate upon the rate, condition or time of payment for the distributions is stated in the articles of incorporation or the resolution.
5.   If the corporation is authorized to issue more than one class of stock or more than one series of any class, the voting powers, designations, preferences, limitations, restrictions and relative rights of the various classes of stock or series thereof and the qualifications, limitations or restrictions of such rights must be set forth in full or summarized on the face or back of each certificate which the corporation issues to represent the stock, or on the informational statement sent pursuant to NRS 78.235, except that, in lieu thereof, the certificate or informational statement may contain a statement setting forth the office or agency of the corporation from which a stockholder may obtain a copy of a statement setting forth in full or summarizing the voting powers, designations, preferences, limitations, restrictions and relative rights of the various classes of stock or series thereof. The corporation shall furnish to its stockholders, upon request and without charge, a copy of any such statement or summary.
6.   The provisions of this section do not restrict the directors of a corporation from taking action to protect the interests of the corporation and its stockholders, including, but not limited to, adopting or executing plans, arrangements or instruments that deny rights, privileges, power or authority to a holder of a specified number of shares or percentage of share ownership or voting power.
  [11:177:1925; A 1929, 413; 1941, 374; 1931 NCL 1610](NRS A 1961, 195; 1985, 1787; 1987, 577; 1989, 873; 1991, 1221; 1993, 954; 1995, 2097)

ATTORNEY GENERAL'S OPINIONS.

Articles may provide that preferred stock participate in earnings with common stock. If articles of incorporation so provide, preferred stock may be so issued that after drawing its preferred dividend it will participate with common stock in company earnings. AGO 81 (7-13-1916)

May refuse to file certain amendments. Secretary of state has discretion to refuse to file amendment to articles of incorporation which makes nonassessable stock assessable. AGO B-88 (3-26-1942)

Nonassessable stock cannot be made assessable. Articles of incorporation cannot be amended to make nonassessable stock assessable. AGO B-88 (3-26-1942)

Articles invalid that authorize directors to issue stock without providing for stock. Under NCL 1610 (cf. NRS 78.195) corporate directors may be authorized to issue various classes of stock upon their own resolution. However, such classes of stock must be already provided for in the articles as required by NCL. Articles authorizing directors to issue such stock without specifically providing for such stock are invalid. AGO 100 (9-8-1955)

Nonpar stock issuable for varying considerations. Domestic stock insurance corporations may organize, provide for and issue nonpar stock for varying considerations. AGO 142 (1-18-1956)

NRS 78.1955   Establishment of matters regarding class or series of stock by resolution of board of directors.

1.   If the voting powers, designations, preferences, limitations, restrictions and relative rights of any class or series of stock have been established by a resolution of the board of directors pursuant to a provision in the articles of incorporation, a certificate of designation must be filed with the secretary of state setting forth the resolution. The certificate of designation must be executed by the president or vice president and secretary or assistant secretary and acknowledged by the president or vice president before a person authorized by the laws of Nevada to take acknowledgments of deeds. The certificate of designation so executed and acknowledged must be filed before the issuance of any shares of the class or series.
2.   Unless otherwise provided in the articles of incorporation or the certificate of designation being amended, if no shares of a class or series of stock established by a resolution of the board of directors have been issued, the designation of the class or series, the number of the class or series and the voting powers, designations, preferences, limitations, restrictions and relative rights of the class or series may be amended by a resolution of the board of directors pursuant to a certificate of amendment filed in the manner provided in subsection 4.
3.   Unless otherwise provided in the articles of incorporation or the certificate of designation, if shares of a class or series of stock established by a resolution of the board of directors have been issued, the designation of the class or series, the number of the class or series and the voting powers, designations, preferences, limitations, restrictions and relative rights of the class or series may be amended by a resolution of the board of directors only if the amendment is approved as provided in this subsection. Unless otherwise provided in the articles of incorporation or the certificate of designation, the proposed amendment adopted by the board of directors must be approved by the vote of stockholders holding shares in the corporation entitling them to exercise a majority of the voting power, or such greater proportion of the voting power as may be required by the articles of incorporation or the certificate of designation, of:

(a) The class or series of stock being amended; and
(b) Each class and each series of stock which, before amendment, is senior to the class or series being amended as to the payment of distributions upon dissolution of the corporation, regardless of any limitations or restrictions on the voting power of that class or series.

4.   A certificate of amendment to a certificate of designation must be filed with the secretary of state and must:

(a) Set forth the original designation and the new designation, if the designation of the class or series is being amended;
(b) State that no shares of the class or series have been issued or state that the approval of the stockholders required pursuant to subsection 3 has been obtained; and
(c) Set forth the amendment to the class or series or set forth the designation of the class or series, the number of the class or series and the voting powers, designations, preferences, limitations, restrictions and relative rights of the class or series, as amended.

The certificate of amendment must be executed by the president or vice president and secretary or assistant secretary and acknowledged by the president or vice president before a person authorized by the laws of Nevada to take acknowledgments of deeds. NRS 78.380, 78.385 and 78.390 do not apply to certificates of amendment filed pursuant to this section.
  (Added to NRS by 1995, 2092)

NRS 78.196   Required and authorized classes of stock.

1.   Each corporation must have:

(a) One or more classes of shares that together have unlimited voting rights; and
(b) One or more classes of shares that together are entitled to receive the net assets of the corporation upon dissolution.
If the articles of incorporation provide for only one class of stock, that class of stock has unlimited voting rights and is entitled to receive the net assets of the corporation upon dissolution.

2.   The articles of incorporation, or a resolution of the board of directors pursuant thereto, may authorize one or more classes of stock that:

(a) Have special, conditional or limited voting powers, or no right to vote, except to the extent otherwise prohibited by this chapter;
(b) Are redeemable or convertible:

(1) At the option of the corporation, the stockholders or another person, or upon the occurrence of a designated event;
(2) For cash, indebtedness, securities or other property; or
(3) In a designated amount or in an amount determined in accordance with a designated formula or by reference to extrinsic data or events;

(c) Entitle the stockholders to distributions calculated in any manner, including dividends that may be cumulative, noncumulative or partially cumulative;
(d) Have preference over any other class of shares with respect to distributions, including dividends and distributions upon the dissolution of the corporation;
(e) Have par value; or
(f) Have powers, designations, preferences, limitations, restrictions and relative rights dependent upon any fact or event which may be ascertained outside of the articles of incorporation or the resolution if the manner in which the fact or event may operate on such class or series of stock is stated in the articles of incorporation or the resolution.

3.   The description of voting powers, designations, preferences, limitations, restrictions and relative rights of the share classes contained in this section is not exclusive.
  (Added to NRS by 1991, 1185)

NRS 78.197   Rights of persons holding obligations of corporation.   A corporation may provide in its articles of incorporation that the holder of a bond, debenture or other obligation of the corporation may have any of the rights of a stockholder in the corporation.
  (Added to NRS by 1987, 574; A 1993, 955)

NRS 78.200   Rights or options to purchase stock.   A corporation may create and issue, whether in connection with the issue and sale of any shares of stock or other securities of the corporation, rights or options entitling the holders thereof to purchase from the corporation any shares of its stock of any class or classes, to be evidenced by or in such instrument or instruments as are approved by the board of directors. The terms upon which, the time or times, which may be limited or unlimited in duration, at or within which, and the price or prices at which any such shares may be purchased from the corporation upon the exercise of any such a right or option must be fixed and stated in the articles of incorporation or in a resolution or resolutions adopted by the board of directors providing for the creation and issue of the rights or options, and, in every case, set forth or incorporated by reference in the instrument or instruments evidencing the rights or options.
  [11(a):177:1925; added 1949, 158; 1943 NCL 1610.01](NRS A 1991, 1223; 1993, 955)

NRS 78.205   Fractions of shares: Issuance; alternatives to issuance.

1.   A corporation is not obliged to but may execute and deliver a certificate for or including a fraction of a share.
2.   In lieu of executing and delivering a certificate for a fraction of a share, a corporation may:

(a) Pay to any person otherwise entitled to become a holder of a fraction of a share:

(1) The appraised value of that share if the appraisal was properly demanded; or
(2) If no appraisal was demanded or an appraisal was not properly demanded, an amount in cash specified for that purpose as the value of the fraction in the articles, plan of reorganization, plan of merger or exchange, resolution of the board of directors, or other instrument pursuant to which the fractional share would otherwise be issued, or, if not specified, then as may be determined for that purpose by the board of directors of the issuing corporation;

(b) Issue such additional fraction of a share as is necessary to increase the fractional share to a full share; or
(c) Execute and deliver registered or bearer scrip over the manual or facsimile signature of an officer of the corporation or of its agent for that purpose, exchangeable as provided on the scrip for full share certificates, but the scrip does not entitle the holder to any rights as a stockholder except as provided on the scrip. The scrip may provide that it becomes void unless the rights of the holders are exercised within a specified period and may contain any other provisions or conditions that the corporation deems advisable. Whenever any scrip ceases to be exchangeable for full share certificates, the shares that would otherwise have been issuable as provided on the scrip are deemed to be treasury shares unless the scrip contains other provisions for their disposition.

  [11(b):177:1925; added 1953, 180](NRS A 1979, 1160; 1993, 956)

NRS 78.207   Increase or decrease in number of authorized shares of class and series: Resolution by board of directors; vote of stockholders required under certain circumstances.

1.   Unless otherwise provided in the articles of incorporation, a corporation organized and existing under the laws of this state that desires to change the number of shares of a class and series, if any, of its authorized stock by increasing or decreasing the number of authorized shares of the class and series and correspondingly increasing or decreasing the number of issued and outstanding shares of the same class and series held by each stockholder of record at the effective date and time of the change, may, except as otherwise provided in subsections 2 and 3, do so by a resolution adopted by the board of directors, without obtaining the approval of the stockholders. The resolution may also provide for a change of the par value, if any, of the same class and series of the shares increased or decreased. After the effective date and time of the change, the corporation may issue its stock in accordance therewith.
2.   A proposal to increase or decrease the number of authorized shares of any class and series, if any, that includes provisions pursuant to which only money will be paid or scrip will be issued to stockholders who:

(a) Before the increase or decrease in the number of shares becomes effective, in the aggregate hold 10 percent or more of the outstanding shares of the affected class and series; and
(b) Would otherwise be entitled to receive fractions of shares in exchange for the cancellation of all of their outstanding shares, must be approved by the vote of stockholders holding a majority of the voting power of the affected class and series, or such greater proportion as may be provided in the articles of incorporation, regardless of limitations or restrictions on the voting power thereof.

3.   If a proposed increase or decrease in the number of authorized shares of any class or series would alter or change any preference or any relative or other right given to any other class or series of outstanding shares, then the increase or decrease must be approved by the vote, in addition to any vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series whose preference or rights are affected by the increase or decrease, regardless of limitations or restrictions on the voting power thereof.
4.   Any proposal to increase or decrease the number of authorized shares of any class and series, if any, that includes provisions pursuant to which only money will be paid or scrip will be issued to stockholders who:

(a) Before the increase or decrease in the number of shares becomes effective, hold 1 percent or more of the outstanding shares of the affected class and series; and
(b) Would otherwise be entitled to receive a fraction of a share in exchange for the cancellation of all of their outstanding shares, is subject to the provisions of NRS 92A.300 to 92A.500, inclusive. If the proposal is subject to those provisions, any stockholder who is obligated to accept money or scrip rather than receive a fraction of a share resulting from the action taken pursuant to this section may dissent in accordance with those provisions and obtain payment of the fair value of the fraction of a share to which the stockholder would otherwise be entitled.

  [Part 6:177:1925; A 1951, 28](NRS A 1959, 688; 1991, 1224; 1993, 956; 1995, 2098; 1997, 699)

NRS 78.209   Filing certificate of change in number of authorized shares of class and series; contents of certificate; articles of incorporation deemed amended.

1.   A change pursuant to NRS 78.207 is not effective until after the filing in the office of the secretary of state of a certificate, signed by the corporation's president, or a vice president, and its secretary, or an assistant secretary, and acknowledged by the president or vice president before a person authorized by the laws of this state to take acknowledgments of deeds, setting forth:

(a) The current number of authorized shares and the par value, if any, of each class and series, if any, of shares before the change;
(b) The number of authorized shares and the par value, if any, of each class and series, if any, of shares after the change;
(c) The number of shares of each affected class and series, if any, to be issued after the change in exchange for each issued share of the same class or series;
(d) The provisions, if any, for the issuance of fractional shares, or for the payment of money or the issuance of scrip to stockholders otherwise entitled to a fraction of a share and the percentage of outstanding shares affected thereby;
(e) That any required approval of the stockholders has been obtained; and
(f) Whether the change is effective on filing the certificate or, if not, the date and time at which the change will be effective, which must not be more than 90 days after the certificate is filed.
The provisions in the articles of incorporation of the corporation regarding the authorized number and par value, if any, of the changed class and series, if any, of shares shall be deemed amended as provided in the certificate at the effective date and time of the change.

2.   Unless an increase or decrease of the number of authorized shares pursuant to NRS 78.207 is accomplished by an action that otherwise requires an amendment to the corporation's articles of incorporation, such an amendment is not required by that section.
  (Added to NRS by 1997, 694)

NRS 78.211   Consideration for shares: Types; adequacy; effect of receipt; actions of corporation pending receipt in future.

1.   The board of directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including, but not limited to, cash, promissory notes, services performed, contracts for services to be performed or other securities of the corporation.
2.   Before the corporation issues shares, the board of directors must determine that the consideration received or to be received for the shares to be issued is adequate. The judgment of the board of directors as to the adequacy of the consideration received for the shares issued is conclusive in the absence of actual fraud in the transaction.
3.   When the corporation receives the consideration for which the board of directors authorized the issuance of shares, the shares issued therefor are fully paid.
4.   The corporation may place in escrow shares issued for a contract for future services or benefits or a promissory note, or make any other arrangements to restrict the transfer of the shares. The corporation may credit distributions made for the shares against their purchase price, until the services are performed, the benefits are received or the promissory note is paid. If the services are not performed, the benefits are not received or the promissory note is not paid, the shares escrowed or restricted and the distributions credited may be canceled in whole or in part.
  (Added to NRS by 1991, 1186; A 1993, 958)

FEDERAL AND OTHER CASES.

Preincorporation agreement to issue stock could be ratified by corporation. Preincorporation agreement between promoters, providing for issuance of stock in return for contributions of cash, services or expenditures on behalf of corporation, was one within corporate powers expressed in former NRS 78.210 (cf. NRS 78.211) and, as such, was capable of being expressly or impliedly ratified by corporation. Chartrand v. Barney's Club, Inc., 380 F.2d 97 (9th Cir. 1967), cited, Jacobson v. Stern, 96 Nev. 56, at 61, 605 P.2d 198 (1980)

Transaction violated statute and was unenforceable under circumstances. Where foreign corporation controlled by one director of Nevada corporation received 4,500,000 shares of Nevada corporation's stock and warrants for additional 1,000,000 shares in consideration for prior services and promissory note, transaction violated former NRS 78.210 (cf. NRS 78.211), which requires that prior value of shares be paid upon issuance in cash, labor, services, personal property, real estate or leases, and was unenforceable because there were no disinterested or independent members of board and transaction was unfair to Nevada corporation. Drobbin v. Nicolet Instrument Corp., 631 F. Supp. 860 (S.D.N.Y. 1986)

NRS 78.215   Issuance of shares for consideration or as share dividend.

1.   A corporation may issue and dispose of its authorized shares for such consideration as may be prescribed in the articles of incorporation or, if no consideration is so prescribed, then for such consideration as may be fixed by the board of directors.
2.   If a consideration is prescribed for shares without par value, that consideration must not be used to determine the fees required for filing articles of incorporation pursuant to NRS 78.760.
3.   Unless the articles of incorporation provide otherwise, shares may be issued pro rata and without consideration to the corporation's stockholders or to the stockholders of one or more classes or series. An issuance of shares under this subsection is a share dividend.
4.   Shares of one class or series may not be issued as a share dividend in respect of shares of another class or series unless:

(a) The articles of incorporation so authorize;
(b) A majority of the votes entitled to be cast by the class or series to be issued approve the issue; or
(c) There are no outstanding shares of the class or series to be issued.

5.   If the board of directors does not fix the record date for determining stockholders entitled to a share dividend, it is the date the board of directors authorizes the share dividend.
  [13:177:1925; NCL 1612](NRS A 1975, 478; 1991, 1225; 1993, 958)

ATTORNEY GENERAL'S OPINIONS.

Nonpar stock issuable for varying considerations. Domestic stock insurance corporations may organize, provide for and issue nonpar stock for varying considerations. AGO 142 (1-18-1956)

NRS 78.220   Subscription for corporate shares: Payment; collection on default; irrevocability.

1.   Subscriptions to the shares of a corporation, whether made before or after its organization, shall be paid in full at such time or in such installments at such times as determined by the board of directors. Any call made by the board of directors for payment on subscriptions shall be uniform as to all shares of the same class or series.
2.   If default is made in the payment of any installment or call, the corporation may proceed to collect the amount due in the same manner as any debt due the corporation. In addition, the corporation may sell a sufficient number of the subscriber's shares at public auction to pay for the installment or call and any incidental charges incurred as a result of the sale. No penalty causing a forfeiture of a subscription, of stock for which a subscription has been executed, or of amounts paid thereon, may be declared against any subscriber unless the amount due remains unpaid for 30 days after written demand. Such written demand shall be deemed made when it is mailed by registered or certified mail, return receipt requested, to the subscriber's last known address. If any of the subscriber's shares are sold at public auction, any excess of the proceeds over the total of the amount due plus any incidental charges of the sale shall be paid to the subscriber or his legal representative. If an action is brought to recover the amount due on a subscription or call, any judgment in favor of the corporation shall be reduced by the amount of the net proceeds of any sale by the corporation of the subscriber's stock.
3.   If a receiver of a corporation has been appointed, all unpaid subscriptions shall be paid at such times and in such installments as the receiver or the court may direct, subject, however, to the provisions of the subscription contract.
4.   A subscription for shares of a corporation to be organized is irrevocable for 6 months unless otherwise provided by the subscription agreement or unless all of the subscribers consent to the revocation of the subscription.
  [14:177:1925; NCL 1613](NRS A 1977, 651)

NEVADA CASES.

Liability of subscriber. In action in equity by creditors of defunct banking corporation against stockholder indebted to corporation upon his unpaid subscription to its capital stock, where corporation owed defendant a larger sum than amount of his unpaid subscription, and indebtedness of corporation to defendant was collaterally secured, trial court correctly held that defendant had to pay amount of his unpaid subscription and surrender the collateral securities in order to participate ratably with other creditors of corporation in distribution of its assets. (See former sec. 10, ch. 111, Stats. 1865; cf. NRS 78.220.) Thompson v. Reno Sav. Bank, 19 Nev. 103, 7 Pac. 68 (1885)

Liability of subscriber. In action in equity by creditors of defunct banking corporation against stockholder indebted to corporation upon his unpaid subscription to its capital stock, where corporation owed defendant a larger sum than amount of his unpaid subscription, he was not allowed to setoff indebtedness of corporation against his liability, because debt which he owed for his unpaid stock was trust fund which equity would distribute among all of creditors of corporation, and if setoff had been allowed, defendant would have appropriated entire fund. (See former sec. 10, ch. 111, Stats. 1865; cf. NRS 78.220.) Thompson v. Reno Sav. Bank, 19 Nev. 103, 7 Pac. 68 (1885)

NRS 78.225   Stockholder's liability: No individual liability except for payment for which shares were authorized to be issued or which was specified in subscription agreement.   Unless otherwise provided in the articles of incorporation, no stockholder of any corporation formed under the laws of this state is individually liable for the debts or liabilities of the corporation. A purchaser of shares of stock from the corporation is not liable to the corporation or its creditors with respect to the shares, except to pay the consideration for which the shares were authorized to be issued or which was specified in the written subscription agreement.
  [15:177:1925; A 1929, 413; NCL 1614](NRS A 1991, 1225)

NRS CROSS REFERENCES.
  Constitutional limitation of shareholders' liability, Const. Art. 8 3

NEVADA CASES.

Undercapitalization of corporate entity by itself is usually insufficient ground to pierce corporate veil absent fraud or injustice. Where aggrieved party sought to impose liability on shareholders of corporation for corporate debt based on claim that corporation was intentionally undercapitalized to remain judgment proof, supreme court held that undercapitalization, by itself, is usually insufficient ground to disregard corporate entity absent showing by party seeking to pierce corporate veil that financial structure of corporation is fraudulent or caused injustice to aggreived party. (See NRS 78.225.) Paul Steelman, Ltd. v. Omni Realty Partners, 110 Nev. 1223, 885 P.2d 549 (1994)

FEDERAL AND OTHER CASES.

Stockholder not liable for corporate obligations. Under Nev. Art. 8, 3, and NRS 78.225, stockholder of private corporation is not liable, solely by reason of his stock ownership, for debts and obligations of corporation. Berman v. Riverside Casino Corp., 247 F. Supp. 243 (D. Nev. 1964), aff'd, Berman v. Riverside Casino Corp., 354 F.2d 43 (1965)

NRS 78.230   Liability of holder of stock as collateral security; liability of executors, administrators, guardians and trustees.

1.   No person holding shares in any corporation as collateral security shall be personally liable as a stockholder.
2.   No executor, administrator, guardian or trustee, unless he, without authorization, shall have voluntarily invested the trust funds in such shares, shall be personally liable as a stockholder, but the estate and funds in the hands of such executor, administrator, guardian or trustee shall be liable.
  [16:177:1925; NCL 1615]

NRS 78.235   Stock certificates: Validation; facsimile signatures; uncertificated shares and informational statements.

1.   Except as otherwise provided in subsection 4, every stockholder is entitled to have a certificate, signed by officers or agents designated by the corporation for the purpose, certifying the number of shares owned by him in the corporation.
2.   Whenever any certificate is countersigned or otherwise authenticated by a transfer agent or transfer clerk, and by a registrar, then a facsimile of the signatures of the officers or agents, the transfer agent or transfer clerk or the registrar of the corporation may be printed or lithographed upon the certificate in lieu of the actual signatures. If a corporation uses facsimile signatures of its officers and agents on its stock certificates, it cannot act as registrar of its own stock, but its transfer agent and registrar may be identical if the institution acting in those dual capacities countersigns or otherwise authenticates any stock certificates in both capacities.
3.   If any officer or officers who have signed, or whose facsimile signature or signatures have been used on, any certificate or certificates for stock cease to be an officer or officers of the corporation, whether because of death, resignation or other reason, before the certificate or certificates have been delivered by the corporation, the certificate or certificates may nevertheless be adopted by the corporation and be issued and delivered as though the person or persons who signed the certificate or certificates, or whose facsimile signature or signatures have been used thereon, had not ceased to be an officer or officers of the corporation.
4.   A corporation may provide in its articles of incorporation or in its bylaws for the issuance of uncertificated shares of some or all of the shares of any or all of its classes or series. The issuance of uncertificated shares has no effect on existing certificates for shares until surrendered to the corporation, or on the respective rights and obligations of the stockholders. Unless otherwise provided by a specific statute, the rights and obligations of stockholders are identical whether or not their shares of stock are represented by certificates.
5.   Within a reasonable time after the issuance or transfer of shares without certificates, the corporation shall send the stockholder a written statement containing the information required on the certificates pursuant to subsection 1. At least annually thereafter, the corporation shall provide to its stockholders of record, a written statement confirming the information contained in the informational statement previously sent pursuant to this subsection.
  [Part 18:177:1925; A 1929, 413; 1937, 8; 1931 NCL 1617](NRS A 1965, 1012; 1987, 579; 1991, 1226; 1993, 959)

ATTORNEY GENERAL'S OPINIONS.

Certificate not stock; stockholder owns stock without certificate. Stock certificate is not stock itself but is merely paper indicative of ownership of amount of stock named therein. Stockholder owns stock whether he has certificate or not. AGO 38 (6-7-1921)

NRS 78.240   Shares of stock are personal property; transfers.   The shares of stock in every corporation shall be personal property and shall be transferable on the books of the corporation, in such manner and under such regulations as may be provided in the bylaws, and as provided in chapter 104 of NRS.
  [Part 18:177:1925; A 1929, 413; 1937, 8; 1931 NCL 1617](NRS A 1965, 917)

NRS CROSS REFERENCES.
  Uniform Commercial Code, NRS ch. 104

NEVADA CASES.

No change of venue for action concerning stock in corporation owning mining claim in different county. Where complaint showed on its face that action pertained solely to shares of stock in corporations owning mining claims, such shares were personal property under RL 1158 (cf. NRS 78.240) and action concerned personal property, not real property. There was no basis for change of venue pursuant to RL 5011 (cf. NRS 13.010) for the reason that mining claims were located in county other than where action was brought. Order denying motion for change of venue was affirmed. Page v. Walser, 43 Nev. 422, 187 Pac. 509 (1920)

Transfer of stock must be registered in corporate books. Under provisions of NCL 1617 (cf. NRS 78.240), transfer of stock in corporation between individuals, in order to receive recognition by corporation, must be registered upon books of corporation. In re Simrak, 61 Nev. 431, 132 P.2d 605 (1942), cited, Schwabacher & Co. v. Zobrist, 102 Nev. 55, at 58, 714 P.2d 1003 (1986)

Unregistered transfer of stock binding on parties to transfer; equitable title passes. Under NCL 1617 (cf. NRS 78.240), transfer of stock in corporation, although not registered upon books of corporation, is binding upon parties to transfer, and equitable title, at least, passes. In re Simrak, 61 Nev. 431, 132 P.2d 605 (1942), cited, Schwabacher & Co. v. Zobrist, 102 Nev. 55, at 58, 714 P.2d 1003 (1986)

Purpose of registration to protect corporate officers. Primary purpose of NCL 1617 (cf. NRS 78.240), which provides that transfer of stock in corporation must be registered upon books of corporation before transfer is valid against corporation, is to provide protection to officers of corporation in determining ownership of or right to vote shares of stock. In re Simrak, 61 Nev. 431, 132 P.2d 605 (1942)

NRS 78.242   Restrictions on transfer of stock.

1.   Subject to the limitation imposed by NRS 104.8204, a written restriction on the transfer or registration of transfer of the stock of a corporation, if permitted by this section, may be enforced against the holder of the restricted stock or any successor or transferee of the holder, including an executor, administrator, trustee, guardian or other fiduciary entrusted with like responsibility for the person or estate of the holder.
2.   A restriction on the transfer or registration of transfer of the stock of a corporation may be imposed by the articles of incorporation or by the bylaws or by an agreement among any number of stockholders or between one or more stockholders and the corporation. No restriction so imposed is binding with respect to stocks issued before the adoption of the restriction unless the stockholders are parties to an agreement or voted in favor of the restriction.
3.   A restriction on the transfer or the registration of transfer of shares is valid and enforceable against the transferee of the stockholder if the restriction is not prohibited by other law and its existence is noted conspicuously on the front or back of the stock certificate or is contained in the statement of information required by NRS 78.235. Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction.
4.   A restriction on the transfer or registration of transfer of stock of a corporation is permitted, without limitation by this enumeration, if it:

(a) Obligates the stockholder first to offer to the corporation or to any other stockholder or stockholders of the corporation or to any other person or persons or to any combination of the foregoing a prior opportunity, to be exercised within a reasonable time, to acquire the stock;
(b) Obligates the corporation or any holder of stock of the corporation or any other person or any combination of the foregoing to purchase stock which is the subject of an agreement respecting the purchase and sale of the stock;
(c) Requires the corporation or any stockholder or stockholders to consent to any proposed transfer of the stock or to approve the proposed transferee of stock;
(d) Prohibits the transfer of the stock to designated persons or classes of persons, and such designation is not manifestly unreasonable; or
(e) Prohibits the transfer of stock:

(1) To maintain the corporation's status when it is dependent on the number or identity of its stockholders;
(2) To preserve exemptions under federal or state laws governing taxes or securities; or
(3) For any other reasonable purpose.

5.   For the purposes of this section, "stock" includes a security convertible into or carrying a right to subscribe for or to acquire stock.
  (Added to NRS by 1969, 112; A 1991, 1226)

NRS 78.245   Corporate stocks, bonds and securities not taxed when owned by nonresidents or foreign corporations.   No stocks, bonds or other securities issued by any corporation organized under this chapter, nor the income or profits therefrom, nor the transfer thereof by assignment, descent, testamentary disposition or otherwise, shall be taxed by this state when such stocks, bonds or other securities shall be owned by nonresidents of this state or by foreign corporations.
  [87:177:1925; A 1929, 413; NCL 1686]

NRS 78.250   Cancellation of outstanding certificates or change in informational statements: Issuance of new certificates or statements; order for surrender of certificates; penalties for failure to comply.

1.   When the articles of incorporation are amended in any way affecting the statements contained in certificates for outstanding shares or informational statements sent pursuant to NRS 78.235, or it becomes desirable for any reason, in the discretion of the board of directors, to cancel any outstanding certificate for shares and issue a new certificate therefor conforming to the rights of the holder, the board of directors may send additional informational statements as provided in NRS 78.235 and order any holders of outstanding certificates for shares to surrender and exchange them for new certificates within a reasonable time to be fixed by the board of directors.
2.   Such an order may provide that the holder of any certificate so ordered to be surrendered is not entitled to vote or to receive distributions or exercise any of the other rights of stockholders of record until he has complied with the order, but the order operates to suspend such rights only after notice and until compliance.
3.   The duty to surrender any outstanding certificates may also be enforced by action at law.
  [18a:177:1925; added 1937, 8; 1931 NCL 1617.01](NRS A 1987, 580; 1993, 960)

NRS 78.257   Right of stockholders to inspect and audit financial records; exceptions.

1.   Any person who has been a stockholder of record of any corporation and owns not less than 15 percent of all of the issued and outstanding shares of the stock of such corporation or has been authorized in writing by the holders of at least 15 percent of all its issued and outstanding shares, upon at least 5 days' written demand, is entitled to inspect in person or by agent or attorney, during normal business hours, the books of account and all financial records of the corporation, to make extracts therefrom, and to conduct an audit of such records. Holders of voting trust certificates representing 15 percent of the issued and outstanding shares of the corporation shall be regarded as stockholders for the purpose of this subsection. The right of stockholders to inspect the corporate records may not be limited in the articles or bylaws of any corporation.
2.   All costs for making extracts of records or conducting an audit must be borne by the person exercising his rights under subsection 1.
3.   The rights authorized by subsection 1 may be denied to any stockholder upon his refusal to furnish the corporation an affidavit that such inspection, extracts or audit is not desired for any purpose not related to his interest in the corporation as a stockholder. Any stockholder or other person, exercising rights under subsection 1, who uses or attempts to use information, documents, records or other data obtained from the corporation, for any purpose not related to the stockholder's interest in the corporation as a stockholder, is guilty of a gross misdemeanor.
4.   If any officer or agent of any corporation keeping records in this state willfully neglects or refuses to permit an inspection of the books of account and financial records upon demand by a person entitled to inspect them, or refuses to permit an audit to be conducted, as provided in subsection 1, the corporation shall forfeit to the state the sum of $100 for every day of such neglect or refusal, and the corporation, officer or agent thereof is jointly and severally liable to the person injured for all damages resulting to him.
5.   A stockholder who brings an action or proceeding to enforce any right under this section or to recover damages resulting from its denial:

(a) Is entitled to costs and reasonable attorney's fees, if he prevails; or
(b) Is liable for such costs and fees, if he does not prevail, in the action or proceeding.

6.   Except as otherwise provided in this subsection, the provisions of this section do not apply to any corporation listed and traded on any recognized stock exchange nor do they apply to any corporation that furnishes to its stockholders a detailed, annual financial statement. A person who owns, or is authorized in writing by the owners of, at least 15 percent of the issued and outstanding shares of the stock of a corporation that has elected to be governed by subchapter S of the Internal Revenue Code and whose shares are not listed or traded on any recognized stock exchange is entitled to inspect the books of the corporation pursuant to subsection 1 and has the rights, duties and liabilities provided in subsections 2 to 5, inclusive.
  (Added to NRS by 1971, 863; A 1977, 659; 1997, 3092)

NRS 78.265   Preemptive rights of stockholders in corporations organized before October 1, 1991.

1.   The provisions of this section apply to corporations organized in this state before October 1, 1991.
2.   Except to the extent limited or denied by this section or the articles of incorporation, shareholders have a preemptive right to acquire unissued shares, treasury shares or securities convertible into such shares.
3.   Unless otherwise provided in the articles of incorporation:

(a) A preemptive right does not exist:

(1) To acquire any shares issued to directors, officers or employees pursuant to approval by the affirmative vote of the holders of a majority of the shares entitled to vote or when authorized by a plan approved by such a vote of shareholders;
(2) To acquire any shares sold for a consideration other than cash;
(3) To acquire any shares issued at the same time that the shareholder who claims a preemptive right acquired his shares;
(4) To acquire any shares issued as part of the same offering in which the shareholder who claims a preemptive right acquired his shares; or
(5) To acquire any shares, treasury shares or securities convertible into such shares, if the shares or the shares into which the convertible securities may be converted are upon issuance registered pursuant to section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l).

(b) Holders of shares of any class that is preferred or limited as to dividends or assets are not entitled to any preemptive right.
(c) Holders of common stock are not entitled to any preemptive right to shares of any class that is preferred or limited as to dividends or assets or to any obligations, unless convertible into shares of common stock or carrying a right to subscribe to or acquire shares of common stock.
(d) Holders of common stock without voting power have no preemptive right to shares of common stock with voting power.
(e) The preemptive right is only an opportunity to acquire shares or other securities upon such terms as the board of directors fixes for the purpose of providing a fair and reasonable opportunity for the exercise of such right.

  [23:177:1925; NCL 1622](NRS A 1977, 909; 1987, 581; 1991, 1227)

NEVADA CASES.

Receiver appointed under circumstances where preemptive right violated. On appeal from appointment of receiver for corporation where evidence showed corporate stock was held by two stockholders, one stockholder, who at such time was sole stockholder with voting rights, approved amendment of articles of incorporation increasing amount of authorized capital, and then, without first offering pro rata share of new stock to other stockholder, he bought all of new shares, trial court did not abuse its discretion in appointing receiver because corporation willfully violated its charter and NRS 78.265 by selling new stock in such manner and such infraction brought corporation within NRS 78.650. Fact that other stockholder was nonvoting stockholder at the time did not in any way diminish his rights. Peri-Gil Corp. v. Sutton, 84 Nev. 406, 442 P.2d 35 (1968), cited, Nishon's, Inc. v. Kendigian, 91 Nev. 504, at 505, 538 P.2d 580 (1975)

FEDERAL AND OTHER CASES.

Legal effect of preemptive right. In action for fraud under federal Securities Exchange Act, stockholder's preemptive right under NRS 78.265 to purchase proportionate share of any additional stock issued made him equivalent of purchaser. Brennan v. EMDE Medical Research, Inc., 652 F. Supp. 255 (D. Nev. 1986)

NRS 78.267   Preemptive rights of stockholders in corporations organized on or after October 1, 1991.

1.   The provisions of this section apply to corporations organized in this state on or after October 1, 1991.
2.   The stockholders of a corporation do not have a preemptive right to acquire the corporation's unissued shares except to the extent the articles of incorporation so provide.
3.   A statement included in the articles of incorporation that "the corporation elects to have preemptive rights" or words of similar import have the following effects unless the articles of incorporation otherwise provide:

(a) The stockholders of the corporation have a preemptive right, granted on uniform terms and conditions prescribed by the board of directors to provide a fair and reasonable opportunity to exercise the right, to acquire proportional amounts of the corporation's unissued shares upon the decision of the board of directors to issue them.
(b) A stockholder may waive his preemptive right. A waiver evidenced by a writing is irrevocable even though it is not supported by consideration.
(c) There is no preemptive right with respect to:

(1) Shares issued as compensation to directors, officers, agents or employees of the corporation, its subsidiaries or affiliates;
(2) Shares issued to satisfy rights of conversion or options created to provide compensation to directors, officers, agents or employees of the corporation, its subsidiaries or affiliates;
(3) Shares authorized in articles of incorporation which are issued within 6 months from the effective date of incorporation; or
(4) Shares sold otherwise than for money.

(d) Holders of shares of any class without general voting rights but with preferential rights to distributions or assets have no preemptive rights with respect to shares of any class.
(e) Holders of shares of any class with general voting rights but without preferential rights to distributions or assets have no preemptive rights with respect to shares of any class with preferential rights to distributions or assets unless the shares with preferential rights are convertible into or carry a right to subscribe for or acquire shares without preferential rights.
(f) Shares subject to preemptive rights that are not acquired by stockholders may be issued to any person for 1 year after being offered to stockholders at a consideration set by the board of directors that is not lower than the consideration set for the exercise of preemptive rights. An offer at a lower consideration or after the expiration of one year is subject to the stockholders' preemptive rights.

4.   As used in this section, "shares" includes a security convertible into or carrying a right to subscribe for or acquire shares.
  (Added to NRS by 1991, 1187)

NRS 78.275   Assessments on stock: Levy and collection; sale after default in payment.

1.   The directors may at such times and in such amount, as they may from time to time deem the interest of the corporation to require, levy and collect assessments upon the assessable stock of the corporation in the manner provided in this section.
2.   Notice of each assessment must be given to the stockholders personally, or by publication once a week for at least 4 weeks, in some newspaper published in the county in which the registered office or place of business of the corporation is located, and in a newspaper published in the county wherein the property of the corporation is situated if in this state, and if no paper is published in either of those counties, then the newspaper published nearest to the registered office in the state.
3.   If after the notice has been given, any stockholder defaults in the payment of the assessment upon the shares held by him, so many of those shares may be sold as will be necessary for the payment of the assessment upon all the shares held by him, together with all costs of advertising and expenses of sale. The sale of the shares must be made at the office of the corporation at public auction to the highest bidder, after a notice thereof published for 4 weeks as directed in this section, and a copy of the notice mailed to each delinquent stockholder if his address is known 4 weeks before the sale. At the sale the person who offers to pay the assessment so due, together with the expenses of advertising and sale, for the smallest number of shares, or portion of a share, as the case may be, shall be deemed the highest bidder.
  [Part 74:177:1925; NCL 1673](NRS A 1993, 960)

ATTORNEY GENERAL'S OPINIONS.

Stock issued as paid up not assessable. Assessable stock may be made nonassessable, but stock which has been issued as fully paid up cannot thereafter be made assessable. AGO 45 (4-19-1919)

Provision in articles for assessment. Capital stock may be assessed where articles provide: "The capital stock of the corporation shall be subject to assessment." AGO 106 (4-11-1922)

Assessment of stock permitted by corporation organized under prior law. Corporation organized under 1885 law authorizing assessment of capital stock may make such assessments notwithstanding fact that present statutes prohibit them. AGO 165 (5-6-1952)

NRS 78.280   Purchase by corporation of its own stock at assessment sale when no other available purchaser.

1.   Every corporation in this state may, whenever at any assessment sale of the stock of the corporation no person will take the stock and pay the assessment, or amount unpaid and due thereon and costs, purchase such stock and hold the stock for the benefit of the corporation.
2.   All purchases of its own stock by any corporation in this state which have been previously made at assessment sales whereat outside persons have failed to bid, and which purchases were for the amount of assessments due, and costs or otherwise, are valid, and vest the legal title to the stock in the corporation.
3.   The stock so purchased is subject to the control of the remaining stockholders, who may dispose of the stock as they may deem fit.
4.   Whenever any portion of the stock of any corporation is held by the corporation by purchase or otherwise, a majority of the remaining shares of stock in the corporation is a majority of the shares of the stock in the incorporated company, for all purposes of election or voting on any question before a stockholders' meeting.
  [Part 74:177:1925; NCL 1673](NRS A 1993, 2764)

NRS 78.283   Treasury shares: Definition; limitations; retirement and disposal.

1.   As used in this section, "treasury shares" means shares of a corporation issued and thereafter acquired by the corporation or another entity, the majority of whose outstanding voting power to elect its general partner, directors, managers or members of the governing body is beneficially held, directly or indirectly, by the corporation, which have not been retired or restored to the status of unissued shares.
2.   Treasury shares do not carry voting rights or participate in distributions, may not be counted as outstanding shares for any purpose and may not be counted as assets of the corporation for the purpose of computing the amount available for distributions. Unless the articles of incorporation provide otherwise, treasury shares may be retired and restored to the status of authorized and unissued shares without an amendment to the articles of incorporation or may be disposed of for such consideration as the board of directors may determine.
3.   This section does not limit the right of a corporation to vote its shares held by it in a fiduciary capacity.
  (Added to NRS by 1959, 682; A 1981, 1890; 1991, 1228; 1997, 701)

NRS 78.288   Distributions to stockholders.

1.   Except as otherwise provided in subsection 2 and the articles of incorporation, a board of directors may authorize and the corporation may make distributions to its stockholders.
2.   No distribution may be made if, after giving it effect:

(a) The corporation would not be able to pay its debts as they become due in the usual course of business; or
(b) Except as otherwise specifically allowed by the articles of incorporation, the corporation's total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution.

3.   The board of directors may base a determination that a distribution is not prohibited under subsection 2 on:

(a) Financial statements prepared on the basis of accounting practices that are reasonable in the circumstances;
(b) A fair valuation, including, but not limited to, unrealized appreciation and depreciation; or
(c) Any other method that is reasonable in the circumstances.

4.   The effect of a distribution under subsection 2 must be measured:

(a) In the case of a distribution by purchase, redemption or other acquisition of the corporation's shares, as of the earlier of:

(1) The date money or other property is transferred or debt incurred by the corporation; or
(2) The date upon which the stockholder ceases to be a stockholder with respect to the acquired shares.

(b) In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed.
(c) In all other cases, as of:

(1) The date the distribution is authorized if the payment occurs within 120 days after the date of authorization; or
(2) The date the payment is made if it occurs more than 120 days after the date of authorization.

5. A corporation's indebtedness to a stockholder 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.
6.   Indebtedness of a corporation, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations under subsection 2 if its terms provide that payment of principal and interest are made only if and to the extent that payment of a distribution to stockholders could then be made pursuant to this section. If the indebtedness is issued as a distribution, each payment of principal or interest must be treated as a distribution, the effect of which must be measured on the date the payment is actually made.
(Added to NRS by 1991, 1187)

NRS 78.295   Liability of directors for declaration of distributions.   A director is fully protected in relying in good faith upon the books of account of the corporation or statements prepared by any of its officials as to the value and amount of the assets, liabilities or net profits of the corporation, or any other facts pertinent to the existence and amount of money from which distributions may properly be declared.
  [Part 26:177:1925; A 1931, 415; 1949, 158; 1943 NCL 1625](NRS A 1991, 1229)

NRS 78.300   Liability of directors for unlawful distributions.

1.   The directors of a corporation shall not make distributions to stockholders except as provided by this chapter.
2.   In case of any willful or grossly negligent violation of the provisions of this section, the directors under whose administration the violation occurred, except those who caused their dissent to be entered upon the minutes of the meeting of the directors at the time, or who not then being present caused their dissent to be entered on learning of such action, are jointly and severally liable, at any time within 3 years after each violation, to the corporation, and, in the event of its dissolution or insolvency, to its creditors at the time of the violation, or any of them, to the lesser of the full amount of the distribution made or of any loss sustained by the corporation by reason of the distribution to stockholders.
  [75:177:1925; A 1931, 415; 1949, 158; 1943 NCL 1674](NRS A 1987, 83; 1991, 1229)

NEVADA CASES.

Directors who transferred assets of insolvent corporation for stock were liable to creditor as trustees of dissolved corporation, not for payment of unlawful dividends. Where officers and directors of insolvent corporation caused corporate assets to be transferred to another corporation in exchange for shares of its stock, distributed shares received to stockholders of insolvent corporation and then dissolved corporation, officers and directors were personally liable to creditor as trustees of dissolved corporation under NRS 78.590 and 78.595, not under NRS 78.300, relating to unlawful payment of dividends. Applicable period of limitations for creditor's action was 4 years under NRS 11.220, not 3 years under NRS 11.190, because liability was not one created by statute. Nevada Land & Mortgage Co. v. Lamb, 90 Nev. 247, 524 P.2d 326 (1974)

NRS 78.307   "Investment company" and "open-end investment company" defined; redemption of shares by open-end investment company.

1.   As used in this section, unless the context requires otherwise:

(a) "Investment company" means any corporation, trust, association or fund which is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities, and whose assets are invested principally in cash or in securities of other issuers.
(b) "Open-end investment company" means any investment company which issues one or more series or classes of securities under the terms of which the holder of the security, upon presentation thereof to the issuer, is entitled to receive approximately his proportionate share of the current net assets of the issuer applicable to such series or class, or the cash equivalent thereof.

2.   An open-end investment company may, from time to time, redeem its shares, in accordance with their terms, at approximately the proportionate share of the current net assets of the issuer applicable to such shares, or the cash equivalent thereof.
  (Added to NRS by 1961, 174)

MEETINGS, ELECTIONS, VOTING AND NOTICE

NRS 78.310   Place of stockholders' and directors' meetings.   Meetings of stockholders and directors of any corporation organized under the provisions of this chapter may be held within or without this state, in the manner provided by the bylaws of the corporation. The articles of incorporation may designate any place or places where such stockholders' or directors' meetings may be held, but in the absence of any provision therefor in the articles of incorporation, then the meetings must be held within or without this state, as directed from time to time by the bylaws of the corporation.
  [Part 31:177:1925; NCL 1630](NRS A 1993, 961)

NRS 78.315   Directors' meetings: Quorum; consent for actions taken without meeting; participation by telephone or similar method.

1.   Unless the articles of incorporation or the bylaws provide for a different proportion, a majority of the board of directors of the corporation then in office, at a meeting duly assembled, is necessary to constitute a quorum for the transaction of business, and the act of directors holding a majority of the voting power of the directors, present at a meeting at which a quorum is present, is the act of the board of directors.
2.   Unless otherwise restricted by the articles of incorporation or bylaws, any action required or permitted to be taken at a meeting of the board of directors or of a committee thereof may be taken without a meeting if, before or after the action, a written consent thereto is signed by all the members of the board or of the committee.
3.   Unless otherwise restricted by the articles of incorporation or bylaws, members of the board of directors or the governing body of any corporation, or of any committee designated by such board or body, may participate in a meeting of the board, body or committee by means of a telephone conference or similar method of communication by which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this subsection constitutes presence in person at the meeting.
  [Part 31:177:1925; NCL 1630](NRS A 1957, 75; 1959, 685; 1977, 412; 1991, 1229; 1993, 961; 1997, 701)

NEVADA CASES.

Action by quorum without notice. In action on promissory note issued by corporation, where shareholder intervened and alleged lack of authority from directors to execute note, bylaws provided for regular meetings of directors on any business day without notice, evidence showed custom of attendance of only two directors at meetings and silence of minutes on any notice to third director, and no shareholder or director had ever objected, neither corporation nor shareholders could attack validity of authorization by two directors at meeting of which third director had no actual notice. (See NRS 78.315.) Scott v. Cord, 75 Nev. 179, 336 P.2d 773 (1959)

FEDERAL AND OTHER CASES.

Quorum necessary to amend provision in bylaws for quorum. Under NRS 78.060, 78.115 and 78.315, which relate to powers, boards of directors, and meetings of directors of corporations, bylaw which provided that four of five directors were necessary to constitute quorum was valid, and purported amendment to bylaws of corporation by three of five members of board in absence of other two was void. Olincy v. Merle Norman Cosmetics, Inc., 19 Cal. Rptr. 387 (Dist. Ct. App. 1962)

NRS 78.320   Stockholders' meetings: Quorum; consent for actions taken without meeting; participation by telephone or similar method.

1.   Unless this chapter, the articles of incorporation or the bylaws provide for different proportions:

(a) A majority of the voting power, which includes the voting power that is present in person or by proxy, regardless of whether the proxy has authority to vote on all matters, constitutes a quorum for the transaction of business; and
(b) Action by the stockholders on a matter other than the election of directors is approved if the number of votes cast in favor of the action exceeds the number of votes cast in opposition to the action.

2.   Unless otherwise provided in the articles of incorporation or the bylaws, any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if a written consent thereto is signed by stockholders holding at least a majority of the voting power, except that if a different proportion of voting power is required for such an action at a meeting, then that proportion of written consents is required.
3.   In no instance where action is authorized by written consent need a meeting of stockholders be called or notice given.
4.   Unless otherwise restricted by the articles of incorporation or bylaws, stockholders may participate in a meeting of stockholders by means of a telephone conference or similar method of communication by which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this subsection constitutes presence in person at the meeting.
  [29(a):177:1925; added 1949, 158; 1943 NCL 1628.01](NRS A 1959, 686; 1987, 581; 1989, 875; 1991, 1229; 1993, 961; 1997, 702)

NRS 78.325   Actions at meetings not regularly called: Ratification and approval.

1.   Whenever all persons entitled to vote at any meeting, whether of directors, trustees or stockholders, consent, either by:

(a) A writing on the records of the meeting or filed with the secretary; or
(b) Presence at such meeting and oral consent entered on the minutes; or
(c) Taking part in the deliberations at such meeting without objection; the doings of such meeting shall be as valid as if had at a meeting regularly called and noticed.

2.   At such meeting any business may be transacted which is not excepted from the written consent or to the consideration of which no objection for want of notice is made at the time.
3.   If any meeting be irregular for want of notice or of such consent, provided a quorum was present at such meeting, the proceedings of the meeting may be ratified and approved and rendered likewise valid and the irregularity or defect therein waived by a writing signed by all parties having the right to vote at such meeting.
4.   Such consent or approval of stockholders or creditors may be by proxy or attorney, but all such proxies and powers of attorney must be in writing.
  [Part 92:177:1925; A 1929, 413; NCL 1691]

NRS 78.330   Directors: Election; classification; voting power.

1.   Unless elected pursuant to NRS 78.320, directors of every corporation must be elected at the annual meeting of the stockholders by a plurality of the votes cast at the election. Unless otherwise provided in the bylaws, the board of directors have the authority to set the date, time and place for the annual meeting of the stockholders. If for any reason directors are not elected pursuant to NRS 78.320 or at the annual meeting of the stockholders, they may be elected at any special meeting of the stockholders which is called and held for that purpose.
2.   The articles of incorporation or the bylaws may provide for the classification of directors as to the duration of their respective terms of office or as to their election by one or more authorized classes or series of shares, but at least one-fourth in number of the directors of every corporation must be elected annually.
3.   The articles of incorporation may provide that the voting power of individual directors or classes of directors may be greater than or less than that of any other individual directors or classes of directors, and the different voting powers may be stated in the articles of incorporation or may be dependent upon any fact or event that may be ascertained outside the articles of incorporation if the manner in which the fact or event may operate on those voting powers is stated in the articles of incorporation. If the articles of incorporation provide that any directors may have voting power greater than or less than other directors, every reference in this chapter to a majority or other proportion of directors shall be deemed to refer to a majority or other proportion of the voting power of all of the directors or classes of directors, as may be required by the articles of incorporation.
  [Part 33:177:1925; A 1929, 413; NCL 1632](NRS A 1967, 267; 1979, 215; 1987, 582; 1989, 875; 1993, 962)

NEVADA CASES.

Directors could not amend bylaws to change date of election. Under California statute providing for annual election of corporate directors (cf. NRS 78.330), directors of corporation could not lawfully amend bylaws to change date of election from July to October, even though bylaws provided that directors could amend bylaws, because stockholders would thereby be deprived of control afforded by annual election. State ex rel. Curtis v. McCullough, 3 Nev. 202 (1867)

Election called by president void when bylaws require order of board. Under statute which provided that trustees of corporation should be elected in manner provided in bylaws of corporation, election of trustees at meeting convened by order of president of corporation was void where bylaws of corporation provided that all meetings were to be convened by order of board of trustees. State ex rel. Guerrero v. Pettinelli, 10 Nev. 141 (1875)

FEDERAL AND OTHER CASES.

Management vested in board; stockholders elect directors. Under NRS 78.115 and 78.120, management and control of affairs of private corporation are vested in board of directors. Stockholder, as such, exercises his powers in election of directors. (See NRS 78.330.) Berman v. Riverside Casino Corp., 247 F. Supp. 243 (D. Nev. 1964), aff'd, Berman v. Riverside Casino Corp., 354 F.2d 43 (1965)

NRS 78.335   Directors: Removal; filling of vacancies.

1.   Any director may be removed from office by the vote of stockholders representing not less than two-thirds of the voting power of the issued and outstanding stock entitled to voting power, except that:

(a) In the case of corporations which have provided in their articles of incorporation for the election of directors by cumulative voting, no director may be removed from office under the provisions of this section except upon the vote of stockholders owning sufficient shares to have prevented his election to office in the first instance; and
(b) The articles of incorporation may require the concurrence of a larger percentage of the stock entitled to voting power in order to remove a director.

2.   Whenever the holders of any class or series of shares are entitled to elect one or more directors, unless otherwise provided in the articles of incorporation, removal of any such director requires only the proportion of votes, specified in subsection 1, of the holders of that class or series, and not the votes of the outstanding shares as a whole.
3.   All vacancies, including those caused by an increase in the number of directors, may be filled by a majority of the remaining directors, though less than a quorum, unless it is otherwise provided in the articles of incorporation.
4.   Unless otherwise provided in the articles of incorporation, when one or more directors give notice of his or their resignation to the board, effective at a future date, the board may fill the vacancy or vacancies to take effect when the resignation or resignations become effective, each director so appointed to hold office during the remainder of the term of office of the resigning director or directors.
  [Part 33:177:1925; A 1929, 413; NCL 1632](NRS A 1989, 875; 1991, 1230; 1993, 962)

FEDERAL AND OTHER CASES.

Federal jurisdiction presumed. In stockholder's action against corporation, where NRS 78.335, 78.345, 78.600 and 78.630-78.715 would have provided ample means for rectifying situation alleged in complaint, but complaint was not based on such sections, it was unnecessary to decide whether in diversity case federal court could take jurisdiction of action based on any of such sections, but court presumed that it could. Pioche Mines Consol. v. Dolman, 333 F.2d 257 (9th Cir. 1964)

NRS 78.340   Failure to hold election of directors on regular day does not dissolve corporation.   If the directors shall not be elected on the day designated for the purpose, the corporation shall not for that reason be dissolved; but every director shall continue to hold his office and discharge his duties until his successor has been elected.
  [34:177:1925; NCL 1633]

FEDERAL AND OTHER CASES.

Continuation of officer and directors. In proceeding for mandamus, where: (1) appellate court ordered that appointment of receiver of corporation should be vacated and that he should settle his accounts and return corporate property to corporation; (2) trial court refused to order return of property because receiver had not accounted and issued restraining order enjoining president of corporation from attempting to occupy or control corporate property; (3) appellate court then reversed trial court stating that, if there was substantial delay in settling receiver's accounts, return of property should not await settlement of receiver's accounts; and (4) corporation president then died, there was no merit to contention that there were no officers or directors of corporation to whom properties could be returned because there was no evidence in record to support assertion that those persons listed as officers, directors and agents of corporation as filed each year with secretary of state pursuant to NRS 78.150 were not at least de facto what they purported to be. (See NRS 78.340.) Pioche Mines Consol., Inc. v. Foley, 410 F.2d 742 (1969)

NRS 78.345   Election of directors by order of court upon failure of regular election.

1.   If any corporation fails to elect directors within 18 months after the last election of directors required by NRS 78.330, the district court has jurisdiction in equity, upon application of any one or more stockholders holding stock entitling them to exercise at least 15 percent of the voting power, to order the election of directors in the manner required by NRS 78.330.
2.   The application must be made by petition filed in the county where the registered office of the corporation is located and must be brought on behalf of all stockholders desiring to be joined therein. Such notice must be given to the corporation and the stockholders as the court may direct.
3.   The directors elected pursuant to this section have the same rights, powers and duties and the same tenure of office as directors elected by the stockholders at the annual meeting held at the time prescribed therefor, next before the date of the election pursuant to this section, would have had.
  [35:177:1925; NCL 1634](NRS A 1991, 1231)

NEVADA CASES.

Showing that stockholders have majority of voting power or are unable to secure stockholders' meeting not required. Where proceeding was brought by stockholder on behalf of himself and others similarly situated for appointment of board of directors under NCL 1634 (cf. NRS 78.345) for failure to elect directors within required time, no allegation or showing was required that petitioners had majority of voting power and were unable to secure annual or special meeting of stockholders. NCL 1634 (cf. NRS 78.345) contains no such requirement, and so to construe it would necessitate reading such provision into statute. In re Simrak, 61 Nev. 431, 132 P.2d 605 (1942)

Successors in ownership not estopped by prior failure to elect directors. That owners of stock in mining corporation did not object to failure to hold annual meeting and elect directors did not preclude successors in interest of original owners from having board of directors appointed and seeking aid under NCL 1634 (cf. NRS 78.345) for that purpose, and it did not estop them from resorting to courts for help, because after expiration of 6 months new right accrued which could not have been waived in advance by persons then strangers to corporation. In re Simrak, 61 Nev. 431, 132 P.2d 605 (1942)

Purchaser of stock at execution sale could maintain proceeding without entry of transfer on corporate records. Where mining corporation neglected to elect directors within 6 months after time designated for its annual meeting, purchaser of shares of stock at execution sale who held certificate of sale issued by sheriff was entitled to maintain proceeding against corporation for appointment of directors as provided in NCL 1634 (cf. NRS 78.345), even though no entry of transfer of stock had been made on records of corporation. In re Simrak, 61 Nev. 431, 132 P.2d 605 (1942)

FEDERAL AND OTHER CASES.

Federal jurisdiction presumed. In stockholder's action against corporation, where NRS 78.335, 78.345, 78.600 and 78.630-78.715 would have provided ample means for rectifying situation alleged in complaint, but complaint was not based on such sections, it was unnecessary to decide whether in diversity case a federal court could take jurisdiction of action based on any of such sections, but court presumed that it could. Pioche Mines Consol. v. Dolman, 333 F.2d 257 (9th Cir. 1964)

NRS 78.347   Application by stockholder for order of court appointing custodian or receiver; authority of custodian.

1.   Any stockholder may apply to the district court to appoint one or more persons to be custodians of the corporation, and, if the corporation is insolvent, to be receivers of the corporation when:

(a) The business of the corporation is suffering or is threatened with irreparable injury because the directors are so divided respecting the management of the affairs of the corporation that a required vote for action by the board of directors cannot be obtained and the stockholders are unable to terminate this division; or
(b) The corporation has abandoned its business and has failed within a reasonable time to take steps to dissolve, liquidate or distribute its assets in accordance with this chapter.

2.   A custodian appointed pursuant to this section has all the powers and title of a trustee appointed under NRS 78.590, 78.635 and 78.650, but the authority of the custodian is to continue the business of the corporation and not to liquidate its affairs or distribute its assets, except when the district court so orders and except in cases arising pursuant to paragraph (b) of subsection 1.
  (Added to NRS by 1991, 1188)

NRS 78.350   Voting rights of stockholders; determination of stockholders entitled to notice of and to vote at meeting.

1.   Unless otherwise provided in the articles of incorporation, or in the resolution providing for the issuance of the stock adopted by the board of directors pursuant to authority expressly vested in it by the provisions of the articles of incorporation, every stockholder of record of a corporation is entitled at each meeting of stockholders thereof to one vote for each share of stock standing in his name on the records of the corporation. If the articles of incorporation, or the resolution providing for the issuance of the stock adopted by the board of directors pursuant to authority expressly vested in it by the articles of incorporation, provides for more or less than one vote per share for any class or series of shares on any matter, every reference in this chapter to a majority or other proportion of stock shall be deemed to refer to a majority or other proportion of the voting power of all of the shares or those classes or series of shares, as may be required by the articles of incorporation, or in the resolution providing for the issuance of the stock adopted by the board of directors pursuant to authority expressly vested in it by the provisions of the articles of incorporation, or the provisions of this chapter.
2.   Unless contrary provisions are contained in the articles of incorporation, the directors may prescribe a period not exceeding 60 days before any meeting of the stockholders during which no transfer of stock on the books of the corporation may be made, or may fix a day not more than 60 days before the holding of any such meeting as the day as of which stockholders entitled to notice of and to vote at such meetings must be determined. Only stockholders of record on that day are entitled to notice or to vote at such meeting.
3.   The provisions of this section do not restrict the directors from taking action to protect the interests of the corporation and its stockholders, including, but not limited to, adopting or executing plans, arrangements or instruments that deny rights, privileges, power or authority to a holder or holders of a specified number of shares or percentage of share ownership or voting power.
  [28:177:1925; NCL 1627](NRS A 1965, 1012; 1989, 876; 1991, 1231; 1993, 963)

NRS 78.355   Stockholders' proxies.

1.   At any meeting of the stockholders of any corporation any stockholder may designate another person or persons to act as a proxy or proxies. If any stockholder designates two or more persons to act as proxies, a majority of those persons present at the meeting, or, if only one is present, then that one has and may exercise all of the powers conferred by the stockholder upon all of the persons so designated unless the stockholder provides otherwise.
2.   Without limiting the manner in which a stockholder may authorize another person or persons to act for him as proxy pursuant to subsection 1, the following constitute valid means by which a stockholder may grant such authority:

(a) A stockholder may execute a writing authorizing another person or persons to act for him as proxy. The proxy may be limited to action on designated matters. Execution may be accomplished by the signing of the writing by the stockholder or his authorized officer, director, employee or agent or by causing the signature of the stockholder to be affixed to the writing by any reasonable means, including, but not limited to, a facsimile signature.
(b) A stockholder may authorize another person or persons to act for him as proxy by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person who will be the holder of the proxy or to a firm which solicits proxies or like agent who is authorized by the person who will be the holder of the proxy to receive the transmission. Any such telegram, cablegram or other means of electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder. If it is determined that the telegram, cablegram or other electronic transmission is valid, the persons appointed by the corporation to count the votes of stockholders and determine the validity of proxies and ballots or other persons making those determinations must specify the information upon which they relied.

3.   Any copy, communication by telecopier, or other reliable reproduction of the writing or transmission created pursuant to subsection 2, may be substituted for the original writing or transmission for any purpose for which the original writing or transmission could be used, if the copy, communication by telecopier, or other reproduction is a complete reproduction of the entire original writing or transmission.
4.   No such proxy is valid after the expiration of 6 months from the date of its creation, unless it is coupled with an interest, or unless the stockholder specifies in it the length of time for which it is to continue in force, which may not exceed 7 years from the date of its creation. Subject to these restrictions, any proxy properly created is not revoked and continues in full force and effect until another instrument or transmission revoking it or a properly created proxy bearing a later date is filed with or transmitted to the secretary of the corporation or another person or persons appointed by the corporation to count the votes of stockholders and determine the validity of proxies and ballots.
  [29:177:1925; A 1953, 180](NRS A 1991, 1232; 1997, 702)

NRS 78.360   Cumulative voting.

1.   The articles of incorporation of any corporation may provide that at all elections of directors of the corporation each holder of stock possessing voting power is entitled to as many votes as equal the number of his shares of stock multiplied by the number of directors to be elected, and that he may cast all of his votes for a single director or may distribute them among the number to be voted for or any two or more of them, as he may see fit. To exercise the right of cumulative voting, one or more of the stockholders requesting cumulative voting must give written notice to the president or secretary of the corporation that the stockholder desires that the voting for the election of directors be cumulative.
2.   The notice must be given not less than 48 hours before the time fixed for holding the meeting, if notice of the meeting has been given at least 10 days before the date of the meeting, and otherwise not less than 24 hours before the meeting. At the meeting, before the commencement of voting for the election of directors, an announcement of the giving of the notice must be made by the chairman or the secretary of the meeting or by or on behalf of the stockholder giving the notice. Notice to stockholders of the requirement of this subsection must be contained in the notice calling the meeting or in the proxy material accompanying the notice.
  [30:177:1925; NCL 1629](NRS A 1969, 101; 1991, 1233; 1993, 963)

NRS 78.365   Voting trusts.

1.   A stockholder, by agreement in writing, may transfer his stock to a voting trustee or trustees for the purpose of conferring the right to vote the stock for a period not exceeding 15 years upon the terms and conditions therein stated. Any certificates of stock so transferred must be surrendered and canceled and new certificates for the stock issued to the trustee or trustees in which it must appear that they are issued pursuant to the agreement, and in the entry of ownership in the proper books of the corporation that fact must also be noted, and thereupon the trustee or trustees may vote the stock so transferred during the terms of the agreement. A duplicate of every such agreement must be filed in the registered office of the corporation and at all times during its terms be open to inspection by any stockholder or his attorney.
2.   At any time within the 2 years next preceding the expiration of an agreement entered into pursuant to the provisions of subsection 1, or the expiration of an extension of that agreement, any beneficiary of the trust may, by written agreement with the trustee or trustees, extend the duration of the trust for a time not to exceed 15 years after the scheduled expiration date of the original agreement or the latest extension. An extension is not effective unless the trustee, before the expiration date of the original agreement or the latest extension, files a duplicate of the agreement providing for the extension in the registered office of the corporation. An agreement providing for an extension does not affect the rights or obligations of any person not a party to that agreement.
3.   An agreement between two or more stockholders, if in writing and signed by them, may provide that in exercising any voting rights the stock held by them must be voted:

(a) Pursuant to the provisions of the agreement;
(b) As they may subsequently agree; or
(c) In accordance with a procedure agreed upon.

4.   An agreement entered into pursuant to the provisions of subsection 3 is not effective for a term of more than 15 years, but at any time within the 2 years next preceding the expiration of the agreement the parties thereto may extend its duration for as many additional periods, each not to exceed 15 years, as they wish.
5.   An agreement entered into pursuant to the provisions of subsection 1 or 3 is not invalidated by the fact that by its terms its duration is more than 15 years, but its duration shall be deemed amended to conform with the provisions of this section.
  [22:177:1925; A 1929, 413; 1951, 328](NRS A 1987, 582; 1989, 976; 1991, 1234; 1993, 964)

NRS 78.370   Notice to stockholders.

1.   Whenever under the provisions of this chapter stockholders are required or authorized to take any action at a meeting, the notice of the meeting must be in writing and signed by the president or a vice president, or the secretary, or an assistant secretary, or by such other natural person or persons as the bylaws may prescribe or permit or the directors may designate.
2.   The notice must state the purpose or purposes for which the meeting is called and the time when, and the place, which may be within or without this state, where it is to be held.
3.   A copy of the notice must be delivered personally or mailed postage prepaid to each stockholder of record entitled to vote at the meeting not less than 10 nor more than 60 days before the meeting. If mailed, it must be directed to the stockholder at his address as it appears upon the records of the corporation, and upon the mailing of any such notice the service thereof is complete, and the time of the notice begins to run from the date upon which the notice is deposited in the mail for transmission to the stockholder. Personal delivery of any such notice to any officer of a corporation or association, or to any member of a partnership, constitutes delivery of the notice to the corporation, association or partnership.
4.   The articles of incorporation or the bylaws may require that the notice be also published in one or more newspapers.
5.   Notice delivered or mailed to a stockholder in accordance with the provisions of this section and the provisions, if any, of the articles of incorporation or the bylaws is sufficient, and in the event of the transfer of his stock after such delivery or mailing and before the holding of the meeting it is not necessary to deliver or mail notice of the meeting to the transferee.
6.   Any stockholder may waive notice of any meeting by a writing signed by him, or his duly authorized attorney, either before or after the meeting.
7.   Unless otherwise provided in the articles of incorporation or the bylaws, whenever notice is required to be given, under any provision of this chapter or the articles of incorporation or bylaws of any corporation, to any stockholder to whom:

(a) Notice of two consecutive annual meetings, and all notices of meetings or of the taking of action by written consent without a meeting to him during the period between those two consecutive annual meetings; or
(b) All, and at least two, payments sent by first-class mail of dividends or interest on securities during a 12-month period, have been mailed addressed to him at his address as shown on the records of the corporation and have been returned undeliverable, the giving of further notices to him is not required. Any action or meeting taken or held without notice to such a stockholder has the same effect as if the notice had been given. If any such stockholder delivers to the corporation a written notice setting forth his current address, the requirement that notice be given to him is reinstated. If the action taken by the corporation is such as to require the filing of a certificate under any of the other sections of this chapter, the certificate need not state that notice was not given to persons to whom notice was not required to be given pursuant to this subsection.

  [27:177:1925; A 1941, 110; 1931 NCL 1626](NRS A 1991, 1235; 1993, 965)

REVISER'S NOTE.
  In revised subsection 2 "where it to be held" was changed to "where it is to be held."

NEVADA CASES.

Relinquishment of right to vote. Stockholder of corporation who had contracted to sell his shares to that corporation, and had as part of contract relinquished voting rights to corporation, was not entitled to notice of stockholders' meeting because he was not entitled to vote. (See NRS 78.370.) McLaney v. Fortune Operating Co., 84 Nev. 491, 444 P.2d 505 (1968)

NRS 78.375   Waiver of notice.   Whenever any notice whatever is required to be given under the provisions of this chapter, a waiver thereof in writing, signed by the person or persons entitled to the notice, whether before or after the time stated therein, shall be deemed equivalent thereto.
  [Part 92:177:1925; A 1929, 413; NCL 1691]

ACQUISITION OF CONTROLLING INTEREST

FEDERAL AND OTHER CASES.

Status of corporation as "issuing" corporation is not dependent on whether it has elected to opt out of protection of statutes governing acquisition of controlling interest. Plaintiffs sought to prohibit defendants from enforcing certain provisions of statutes governing takeover bids. Contrary to position taken by defendant, status of corporation as "issuing" corporation does not depend on whether it has elected to opt out of protection of statutes governing acquisition of controlling interest (see NRS 78.378 et seq.). Batus, Inc. v. McKay, 684 F. Supp. 637 (D. Nev. 1988)

Former 60-day limitation violated Commerce Clause of U.S. Constitution. Plaintiffs sought to prohibit defendants from enforcing certain provisions of statutes governing takeover bids (see NRS 78.378 et seq.). Court concluded that 60-day limitation of former NRS 78.3772 severely inhibited unsolicited nationwide tender offer for securities of Nevada corporation whose business was subject to regulations and approvals of regulatory agencies. Because 60-day limitation may have substantially affected free flow of interstate commerce while there was no substantial state interest to be protected by preserving 60-day limitation, court held that 60-day limitation violated Commerce Clause of U.S. Constitution and enjoined defendants from enforcing or seeking to enforce that provision. Batus, Inc. v. McKay, 684 F. Supp. 637 (D. Nev. 1988)

Former 60-day limitation conflicted with Supremacy Clause of U.S. Constitution. Plaintiffs sought to prohibit defendants from enforcing certain provisions of statutes governing takeover bids (see NRS 78.378 et seq.). Where (1) pursuant to federal statute, offeror was required to secure regulatory approval before consummating tender offer, (2) regulatory approval could not be obtained within 60 days, and (3) if offeror attempted to modify price for shares after 50 days, offeror could not comply with rule adopted by Securities Exchange Commission under federal statute requiring offeror to keep offer open for at least 10 business days following announced increase or decrease in tender offer price and with requirements of former NRS 78.3772 that shareholders could not deposit shares pursuant to takeover bid later than 60 days after date of first invitation to deposit shares, court concluded that 60-day limitation of former NRS 78.3772 conflicted with Supremacy Clause of U.S. Constitution and enjoined defendants from enforcing or seeking to enforce that provision. Batus, Inc. v. McKay, 684 F. Supp. 637 (D. Nev. 1988)

NRS 78.378   Applicability; imposition of stricter requirements; protection of corporation and its stockholders.

1.   The provisions of NRS 78.378 to 78.3793, inclusive, are applicable to any acquisition of a controlling interest in an issuing corporation unless the articles of incorporation or bylaws of the corporation in effect on the 10th day following the acquisition of a controlling interest by an acquiring person provide that the provisions of those sections do not apply.
2.   The articles of incorporation, the bylaws or a resolution adopted by the directors of the issuing corporation may impose stricter requirements on the acquisition of a controlling interest in the corporation than the provisions of NRS 78.378 to 78.3793, inclusive.
3.   The provisions of NRS 78.378 to 78.3793, inclusive, do not restrict the directors of an issuing corporation from taking action to protect the interests of the corporation and its stockholders, including, but not limited to, adopting or executing plans, arrangements or instruments that deny rights, privileges, power or authority to a holder of a specified number of shares or percentage of share ownership or voting power.
  (Added to NRS by 1987, 755; A 1989, 877)

NRS 78.3781   Definitions.   As used in NRS 78.378 to 78.3793, inclusive, unless the context otherwise requires, the words and terms defined in NRS 78.3782 to 78.3788, inclusive, have the meanings ascribed to them in those sections.
  (Added to NRS by 1987, 756)

NRS 78.3782   "Acquiring person" defined.   "Acquiring person" means any person who, individually or in association with others, acquires or offers to acquire, directly or indirectly, a controlling interest in an issuing corporation. The term does not include any person who, in the ordinary course of business and without an intent to avoid the requirements of NRS 78.378 to 78.3793, inclusive, acquires voting shares for the benefit of others, in respect of which he is not specifically authorized to exercise or direct the exercise of voting rights.
  (Added to NRS by 1987, 756)

NRS 78.3783   "Acquisition" defined.

1.   Except as otherwise provided in subsection 2, "acquisition" means the direct or indirect acquisition of a controlling interest.
2.   "Acquisition" does not include any acquisition of shares in good faith, and without an intent to avoid the requirements of NRS 78.378 to 78.3793, inclusive:

(a) By an acquiring person authorized pursuant to NRS 78.378 to 78.3793, inclusive, to exercise voting rights, to the extent that the new acquisition does not result in the acquiring person obtaining a controlling interest greater than that previously authorized; or
(b) Pursuant to:

(1) The laws of descent and distribution;
(2) The enforcement of a judgment;
(3) The satisfaction of a pledge or other security interest; or
(4) A merger or reorganization effected in compliance with the provisions of NRS 78.622 or 92A.200 to 92A.240, inclusive, to which the issuing corporation is a party.

(Added to NRS by 1987, 756; A 1991, 1236; 1995, 2099)

NRS 78.3784   "Control shares" defined.   "Control shares" means those outstanding voting shares of an issuing corporation which an acquiring person and those persons acting in association with an acquiring person:

1.   Acquire in an acquisition or offer to acquire in an acquisition; and
2.   Acquire within 90 days immediately preceding the date when the acquiring person became an acquiring person.
  (Added to NRS by 1987, 756)

NRS 78.3785   "Controlling interest" defined.   "Controlling interest" means the ownership of outstanding voting shares of an issuing corporation sufficient, but for the provisions of NRS 78.378 to 78.3793, inclusive, to enable the acquiring person, directly or indirectly and individually or in association with others, to exercise:

1.   One-fifth or more but less than one-third;
2.   One-third or more but less than a majority; or
3.   A majority or more, of all the voting power of the corporation in the election of directors.
  (Added to NRS by 1987, 756)

NRS 78.3786   "Fair value" defined.   "Fair value" means a value not less than the highest price per share paid by the acquiring person in an acquisition.
  (Added to NRS by 1987, 756)

NRS 78.3787   "Interested stockholder" defined.   "Interested stockholder" means a person who directly or indirectly exercises the voting power of an issuing corporation and who is:

1.   An acquiring person;
2.   An officer of the corporation; or
3.   An employee and director of the corporation.
  (Added to NRS by 1987, 757)

NRS 78.3788   "Issuing corporation" defined.   "Issuing corporation" means a corporation which is organized in this state and which:

1.   Has 200 or more stockholders, at least 100 of whom are stockholders of record and residents of this state; and
2.   Does business in this state directly or through an affiliated corporation.
  (Added to NRS by 1987, 757; A 1989, 877)

FEDERAL AND OTHER CASES.

Determination of whether corporation for which tender offer is made is "issuing corporation." Plaintiffs sought to prohibit defendants from enforcing certain provisions of statutes governing takeover bids. Plaintiffs argued that corporation for which tender offer was made was issuing corporation under former provisions of NRS 78.3788 and therefore provisions governing takeover bids were inapplicable. Former provisions of NRS 78.3788 defined issuing corporation as corporation organized in Nevada which had 200 or more shareholders at least 100 of whom, as indicated by stock ledger of corporation, were residents of Nevada. Because (1) NRS 78.105 refers to stock ledger as ledger containing names of all persons who are stockholders of corporation, (2) NRS 78.3788 appears to have been adopted in response to U.S. Supreme Court decision recognizing state's interest in regulating internal affairs of domestic corporation with substantial number of resident shareholders, and (3) intent behind those statutes is to include all stockholders of corporation, court concluded that in determining whether corporation is issuing corporation, legislature intended broad interpretation of "stock ledger" as used in former provisions of NRS 78.3788 to include beneficial owners and employee shareholders participating in employee stock option plans. Batus, Inc. v. McKay, 684 F. Supp. 637 (D. Nev. 1988)

NRS 78.3789   Delivery of offeror's statement by acquiring person; contents of statement.   An acquiring person who has made or offered to make an acquisition of a controlling interest in an issuing corporation may deliver an offeror's statement to the registered office of the corporation. The acquiring person may request in the statement that the directors of the corporation call a special meeting of the stockholders of the corporation, as provided in NRS 78.379. The statement must set forth:

1.   A recital that the statement is given pursuant to this section;
2.   The name of the acquiring person and of every person associated with him in the acquisition;
3.   The number of shares in any class of voting securities owned, as of the date of the statement, by the acquiring person and each person with whom he is associated, or which the acquiring person intends to acquire;
4.   The percentage of the voting securities of the corporation owned, as of the date of the statement, by the acquiring person and each person with whom he is associated, or which the acquiring person intends to acquire; and
5.   If the acquiring person has not yet acquired the securities of the corporation, a detailed description of:

(a) The terms and conditions of the proposed acquisition; and
(b) The means by which any required consideration, and any indebtedness incurred to consummate the transaction, are to be paid.

  (Added to NRS by 1987, 757; A 1993, 966)

NRS 78.379   Voting rights of acquiring person; meeting of stockholders; statements to accompany notice of meeting.

1.   An acquiring person and those acting in association with an acquiring person obtain only such voting rights in the control shares as are conferred by a resolution of the stockholders of the corporation, approved at a special or annual meeting of the stockholders.
2.   If an acquiring person so requests in an offeror's statement delivered pursuant to NRS 78.3789, and if he gives an undertaking to pay the expenses of the meeting, the directors of the corporation shall, within 10 days after delivery of the statement, call a special meeting of the stockholders to determine the voting rights to be accorded the control shares.
3.   A notice of any meeting of stockholders at which the question of voting rights is to be determined must be accompanied by:

(a) A complete copy of the offeror's statement; and
(b) A statement of the board of directors of the corporation setting forth the position of the board with respect to the acquisition or, if it is the case, stating that the board makes no recommendation concerning the matter.

4.   A special meeting of stockholders called pursuant to this section:

(a) Must not be held before the expiration of 30 days after the delivery of the offeror's statement, unless the statement contains a request that the meeting be held sooner.
(b) Must be held within 50 days after the delivery of the statement, unless the acquiring person otherwise agrees in writing that the meeting may be held after that time.

5.   If the offeror's statement does not include a request that a special meeting be called, the question of voting rights must be presented to the next special or annual meeting of the stockholders.
  (Added to NRS by 1987, 757)

NRS 78.3791   Approval of voting rights of acquiring person.   Except as otherwise provided by the articles of incorporation of the issuing corporation, a resolution of the stockholders granting voting rights to the control shares acquired by an acquiring person must be approved by:

1.   The holders of a majority of the voting power of the corporation; and
2.   If the acquisition will result in any change of the kind described in subsection 3 of NRS 78.390, the holders of a majority of each class or series affected, excluding those shares held by any interested stockholder.
  (Added to NRS by 1987, 758; A 1991, 1236)

NRS 78.3792   Redemption of control shares.

1.   If so provided in the articles of incorporation or the bylaws of the issuing corporation in effect on the 10th day following the acquisition of a controlling interest by an acquiring person, the issuing corporation may call for redemption of not less than all the control shares at the average price paid for the control shares, if:

(a) An offeror's statement is not delivered with respect to the acquisition as provided in NRS 78.3789 on or before the 10th day after the acquisition of the control shares; or
(b) An offeror's statement is delivered, but the control shares are not accorded full voting rights by the stockholders.

2.   The issuing corporation shall call for redemption within 30 days after the occurrence of the event prescribed in paragraph (a) or (b) of subsection 1, and the shares must be redeemed within 60 days after the call.
  (Added to NRS by 1987, 758; A 1989, 877)

NRS 78.3793   Notice to stockholders; purchase of shares by corporation.

1.   Unless otherwise provided in the articles of incorporation or the bylaws of the issuing corporation in effect on the 10th day following the acquisition of a controlling interest by an acquiring person, if the control shares are accorded full voting rights pursuant to NRS 78.378 to 78.3793, inclusive, and the acquiring person has acquired control shares with a majority or more of all the voting power, any stockholder of record, other than the acquiring person, who has not voted in favor of authorizing voting rights for the control shares is entitled to demand payment for the fair value of his shares.
2.   The board of directors of the issuing corporation shall, within 20 days after the vote of the stockholders authorizing voting rights for the control shares, cause a notice to be sent to any stockholder, other than the acquiring person, who has not voted in favor of authorizing voting rights for the control shares, advising him of the fact and of his right to receive fair value for his shares as provided in subsection 3.
3.   Within 20 days after the mailing of the notice described in subsection 2, any stockholder of the corporation, other than the acquiring person, who has not voted in favor of authorizing voting rights for the control shares, may deliver to the registered office of the corporation a written demand that the corporation purchase, for fair value, all or any portion of his shares. The corporation shall comply with the demand within 30 days after its delivery.
  (Added to NRS by 1987, 758; A 1989, 877; 1993, 966)

AMENDMENT AND RESTATEMENT OF ARTICLES OF INCORPORATION

NRS 78.380   Amendment of articles before issuing stock.

1.   At least two-thirds of the incorporators or of the board of directors of any corporation, before issuing any stock, may amend the original articles of incorporation thereof as may be desired by executing and acknowledging or proving in the manner required for original articles of incorporation, and filing with the secretary of state a certificate amending, modifying, changing or altering the original articles, in whole or in part. The certificate must:

(a) Declare that the signers thereof are at least two-thirds of the incorporators or of the board of directors of the corporation, and state the corporation's name.
(b) State the date upon which the original articles thereof were filed with the secretary of state.
(c) Affirmatively declare that to the date of the certificate, no stock of the corporation has been issued.

2.   The amendment is effective upon the filing of the certificate with the secretary of state.
3.   This section does not permit the insertion of any matter not in conformity with this chapter.
  [Part 6:177:1925; A 1951, 28](NRS A 1959, 686; 1991, 1236; 1993, 966)

ATTORNEY GENERAL'S OPINIONS.

Amendment becomes original article when filed before payment of capital. When amendment to articles changing corporate name is filed before payment of any part of capital, amendment becomes original article, and certificate issued by secretary of state should bear date of filing of original articles as well as new name of corporation. AGO 314 (8-21-1928)

NRS 78.385   Amendment of articles after issuing stock: Scope of amendments.

1.   Any corporation having stock may amend its articles of incorporation in any of the following respects:

(a) By addition to its corporate powers and purposes, or diminution thereof, or both.
(b) By substitution of other powers and purposes, in whole or in part, for those prescribed by its articles of incorporation.
(c) By increasing, decreasing or reclassifying its authorized stock, by changing the number, par value, preferences, or relative, participating, optional or other rights, or the qualifications, limitations or restrictions of such rights, of its shares, or of any class or series of any class thereof whether or not the shares are outstanding at the time of the amendment, or by changing shares with par value, whether or not the shares are outstanding at the time of the amendment, into shares without par value or by changing shares without par value, whether or not the shares are outstanding at the time of the amendment, into shares with par value, either with or without increasing or decreasing the number of shares, and upon such basis as may be set forth in the certificate of amendment.
(d) By changing the name of the corporation.
(e) By making any other change or alteration in its articles of incorporation that may be desired.

2.   All such changes or alterations may be effected by one certificate of amendment; but any articles of incorporation so amended, changed or altered, may contain only such provisions as it would be lawful and proper to insert in original articles of incorporation, pursuant to NRS 78.035 and 78.037, if the original articles were executed, acknowledged and filed at the time of making the amendment.
  [Part 7:177:1925; A 1931, 415; 1937, 8; 1949, 158; 1943 NCL 1606](NRS A 1989, 878; 1991, 1237)

FEDERAL AND OTHER CASES.

Minority stockholders may not enjoin meeting to approve amendment authorized by statute. Amendment of articles of Nevada corporation to allow sale or transfer of shares of corporation by operation of law or otherwise without any restriction and to allow any person to own

any number of shares is specifically authorized by 1931 NCL 1606(3) (cf. NRS 78.385), and minority stockholders may not enjoin board of directors from calling stockholders' meeting to approve such amendment. Silva v. Coastal Plywood & Timber Co. (Dist. Ct. App. 1954)

ATTORNEY GENERAL'S OPINIONS.

Nonassessable stock cannot be made assessable. Articles of incorporation cannot be amended to make nonassessable stock assessable. AGO B-88 (3-26-1942)

Amendment is substitute for original section. Amendment is intended as substitute for original section. It continues in force that which is reenacted, repeals what is omitted. AGO 116 (3-2-1944)

Reduction of shares not reduction of capital under circumstances. Redemption of shares by open end investment company, where such shares become authorized, unissued shares rather than treasury shares, does not constitute reduction Of capital so as to require application of NCL 1606 and 1624 (NRS 78.385, 78.390, 78.410-78.445). AGO 923 (5-24-1950)

Under former statute, corporation could purchase own shares without amending articles. NCL 1608 (cf. NRS 78.070) gave corporation power to purchase own shares out of capital without necessity of filing amendment to articles, so long as such purchase did not impair capital to detriment of shareholders and creditors. (See NRS 78.385.) AGO 923 (5-24-1950)

Amendment to become nonprofit corporation requires consent of all shareholders. Corporation organized under general corporation laws cannot amend articles so as to change to nonprofit corporation without consent of all shareholders. AGO 43 (4-14-1955)

NRS 78.390   Amendment of articles after issuing stock: Procedure.

1.   Every amendment adopted pursuant to the provisions of NRS 78.385 must be made in the following manner:

(a) The board of directors must adopt a resolution setting forth the amendment proposed and declaring its advisability, and call a meeting, either annual or special, of the stockholders entitled to vote for the consideration thereof.
(b) At the meeting, of which notice must be given to each stockholder entitled to vote pursuant to the provisions of this section, a vote of the stockholders entitled to vote in person or by proxy must be taken for and against the proposed amendment. If it appears upon the canvassing of the votes that stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, as provided in subsections 3 and 5, or as may be required by the provisions of the articles of incorporation, have voted in favor of the amendment, the president, or vice president, and secretary, or assistant secretary, shall execute a certificate setting forth the amendment, or setting forth the articles of incorporation as amended, and the vote by which the amendment was adopted, and the president or vice president shall acknowledge the certificate before a person authorized by the laws of the place where the acknowledgment is taken to take acknowledgments of deeds.
(c) The certificate so executed and acknowledged must be filed in the office of the secretary of state.

2.   Upon filing the certificate the articles of incorporation are amended accordingly.
3.   If any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless of limitations or restrictions on the voting power thereof.
4.   Provision may be made in the articles of incorporation requiring, in the case of any specified amendments, a larger proportion of the voting power of stockholders than that required by this section.
5.   Different series of the same class of shares do not constitute different classes of shares for the purpose of voting by classes except when the series is adversely affected by an amendment in a different manner than other series of the same class.
  [Part 7:177:1925; A 1931, 415; 1937, 8; 1949, 158; 1943 NCL 1606](NRS A 1959, 686; 1971, 1101; 1979, 395; 1991, 1238; 1993, 967; 1997, 703)

NEVADA CASES.

Delay without fault or misconduct of directors was immaterial variance under circumstances. In action for declaratory judgment concerning right to purchase additional corporate stock, where amendment to articles authorizing additional issue required that subscribers pay 25 percent on exercise of preemptive right, and 25 percent on each of three dates 3, 6 and 9 months after date of adoption of amendment, but amendment was not filed with secretary of state until almost 3 months after adoption and no call was issued for subscriptions until 2 months later, delay without fault or misconduct of directors was immaterial variance, merely extending to new date time for payment of first installments and not invalidating issue, because in any event filing requirements of NRS 78.390 would have consumed enough time to prevent uniform 3-month intervals between successive installments. Cortina v. DeSollano, 75 Nev. 151, 336 P.2d 762 (1959)

NRS 78.403   Restatement of articles.

1.   A corporation may restate, or amend and restate, in a single certificate the entire text of its articles of incorporation as amended by filing with the secretary of state a certificate entitled "Restated Articles of Incorporation of ................," which must set forth the articles as amended to the date of the certificate. If the certificate alters or amends the articles in any manner, it must comply with the provisions of this chapter governing such amendments and must be accompanied by:

(a) A resolution; or
(b) A form prescribed by the secretary of state, setting forth which provisions of the articles of incorporation on file with the secretary of state are being altered or amended.

2.   If the certificate does not alter or amend the articles, it must be signed by the president or vice president and the secretary or assistant secretary of the corporation and state that they have been authorized to execute the certificate by resolution of the board of directors adopted on the date stated, and that the certificate correctly sets forth the text of the articles of incorporation as amended to the date of the certificate.
3.   The following may be omitted from the restated articles:

(a) The names, addresses, signatures and acknowledgments of the incorporators;
(b) The names and addresses of the members of the past and present boards of directors; and
(c) The name and address of the resident agent.

4.   Whenever a corporation is required to file a certified copy of its articles, in lieu thereof it may file a certified copy of the most recent certificate restating its articles as amended, subject to the provisions of subsection 2, together with certified copies of all certificates of amendment filed subsequent to the restated articles and certified copies of all certificates supplementary to the original articles.
  (Added to NRS by 1959, 682; A 1985, 1789; 1989, 977; 1995, 2100; 1997, 704)

COMBINATIONS WITH INTERESTED STOCKHOLDERS

ATTORNEY GENERAL'S OPINIONS.

Redemption of shares not reduction of capital under circumstances. Redemption of shares by open-end investment company, where such shares become authorized, unissued shares rather than treasury shares, does not constitute reduction of capital so as to require application of NCL 1606 and 1624 (cf. NRS 78.411 et seq.). AGO 923 (5-24-1950)

NRS 78.411   Definitions.   As used in NRS 78.411 to 78.444, inclusive, unless the context otherwise requires, the words and terms defined in NRS 78.412 to 78.432, inclusive, have the meanings ascribed to them in those sections.
  (Added to NRS by 1991, 1200)

NRS 78.412   "Affiliate" defined.   "Affiliate" means a person that directly, or indirectly through one or more intermediaries, is controlled by, or is under common control with, a specified person.
  (Added to NRS by 1991, 1200)

NRS 78.413   "Associate" defined.   "Associate," when used to indicate a relationship with any person, means:

1.   Any corporation or organization of which that person is an officer or partner or is, directly or indirectly, the beneficial owner of 10 percent or more of any class of voting shares;
2.   Any trust or other estate in which that person has a substantial beneficial interest or as to which he serves as trustee or in a similar fiduciary capacity; and
3.   Any relative or spouse of that person, or any relative of the spouse, who has the same home as that person.
  (Added to NRS by 1991, 1200)

NRS 78.414   "Beneficial owner" defined.   "Beneficial owner," when used with respect to any shares, means a person that:

1.   Individually or with or through any of its affiliates or associates, beneficially owns the shares, directly or indirectly;
2.   Individually or with or through any of its affiliates or associates, has:

(a) The right to acquire the shares, whether the right is exercisable immediately or only after the passage of time, under any agreement, arrangement or understanding, whether or not in writing, or upon the exercise of rights to convert or exchange, warrants or options, or otherwise, but a person is not considered the beneficial owner of shares tendered under an offer for a tender or exchange made by the person or any of his affiliates or associates until the tendered shares are accepted for purchase or exchange; or
(b) The right to vote the shares under any agreement, arrangement or understanding, whether or not in writing, but a person is not considered the beneficial owner of any shares under this paragraph if the agreement, arrangement or understanding to vote the shares arises solely from a revocable proxy or consent given in response to a solicitation made in accordance with the applicable regulations under the Securities Exchange Act and is not then reportable on a Schedule 13D under the Securities Exchange Act, or any comparable or successor report; or

3.   Has any agreement, arrangement or understanding, whether or not in writing, for the purpose of acquiring, holding, voting, except voting under a revocable proxy or consent as described in paragraph (b) of subsection 2, or disposing of the shares with any other person who beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, the shares.
  (Added to NRS by 1991, 1200)

NRS 78.416   "Combination" defined.   "Combination," when used in reference to any resident domestic corporation and any interested stockholder of the resident domestic corporation, means any of the following:

1.   Any merger or consolidation of the resident domestic corporation or any subsidiary of the resident domestic corporation with:

(a) The interested stockholder; or
(b) Any other corporation, whether or not itself an interested stockholder of the resident domestic corporation, which is, or after the merger or consolidation would be, an affiliate or associate of the interested stockholder.

2.   Any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions, to or with the interested stockholder or any affiliate or associate of the interested stockholder of assets of the resident domestic corporation or any subsidiary of the resident domestic corporation:

(a) Having an aggregate market value equal to 5 percent or more of the aggregate market value of all the assets, determined on a consolidated basis, of the resident domestic corporation;
(b) Having an aggregate market value equal to 5 percent or more of the aggregate market value of all the outstanding shares of the resident domestic corporation; or
(c) Representing 10 percent or more of the earning power or net income, determined on a consolidated basis, of the resident domestic corporation.

3.   The issuance or transfer by the resident domestic corporation or any subsidiary of the resident domestic corporation, in one transaction or a series of transactions, of any shares of the resident domestic corporation or any subsidiary of the resident domestic corporation that have an aggregate market value equal to 5 percent or more of the aggregate market value of all the outstanding shares of the resident domestic corporation to the interested stockholder or any affiliate or associate of the interested stockholder except under the exercise of warrants or rights to purchase shares offered, or a dividend or distribution paid or made, pro rata to all stockholders of the resident domestic corporation.
4.   The adoption of any plan or proposal for the liquidation or dissolution of the resident domestic corporation proposed by, or under any agreement, arrangement or understanding, whether or not in writing, with, the interested stockholder or any affiliate or associate of the interested stockholder.
5.   Any:

(a) Reclassification of securities, including, without limitation, any splitting of shares, dividend distributed in shares, or other distribution of shares with respect to other shares, or any issuance of new shares in exchange for a proportionately greater number of old shares;
(b) Recapitalization of the resident domestic corporation;
(c) Merger or consolidation of the resident domestic corporation with any subsidiary of the resident domestic corporation; or
(d) Other transaction, whether or not with or into or otherwise involving the interested stockholder, proposed by, or under any agreement, arrangement or understanding, whether or not in writing, with, the interested stockholder or any affiliate or associate of the interested stockholder, which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class or series of voting shares or securities convertible into voting shares of the resident domestic corporation or any subsidiary of the resident domestic corporation which is directly or indirectly owned by the interested stockholder or any affiliate or associate of the interested stockholder, except as a result of immaterial changes because of adjustments of fractional shares.

6.   Any receipt by the interested stockholder or any affiliate or associate of the interested stockholder of the benefit, directly or indirectly, except proportionately as a stockholder of the resident domestic corporation, of any loan, advance, guarantee, pledge or other financial assistance or any tax credit or other tax advantage provided by or through the resident domestic corporation.
  (Added to NRS by 1991, 1200)

NRS 78.417   "Common shares" defined.   "Common shares" means any shares other than preferred shares.
  (Added to NRS by 1991, 1202)

NRS 78.418   "Control," "controlling," "controlled by" and "under common control with" defined; presumption of control.

1.   Except as otherwise provided in subsection 2:

(a) "Control," used alone or in the terms "controlling," "controlled by" and "under common control with," means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise.
(b) A person's beneficial ownership of 10 percent or more of the voting power of a corporation's outstanding voting shares creates a presumption that the person has control of the corporation.

2. A person is not considered to have control of a corporation if he holds voting power, in good faith and not for the purpose of circumventing the provisions of this chapter, as an agent, bank, broker, nominee, custodian or trustee for one or more beneficial owners who do not individually or as a group have control of the corporation.
  (Added to NRS by 1991, 1202)

NRS 78.419   "Date of acquiring shares" defined.   "Date of acquiring shares," with respect to any person and any resident domestic corporation, means the date that the person first becomes an interested stockholder of the resident domestic corporation.
  (Added to NRS by 1991, 1202)

NRS 78.421   "Date of announcement" defined.   "Date of announcement," when used in reference to any combination, means the date of the first public announcement of the final, definitive proposal for the combination.
  (Added to NRS by 1991, 1202)

NRS 78.422   "Date of consummation" defined.   "Date of consummation," with respect to any combination, means the date of the consummation of the combination or, in the case of a combination as to which a vote of stockholders is taken, the later of:

1.   The business day before the vote; or
2.   Twenty days before the date of consummation of the combination.
  (Added to NRS by 1991, 1202)

NRS 78.423   "Interested stockholder" defined.

1.   "Interested stockholder," when used in reference to any resident domestic corporation, means any person, other than the resident domestic corporation or any subsidiary of the resident domestic corporation, who is:

(a) The beneficial owner, directly or indirectly, of 10 percent or more of the voting power of the outstanding voting shares of the resident domestic corporation; or
(b) An affiliate or associate of the resident domestic corporation and at any time within 3 years immediately before the date in question was the beneficial owner, directly or indirectly, of 10 percent or more of the voting power of the then outstanding shares of the resident domestic corporation.

2.   To determine whether a person is an interested stockholder, the number of voting shares of the resident domestic corporation considered to be outstanding includes shares considered to be beneficially owned by that person through the application of NRS 78.414, but does not include any other unissued shares of a class of voting shares of the resident domestic corporation which may be issuable under any agreement, arrangement or understanding, or upon exercise of rights to convert, warrants or options, or otherwise.
  (Added to NRS by 1991, 1202; A 1993, 968)

NRS 78.424   "Market value" defined.   "Market value," when used in reference to the shares or property of any resident domestic corporation, means:

1.   In the case of shares, the highest closing sale price of a share during the 30 days immediately preceding the date in question on the composite tape for shares listed on the New York Stock Exchange, or, if the shares are not quoted on the composite tape or not listed on the New York Stock Exchange, on the principal United States securities exchange registered under the Securities Exchange Act on which the shares are listed, or, if the shares are not listed on any such exchange, the highest closing bid quoted with respect to a share during the 30 days preceding the date in question on the National Association of Securities Dealers, Inc.'s, Automated Quotations System or any system then in use, or if no such quotation is available, the fair market value on the date in question of a share as determined by the board of directors of the resident domestic corporation in good faith.
2.   In the case of property other than cash or shares, the fair market value of the property on the date in question as determined by the board of directors of the resident domestic corporation in good faith.
  (Added to NRS by 1991, 1203)

NRS 78.426   "Preferred shares" defined.   "Preferred shares" means any class or series of shares of a resident domestic corporation that under the bylaws or articles of incorporation of the resident domestic corporation:

1.   Is entitled to receive payment of dividends before any payment of dividends on some other class or series of shares; or
2.   Is entitled in the event of any voluntary liquidation, dissolution or winding up of the corporation to receive payment or distribution of a preferential amount before any payments or distributions are received by some other class or series of shares.
  (Added to NRS by 1991, 1203)

NRS 78.427   "Resident domestic corporation" defined.

1.   "Resident domestic corporation" is limited to a domestic corporation that has 200 or more stockholders.
2.   A resident domestic corporation does not cease to be a resident domestic corporation by reason of events occurring or actions taken while the resident domestic corporation is subject to NRS 78.411 to 78.444, inclusive.
  (Added to NRS by 1991, 1203)

NRS 78.428   "Securities Exchange Act" defined.   "Securities Exchange Act" means the Act of Congress known as the Securities Exchange Act of 1934, as amended (15 U.S.C. 78a et seq.).
  (Added to NRS by 1991, 1203)

NRS 78.429   "Share" defined.   "Share" means:

1.   Any share or similar security, any certificate of interest, any participation in any profit-sharing agreement, any voting-trust certificate, or any certificate of deposit for a share; and
2.   Any security convertible, with or without consideration, into shares, or any warrant, call or other option or privilege of buying shares without being bound to do so, or any other security carrying any right to acquire, subscribe to, or purchase shares.
  (Added to NRS by 1991, 1203)

NRS 78.431   "Subsidiary" defined.   "Subsidiary" of any resident domestic corporation means any other corporation of which a majority of the outstanding voting shares whose votes are entitled to be cast are owned, directly or indirectly, by the resident domestic corporation.
  (Added to NRS by 1991, 1203)

NRS 78.432   "Voting shares" defined.   "Voting shares" means shares of stock of a corporation entitled to vote generally in the election of directors.
  (Added to NRS by 1991, 1204)

NRS 78.433   Applicability: Generally.   NRS 78.411 to 78.444, inclusive, do not apply to any combination of a resident domestic corporation:

1.   Which does not, as of the date of acquiring shares, have a class of voting shares registered with the Securities and Exchange Commission under section 12 of the Securities Exchange Act, unless the corporation's articles of incorporation provide otherwise.
2.   Whose articles of incorporation have been amended to provide that the resident domestic corporation is subject to NRS 78.411 to 78.444, inclusive, and which did not have a class of voting shares registered with the Securities and Exchange Commission under section 12 of the Securities Exchange Act on the effective date of the amendment, if the combination is with an interested stockholder whose date of acquiring shares is before the effective date of the amendment.
  (Added to NRS by 1991, 1206)

NRS 78.434   Applicability: Election not to be governed by provisions.   NRS 78.411 to 78.444, inclusive, do not apply to any combination of a resident domestic corporation:

1.   Whose original articles of incorporation contain a provision expressly electing not to be governed by NRS 78.411 to 78.444, inclusive;
2.   Which, within 30 days after October 1, 1991, adopts an amendment to its bylaws expressly electing not to be governed by NRS 78.411 to 78.444, inclusive, which may be rescinded by subsequent amendment of the bylaws; or
3.   Which adopts an amendment to its articles of incorporation, approved by the affirmative vote of the holders, other than interested stockholders and their affiliates and associates, of a majority of the outstanding voting power of the resident domestic corporation, excluding the voting shares of interested stockholders and their affiliates and associates, expressly electing not to be governed by NRS 78.411 to 78.444, inclusive, but the amendment to the articles of incorporation is not effective until 18 months after the vote of the resident domestic corporation's stockholders and does not apply to any combination of the resident domestic corporation with an interested stockholder whose date of acquiring shares is on or before the effective date of the amendment.
  (Added to NRS by 1991, 1206)

NRS 78.436   Applicability: Combination with inadvertent interested stockholder.   NRS 78.411 to 78.444, inclusive, do not apply to any combination of a resident domestic corporation with an interested stockholder of the resident domestic corporation who became an interested stockholder inadvertently, if he:

1.   As soon as practicable, divests himself of a sufficient amount of the voting power of the corporation so that he no longer is the beneficial owner, directly or indirectly, of 10 percent or more of the outstanding voting power of the resident domestic corporation; and
2.   Would not at any time within 3 years preceding the date of announcement with respect to the combination have been an interested stockholder but for the inadvertent acquisition.
  (Added to NRS by 1991, 1207; A 1993, 968)

NRS 78.437   Applicability: Combination with stockholder who became interested before January 1, 1991.   NRS 78.411 to 78.444, inclusive, do not apply to any combination with an interested stockholder who was an interested stockholder on January 1, 1991.
  (Added to NRS by 1991, 1207)

NRS 78.438   Combination prohibited within 3 years after stockholder becomes interested; exception; action on proposal.

1.   Except as otherwise provided in NRS 78.433 to 78.437, inclusive, a resident domestic corporation may not engage in any combination with any interested stockholder of the resident domestic corporation for 3 years after the interested stockholder's date of acquiring shares unless the combination or the purchase of shares made by the interested stockholder on the interested stockholder's date of acquiring shares is approved by the board of directors of the resident domestic corporation before that date.
2.   If a proposal in good faith regarding a combination is made in writing to the board of directors of the resident domestic corporation, the board of directors shall respond, in writing, within 30 days or such shorter period, if any, as may be required by the Securities Exchange Act, setting forth its reasons for its decision regarding the proposal.
3.   If a proposal in good faith to purchase shares is made in writing to the board of directors of the resident domestic corporation, the board of directors, unless it responds affirmatively in writing within 30 days or such shorter period, if any, as may be required by the Securities Exchange Act, is considered to have disapproved the purchase.
  (Added to NRS by 1991, 1204; A 1993, 968)

NRS 78.439   Authorized combinations: General requirements.   A resident domestic corporation may not engage in any combination with an interested stockholder of the resident domestic corporation after the expiration of 3 years after his date of acquiring shares other than a combination meeting all of the requirements of the articles of incorporation of the resident domestic corporation and either the requirements specified in subsection 1 or 2 or all of the requirements specified in NRS 78.441 to 78.444, inclusive:

1.   A combination approved by the board of directors of the resident domestic corporation before the interested stockholder's date of acquiring shares, or as to which the purchase of shares made by the interested stockholder on that date had been approved by the board of directors of the resident domestic corporation before that date.
2.   A combination approved by the affirmative vote of the holders of stock representing a majority of the outstanding voting power not beneficially owned by the interested stockholder proposing the combination, or any affiliate or associate of the interested stockholder proposing the combination, at a meeting called for that purpose no earlier than 3 years after the interested stockholder's date of acquiring shares.
  (Added to NRS by 1991, 1204; A 1993, 969)

NRS 78.441   Authorized combinations: Consideration to be received by disinterested holders of common shares.   A combination engaged in with an interested stockholder of the resident domestic corporation more than 3 years after the interested stockholder's date of acquiring shares may be permissible if the aggregate amount of the cash and the market value, as of the date of consummation, of consideration other than cash to be received per share by all of the holders of outstanding common shares of the resident domestic corporation not beneficially owned by the interested stockholder immediately before that date is at least equal to the higher of the following:

1.   The highest price per share paid by the interested stockholder, at a time when he was the beneficial owner, directly or indirectly, of 5 percent or more of the outstanding voting shares of the resident domestic corporation, for any common shares of the same class or series acquired by him within 3 years immediately before the date of announcement with respect to the combination or within 3 years immediately before, or in, the transaction in which he became an interested stockholder, whichever is higher, plus, in either case, interest compounded annually from the earliest date on which the highest price per share was paid through the date of consummation at the rate for one-year obligations of the United States Treasury from time to time in effect, less the aggregate amount of any dividends paid in cash and the market value of any dividends paid other than in cash, per common share since the earliest date, but no more may be subtracted than the amount of the interest.
2.   The market value per common share on the date of announcement with respect to the combination or on the interested stockholder's date of acquiring shares, whichever is higher, plus interest compounded annually from that date through the date of consummation at the rate for one-year obligations of the United States Treasury from time to time in effect, less the aggregate amount of any dividends paid in cash and the market value of any dividends paid other than in cash, per common share since that date, but no more may be subtracted than the amount of the interest.
  (Added to NRS by 1991, 1204; A 1993, 969)

NRS 78.442   Authorized combinations: Consideration to be received by disinterested holders of class or series of shares other than common shares.   A combination engaged in with an interested stockholder of the resident domestic corporation more than 3 years after the interested stockholder's date of acquiring shares may be permissible if the aggregate amount of the cash and the market value, as of the date of consummation, of consideration other than cash to be received per share by all of the holders of outstanding shares of any class or series of shares, other than common shares, of the resident domestic corporation not beneficially owned by the interested stockholder immediately before that date is at least equal to the highest of the following, whether or not the interested stockholder has previously acquired any shares of the class or series of shares:

1.   The highest price per share paid by the interested stockholder, at a time when he was the beneficial owner, directly or indirectly, of 5 percent or more of the outstanding voting shares of the resident domestic corporation, for any shares of that class or series of shares acquired by him within 3 years immediately before the date of announcement with respect to the combination or within 3 years immediately before, or in, the transaction in which he became an interested stockholder, whichever is higher, plus, in either case, interest compounded annually from the earliest date on which the highest price per share was paid through the date of consummation at the rate for one-year obligations of the United States Treasury from time to time in effect, less the aggregate amount of any dividends paid in cash and the market value of any dividends paid other than in cash, per share of the class or series of shares since the earliest date, but no more may be subtracted than the amount of the interest.
2.   The highest preferential amount per share to which the holders of shares of the class or series of shares are entitled in the event of any voluntary liquidation, dissolution or winding up of the resident domestic corporation, plus the aggregate amount of any dividends declared or due to which the holders are entitled before payment of the dividends on some other class or series of shares, unless the aggregate amount of the dividends is included in the preferential amount.
3.   The market value per share of the class or series of shares on the date of announcement with respect to the combination or on the interested stockholder's date of acquiring shares, whichever is higher, plus interest compounded annually from that date through the date of consummation at the rate for one-year obligations of the United States Treasury from time to time in effect, less the aggregate amount of any dividends paid in cash and the market value of any dividends paid other than in cash, per share of the class or series of shares since that date, but no more may be subtracted than the amount of the interest.
  (Added to NRS by 1991, 1205; A 1993, 970)

NRS 78.443   Authorized combinations: Required form and distribution of consideration.   The consideration to be received by holders of a particular class or series of outstanding shares, including common shares, of the resident domestic corporation in the combination pursuant to NRS 78.441 and 78.442, must be in cash or in the same form as the interested stockholder has used to acquire the largest number of shares of the class or series of shares previously acquired by it, and the consideration must be distributed promptly.
  (Added to NRS by 1991, 1206)

NRS 78.444   Authorized combinations: Restrictions on beneficial ownership of additional voting shares by interested stockholder.   A combination may be permissible if after the interested stockholder's date of acquiring shares and before the date of consummation with respect to the combination, the interested stockholder has not become the beneficial owner of any additional voting shares of the resident domestic corporation except:

1.   As part of the transaction that resulted in his becoming an interested stockholder;
2.   By virtue of proportionate splitting of shares, dividends distributed in shares, or other distributions of shares in respect of shares not constituting a combination;
3.   Through a combination meeting all of the conditions of NRS 78.439; or
4.   Through a purchase at any price that, if the price had been paid in an otherwise permissible combination whose date of announcement and date of consummation were the date of the purchase, would have satisfied the requirements of NRS 78.441, 78.442 and 78.443.
  (Added to NRS by 1991, 1206; A 1993, 971)

SALE OF ASSETS; DISSOLUTION AND WINDING UP

NRS 78.565   Sale, lease or exchange of assets: Conditions.   Every corporation may, by action taken at any meeting of its board of directors, sell, lease or exchange all of its property and assets, including its good will and its corporate franchises, upon such terms and conditions as its board of directors may deem expedient and for the best interests of the corporation, when and as authorized by the affirmative vote of stockholders holding stock in the corporation entitling them to exercise at least a majority of the voting power given at a stockholders' meeting called for that purpose but:

1.   The articles of incorporation may require the vote of a larger proportion of the stockholders and the separate vote or consent of any class of stockholders; and
2.   Unless the articles of incorporation provide otherwise, no vote of stockholders is necessary for a transfer of assets by way of mortgage, or in trust or in pledge to secure indebtedness of the corporation.
  [37:177:1925; NCL 1636](NRS A 1989, 886; 1993, 973)

FEDERAL AND OTHER CASES.

Stockholders may decide whether to sell or dissolve; directors presumed to use sound business judgment in devising plan of liquidation. NRS 78.565 which governs sale of all assets and NRS 78.580 which governs dissolution of corporation empowers stockholders to decide whether, not how, sale or dissolution is to be done, and directors are presumed to have exercised sound business judgment in devising plan of liquidation. Therefore in action to enjoin liquidation it was immaterial whether in proxy materials management had discussed doubtful alternative to plan proposed. Umbriac v. Kaiser, 467 F. Supp. 548 (D. Nev. 1979)

NRS 78.570   Sale of property and franchise under decree of court.   Sales of the property and franchises of corporations that may be sold under a decree of court shall be made after such notice of the time and place as the court may deem proper. If the sales are made in the foreclosure of one or more mortgages, the court may order the sale to be made for the whole amount of indebtedness secured by the mortgage or mortgages, or for the amount of interest due under the mortgage or mortgages, subject to the payment by the purchaser of the outstanding indebtedness and interest secured thereby as they become due. In the latter event the court may, by proper orders, secure the assumption thereof by the purchaser. When a sale shall be ordered to be made, subject as aforesaid, the court shall direct the officer making such sale, in the event that the property and franchises offered do not sell for enough to pay the amount aforesaid, to sell the same free from encumbrances. Sales under this section shall be made on such credits as the court may deem proper.
  [38:177:1925; NCL 1637]

NRS 78.575   Procedure for dissolution before payment of capital and beginning of business.   Before the payment of any part of the capital and before beginning the business for which the corporation was created, the incorporators or the board of directors named in the articles of incorporation may dissolve a corporation by filing in the office of the secretary of state a certificate, signed and acknowledged by a majority of the incorporators or of the board of directors named in the articles of incorporation, stating that no part of the capital has been paid and the business has not begun, and thereupon the corporation is dissolved.
  [73:177:1925; NCL 1672](NRS A 1993, 973; 1995, 1114)

NRS 78.580   Procedure for dissolution after issuance of stock or beginning of business.

1.   If the board of directors of any corporation organized under this chapter, after the issuance of stock or the beginning of business, decides that the corporation should be dissolved, the board may adopt a resolution to that effect. If the corporation has issued no stock, only the directors need to approve the dissolution. If the corporation has issued stock, the directors must recommend the dissolution to the stockholders. The corporation shall notify each stockholder entitled to vote on dissolution and the stockholders entitled to vote must approve the dissolution.
2.   If the dissolution is approved by the directors or both the directors and stockholders, as respectively provided in subsection 1, the corporation shall file a certificate setting forth that the dissolution has been approved by the directors, or by the directors and the stockholders, and a list of the names and post office box or street addresses, either residence or business, of the corporation's president, secretary and treasurer and all of its directors, certified by the president, or a vice president, and the secretary, or an assistant secretary, in the office of the secretary of state. The secretary of state, upon being satisfied that these requirements have been complied with and that the corporate charter has not been revoked, shall issue a certificate that the corporation is dissolved.
  [64:177:1925; NCL 1663](NRS A 1963, 1391; 1979, 397; 1991, 1239; 1993, 973)

FEDERAL AND OTHER CASES.

Stockholders may decide whether to sell or dissolve; directors presumed to use sound business judgment in devising plan of liquidation. NRS 78.565 which governs sale of all assets and NRS 78.580 which governs dissolution of corporation empowers stockholders to decide whether, not how, sale or dissolution is to be done, and directors are presumed to have exercised sound business judgment in devising plan of liquidation. Therefore in action to enjoin liquidation it was immaterial whether in proxy materials management had discussed doubtful alternative to plan proposed. Umbriac v. Kaiser, 467 F. Supp. 548 (D. Nev. 1979)

ATTORNEY GENERAL'S OPINIONS.

Corporate seal not required. Dissolution procedure does not require affixing of corporate seal on certificate of dissolution. AGO 121 (12-6-1951)

NRS 78.585   Continuation of corporation after dissolution for winding up business; limitation on actions by or against dissolved corporation.   The dissolution of a corporation does not impair any remedy or cause of action available to or against it or its directors, officers or shareholders arising before its dissolution and commenced within 2 years after the date of the dissolution. It continues as a body corporate for the purpose of prosecuting and defending suits, actions, proceedings and claims of any kind or character by or against it and of enabling it gradually to settle and close its business, to collect and discharge its obligations, to dispose of and convey its property, and to distribute its assets, but not for the purpose of continuing the business for which it was established.
  [65:177:1925](NRS A 1949, 170; 1955, 165; 1985, 1793)

REVISER'S NOTE.
 Ch. 570, Stats. 1985, the source of the revised section, contains the following provision not included in NRS:
"The amendatory provisions of section 10 of this act apply to corporations which are dissolved on or after July 1, 1985. The provisions apply to corporations dissolved before July 1, 1985, unless a court determines that its application to a corporation dissolved before that date is unconstitutional, in which case the law as it existed before that date governing the continuation of a corporation after its dissolution applies."

NEVADA CASES.

Transfer of corporate property after revocation of charter valid under circumstances. In action for restitution and possession of unpatented mining claims, where plaintiff corporation, through its officers rather than through its board of directors as trustees, executed and delivered deed of such claims to third person within 3-year period following revocation of its charter pursuant to purport and intent of NCL 1664 (cf. NRS 78.585), it was unnecessary to construe such statute in pari materia with NCL 1808 (cf. NRS 78.175), which provides that, upon forfeiture of corporate charter, corporate property is held in trust by board of directors, because satisfaction of first mentioned statutory requirement determined validity of such deed. Porter v. Tempa Mining & Milling Co., 59 Nev. 332, 93 P.2d 741 (1939)

Limitation on power relevant to validity of deed delivered after dissolution. In action for restitution and possession of unpatented mining claims, where plaintiff had forfeited its corporate charter for failure to pay filing fees to state, NCL 1664 (cf. NRS 78.585), which provides that all corporations which expire by their own limitation or are otherwise dissolved shall be continued as bodies corporate for period of 3 years to dispose of and convey their property, was relevant to issue of validity of deed to such claims delivered by plaintiff during such period, because word "limitation" means act of limiting, restriction of power, qualification. Porter v. Tempa Mining & Milling Co., 59 Nev. 332, 93 P.2d 741 (1939), cited, Seavy v. I.X.L. Laundry Co., 60 Nev. 324, at 331, 108 P.2d 853 (1941)

Stockholders liable for torts of corporation that continues usual business after certificate of dissolution filed. Where corporation, after filing certificate of dissolution, and contrary to NCL 1664 (cf. NRS 78.585), continued to conduct its usual business instead of confining its activity to winding up affairs, stockholders become personally liable for torts of corporation occurring after filing of certificate. Seavy v. I.X.L. Laundry Co., 60 Nev. 324, 108 P.2d 853 (1941)

Corporation may be sued before final extinction for torts occurring after certificate of dissolution filed. Under NCL 1664, 1665 and 1666 (cf. NRS 78.585, 78.590 and 78.595), corporation may be sued after it has filed certificate of dissolution, but before its final extinction, for its torts occurring after certificate of dissolution is filed. Seavy v. I.X.L. Laundry Co., 60 Nev. 324, 108 P.2d 853 (1941), cited, Soo Line R.R. v. B.J. Carney & Co., 797 F. Supp. 1472, at 1477 (D. Minn. 1992)

Corporate existence continues for period following filing of certificate of dissolution. Filing of certificate of dissolution of corporation does not mean that it is completely dissolved, because, under NCL 1664 (cf. NRS 78.585), it remains corporate body for certain purposes for 3 years thereafter, and it is only after expiration of that time that it no longer exists for any purpose. Seavy v. I.X.L. Laundry Co., 60 Nev. 324, 108 P.2d 853 (1941)

Provision in statute not controlled by language of different provisions. Portion of NCL 1664 (cf. NRS 78.585) which provides that for 3 years after dissolution corporation continues as body corporate for purpose of prosecuting or defending suits is not controlled by other language in same section dealing with other matters. Seavy v. I.X.L. Laundry Co., 60 Nev. 324, 108 P.2d 853 (1941)

FEDERAL AND OTHER CASES.

Effect on criminal prosecution. In prosecution for violation of federal anti-trust statutes, dissolution of corporation was considered equivalent to death of natural person, and NCL secs. 1664 and 1666 (cf. NRS 78.585 and 78.595), which permitted suits by and against it for specified period after dissolution, did not permit criminal prosecution. U.S. v. Safeway Stores, 140 F.2d 834 (10th Cir. 1944)

Noncompliance with filing requirements ipso facto deprives corporation of rights; exception for winding up affairs. Ch. 180, Stats. 1925 (cf. NRS 78.150-78.175), is self-executing law, and noncompliance with its provisions ipso facto deprives corporation of its charter and its right to do business within state, or bring any suit, except as provided by NCL 1664 (cf. NRS 78.585), which allows suits in winding up corporate affairs. Fidelity Metals Corp. v. Risley, 77 Cal. App.2d 377, 175 P.2d 592 (Dist. Ct. App. 1946)

Suit could be maintained against corporation after 2-year period of limitation on survival of corporation had expired. Railroad leased property to corporation, which filed for dissolution on February 11, 1987. Railroad, in conjunction with sale of property to third party in 1988, conducted investigation of property and discovered that it was contaminated with hazardous substances, and demanded that corporation clean up property and pay for costs. Corporation agreed to cooperate and indicated that it would contact railroad once it had managed to collect various documents. Corporation did not inform railroad of its dissolution until February 13, 1989, 2 days after 2-year period of limitation on survival of corporation had expired (see NRS 78.585). Railroad filed suit, and corporation argued that suit could not be maintained against it because its existence had ended on February 11, 1989. In ruling that railroad could maintain suit, court held that dissolution was ineffective as to railroad because: (1) Nevada law (see NRS 78.590) requires corporation through its trustees either to pay off or adequately provide for its debts; (2) implicit in NRS 78.590 is requirement that corporation notify its creditors of its dissolution; and (3) failure to comply with all provisions of relevant statutes relating to corporate dissolution voids dissolution as to creditors whose rights have been prejudiced thereby. Soo Line R.R. v. B.J. Carney & Co., 797 F. Supp. 1472 (D. Minn. 1992)

NRS 78.590   Trustees of dissolved corporation: Powers of directors.

1.   Upon the dissolution of any corporation under the provisions of NRS 78.580, or upon the expiration of the period of its corporate existence, limited by its articles of incorporation, the directors become trustees thereof, with full power to settle the affairs, collect the outstanding debts, sell and convey the property, real and personal, and divide the money and other property among the stockholders, after paying or adequately providing for the payment of its liabilities and obligations.
2.   After paying or adequately providing for the liabilities and obligations of the corporation, the trustees, with the written consent of stockholders holding stock in the corporation entitling them to exercise at least a majority of the voting power, may sell the remaining assets or any part thereof to a corporation organized under the laws of this or any other state, and take in payment therefor the stock or bonds, or both, of that corporation and distribute them among the stockholders of the liquidated corporation, in proportion to their interest therein. No such sale is valid as against any stockholder who, within 30 days after the mailing of notice to him of the sale, applies to the district court for an appraisal of the value of his interest in the assets so sold, and unless within 30 days after the appraisal is confirmed by the court the stockholders consenting to the sale, or some of them, pay to the objecting stockholder or deposit for his account, in the manner directed by the court, the amount of the appraisal. Upon the payment or deposit the interest of the objecting stockholder vests in the person or persons making the payment or deposit.
  [66:177:1925; NCL 1665](NRS A 1993, 974)

NEVADA CASES.

Corporation may be sued before final extinction for torts occurring after certificate of dissolution filed. Under NCL 1664, 1665 and 1666 (cf. NRS 78.585, 78.590 and 78.595), corporation may be sued after it has filed certificate of dissolution, but before its final extinction, for its torts occurring after certificate of dissolution is filed. Seavy v. I.X.L. Laundry Co., 60 Nev. 324, 108 P.2d 853 (1941), cited, Soo Line R.R. v. B.J. Carney & Co., 797 F. Supp. 1472, at 1477 (D. Minn. 1992)

Power of directors limited to settling ordinary affairs of corporation; suits allowable for debts owing at time of dissolution. NCL 1665 and 1666 (cf. NRS 78.590 and 78.595), which provide that upon dissolution of corporation its directors become trustees to settle its affairs and sue and defend suits in their names as trustees, is limited to settling of ordinary affairs of corporation, and suits allowable are for debts owing by corporation at time of dissolution. Seavy v. I.X.L. Laundry Co., 60 Nev. 324, 108 P.2d 853 (1941)

Court could appoint receiver after judgment under circumstances for corporation dissolved before trial. Where plaintiff corporation was dissolved after litigation was begun, but before trial, and at time of dissolution corporation failed to request trial court to continue directors as trustees or appoint receiver to complete litigation as provided in NRS 78.590 and 78.600, and after judgment when trial court learned of dissolution it invited representatives of corporation to nominate receiver and invitation was declined, it was not error for trial court to appoint receiver, because someone must represent dissolved corporation in litigation. Robert A. Pierce Co. v. Sherman Gardens Co., 82 Nev. 395, 419 P.2d 781 (1966), distinguished, Kelly Broadcasting Co. v. Sovereign Broadcast, Inc., 96 Nev. 188, at 190, 606 P.2d 1089 (1980)

Directors who transferred assets of insolvent corporation for stock were liable to creditor as trustees of dissolved corporation but not for unlawful dividends. Where officers and directors of insolvent corporation caused corporate assets to be transferred to another corporation in exchange for shares of its stock, distributed shares received to stockholders of insolvent corporation and then dissolved corporation, officers and directors were personally liable to creditor as trustees of dissolved corporation under NRS 78.590 and 78.595, not under NRS 78.300, relating to unlawful payment of dividends. Applicable period of limitations for creditor's action was 4 years under NRS 11.220, not 3 years under NRS 11.190, because liability was not one created by statute. Nevada Land & Mortgage Co. v. Lamb, 90 Nev. 247, 524 P.2d 326 (1974)

FEDERAL AND OTHER CASES.

Burden on director to prove purchases fair and no misuse of office. Trustee may purchase beneficiary's interest, and director, acting as trustee during dissolution of corporation under NCL 1665 (cf. NRS 78.590), may purchase stock at pledgee's sale, but burden is on director to prove transaction was fair and involved no misuse of his office. Miller v. Wahyou, 235 F.2d 612 (9th Cir. 1956)

Director may not avoid consequences of breach of trust by voting stock to revive corporation. NCL 1665 (cf. NRS 78.590) places obligation of trustee upon directors of corporations during dissolution, and provision of 1931 NCL 1692 (cf. NRS 78.730), which allows revival of corporation to date back to date of dissolution, does not allow director to avoid consequences of breaches of trust in acquiring stock during dissolution merely by voting that stock to revive corporation. Miller v. Wahyou, 235 F.2d 612 (9th Cir. 1956)

Federal court had no personal jurisdiction over directors because of limitations on liability. Federal court in civil action had no personal jurisdiction over directors of dissolved Nevada corporation through ineffective out-of-state service of process of New York court, because, even assuming effectiveness of such service, liability of such directors was limited to liability as trustees for purpose of winding up corporation affairs, pursuant to NRS 78.590, which could be continued after final distribution only by leave of Nevada court and was further limited to amounts of corporation money and property coming into possession of such directors, as provided in NRS 78.595 to 78.610, inclusive. Schenin v. Micro Copper Corp., 272 F. Supp. 523 (S.D.N.Y. 1967)

Failure to comply with all provisions of relevant statutes relating to corporate dissolution voids dissolution as to creditors whose rights have been prejudiced thereby. Railroad leased property to corporation, which filed for dissolution on February 11, 1987. Railroad, in conjunction with sale of property to third party in 1988, conducted investigation of property and discovered that it was contaminated with hazardous substances, and demanded that corporation clean up property and pay for costs. Corporation agreed to cooperate and indicated that it would contact railroad once it had managed to collect various documents. Corporation did not inform railroad of its dissolution until February 13, 1989, 2 days after 2-year period of limitation on survival of corporation had expired (see NRS 78.585). Railroad filed suit, and corporation argued that suit could not be maintained against it because its existence had ended on February 11, 1989. In ruling that railroad could maintain suit, court held that dissolution was ineffective as to railroad because: (1) Nevada law (see NRS 78.590) requires corporation through its trustees either to pay off or adequately provide for its debts; (2) implicit in NRS 78.590 is requirement that corporation notify its creditors of its dissolution; and (3) failure to comply with all provisions of relevant statutes relating to corporate dissolution voids dissolution as to creditors whose rights have been prejudiced thereby. Soo Line R.R. v. B.J. Carney & Co., 797 F. Supp. 1472 (D. Minn. 1992)

NRS 78.595   Trustees of dissolved corporation: Authority to sue and be sued; joint and several responsibility.   The persons constituted trustees as provided in NRS 78.590 shall have authority to sue for and recover the debts and property therein mentioned, by the name of the trustees of the corporation, describing it by its corporate name, and shall be suable by the same name for the debts owing by the corporation at the time of its dissolution, and shall be jointly and severally responsible for such debts, to the amounts of the moneys and property of the corporation which shall come into their hands or possession.
  [67:177:1925; NCL 1666]

NEVADA CASES.

Power of directors limited to settling ordinary affairs of corporation; suits allowable for debts owing at time of dissolution. NCL 1665 and 1666 (cf. NRS 78.590 and 78.595), which provide that upon dissolution of corporation its directors become trustees to settle its affairs and sue and defend suits in their names as trustees, is limited to settling of ordinary affairs of corporation, and suits allowable are for debts owing by corporation at time of dissolution. Seavy v. I.X.L. Laundry Co., 60 Nev. 324, 108 P.2d 853 (1941)

Corporation may be sued before final extinction for torts occurring after certificate of dissolution filed. Under NCL 1664, 1665 and 1666 (cf. NRS 78.585, 78.590 and 78.595), corporation may be sued after it has filed certificate of dissolution, but before its final extinction, for its torts occurring after certificate of dissolution is filed. Seavy v. I.X.L. Laundry Co., 60 Nev. 324, 108 P.2d 853 (1941), cited, Soo Line R.R. v. B.J. Carney & Co., 797 F. Supp. 1472, at 1477 (D. Minn. 1992)

Directors who transferred assets of insolvent corporation for stock were liable to creditor as trustees of dissolved corporation but not for unlawful dividends. Where officers and directors of insolvent corporation caused corporate assets to be transferred to another corporation in exchange for shares of its stock, distributed shares received to stockholders of insolvent corporation and then dissolved corporation, officers and directors were personally liable to creditor as trustees of dissolved corporation under NRS 78.590 and 78.595, not under NRS 78.300, relating to unlawful payment of dividends. Applicable period of limitations for creditor's action was 4 years under NRS 11.220, not 3 years under NRS 11.190, because liability was not one created by statute. Nevada Land & Mortgage Co. v. Lamb, 90 Nev. 247, 524 P.2d 326 (1974)

FEDERAL AND OTHER CASES.

Effect on criminal prosecution. In prosecution for violation of federal anti-trust statutes, dissolution of corporation was considered equivalent to death of natural person, and NCL secs. 1664 and 1666 (cf. NRS 78.585 and 78.595), which permitted suits by and against it for specified period after dissolution, did not permit criminal prosecution. U.S. v. Safeway Stores, 140 F.2d 834 (10th Cir. 1944)

NRS 78.600   Trustees or receivers for dissolved corporations: Appointment; powers.   When any corporation organized under this chapter shall be dissolved or cease to exist in any manner whatever, the district court, on application of any creditor or stockholder of the corporation, at any time, may either continue the directors trustees as provided in NRS 78.590, or appoint one or more persons to be receivers of and for the corporation, to take charge of the estate and effects thereof, and to collect the debts and property due and belonging to the corporation, with power to prosecute and defend, in the name of the corporation, or otherwise, all such suits as may be necessary or proper for the purposes aforesaid, and to appoint an agent or agents under them, and to do all other acts which might be done by the corporation, if in being, that may be necessary for the final settlement of the unfinished business of the corporation. The powers of the trustees or receivers may be continued as long as the district court shall think necessary for the purposes aforesaid.
  [68:177:1925; NCL 1667]

NEVADA CASES.

Court could appoint receiver after judgment under circumstances for corporation dissolved before trial. Where plaintiff corporation was dissolved after litigation was begun, but before trial, and at time of dissolution corporation failed to request trial court to continue directors as trustees or appoint receiver to complete litigation as provided in NRS 78.590 and 78.600, and after judgment when trial court learned of dissolution it invited representatives of corporation to nominate receiver and invitation was declined, it was not error for trial court to appoint receiver, because someone must represent dissolved corporation in litigation. Robert A. Pierce Co. v. Sherman Gardens Co., 82 Nev. 395, 419 P.2d 781 (1966), distinguished, Kelly Broadcasting Co. v. Sovereign Broadcast, Inc., 96 Nev. 188, at 190, 606 P.2d 1089 (1980)

FEDERAL AND OTHER CASES.

Federal jurisdiction presumed. In stockholder's action against corporation, where NRS 78.335, 78.345, 78.600 and 78.630-78.715 would have provided ample means for rectifying situation alleged in complaint, but complaint was not based on such sections, it was unnecessary to decide whether in diversity case a federal court could take jurisdiction of action based on any of such sections, but court presumed that it could. Pioche Mines Consol. v. Dolman, 333 F.2d 257 (9th Cir. 1964)

NRS 78.605   Jurisdiction of district court.   The district court shall have jurisdiction of the application prescribed in NRS 78.600 and of all questions arising in the proceedings thereon, and may make such orders and decrees and issue injunctions therein as justice and equity shall require.
  [69:177:1925; NCL 1668]

NRS 78.610   Duties of trustees or receivers; payment and distribution to creditors and stockholders.   The trustees or receivers, after payment of all allowances, expenses and costs, and the satisfaction of all special and general liens upon the funds of the corporation to the extent of their lawful priority, shall pay the other debts due from the corporation, if the funds in their hands shall be sufficient therefor, and if not, they shall distribute the same ratably among all the creditors who shall prove their debts in the manner that shall be directed by an order or decree of the court for that purpose. If there shall be any balance remaining after the payment of the debts and necessary expenses (or the making of adequate provision therefor), they shall distribute and pay the same to and among those who shall be justly entitled thereto, as having been stockholders of the corporation, or their legal representatives.
  [70:177:1925; NCL 1669]

NRS 78.615   Abatement of pending actions; substitution of dissolution trustees or receivers.   If any corporation organized under this chapter becomes dissolved by the expiration of its charter or otherwise, before final judgment obtained in any action pending or commenced in any court of record of this state against the corporation, the action shall not abate by reason thereof, but the dissolution of the corporation being suggested upon the record, and the names of the trustees or receivers of the corporation being entered upon the record, and notice thereof served upon the trustees or receivers, or if such service be impracticable upon the counsel of record in such case, the action shall proceed to final judgment against the trustees or receivers by the name of the corporation.
  [71:177:1925; NCL 1670]

NEVADA CASES.

Appeal proceeded against directors when corporation dissolved after notice of appeal filed. Where defendant corporation was dissolved after filing of notice of appeal but before appeal was decided, there had been no final judgment and appeal proceeded against directors as trustees under NRS 78.615. Motion to dismiss defendant's appeal because of dissolution was treated as required notice to its attorney of record. Kelly Broadcasting Co. v. Sovereign Broadcast, Inc., 96 Nev. 188, 606 P.2d 1089 (1980)

NRS 78.620   Dissolution or forfeiture of charter by decree of court; filing.   Whenever any corporation is dissolved or its charter forfeited by decree or judgment of the district court, the decree or judgment shall be forthwith filed by the clerk of the court in the office of the secretary of state.
  [72:177:1925; NCL 1671]

INSOLVENCY; RECEIVERS AND TRUSTEES

NRS 78.622   Reorganization under federal law: Powers of corporation.

1.   If a corporation is under reorganization in a federal court pursuant to Title 11 of U.S.C., it may take any action necessary to carry out any proceeding and do any act directed by the court relating to reorganization, without further action by its directors or stockholders. This authority may be exercised by:

(a) The trustee in bankruptcy appointed by the court;
(b) Officers of the corporation designated by the court; or
(c) Any other representative appointed by the court, with the same effect as if exercised by the directors and stockholders of the corporation.

2.   By filing a certified copy of the confirmed plan of reorganization with the secretary of state, the corporation may:

(a) Alter, amend or repeal its bylaws;
(b) Constitute or reconstitute and classify or reclassify its board of directors;
(c) Name, constitute or appoint directors and officers in place of or in addition to all or some of the directors or officers then in office;
(d) Amend its articles of incorporation;
(e) Make any change in its authorized and issued stock;
(f) Make any other amendment, change, alteration or provision authorized by this chapter; and
(g) Be dissolved, transfer all or part of its assets or merge or consolidate or make any other change authorized by this chapter.

3.   In any action taken pursuant to subsections 1 and 2, a stockholder has no right to demand payment for his stock.
4.   Any amendment of the articles of incorporation made pursuant to subsection 2 must be signed under penalty of perjury by the person authorized by the court and filed with the secretary of state. If the amendment is filed in accordance with the order of reorganization, it becomes effective when it is filed unless otherwise ordered by the court.
5.   Any filing with the secretary of state pursuant to this section must be accompanied by the appropriate fee, if any.
  (Added to NRS by 1985, 1042; A 1993, 2765)

NRS 78.626   Notice: Petition in bankruptcy.   Within 30 days after the filing of a petition in bankruptcy pursuant to Title 11 of U.S.C., the corporation shall file with the secretary of state a notice of that filing, specifying:

1.   The date of the filing;
2.   The name and address of the court where the petition was filed; and
3.   The number assigned to the case by the court.
  (Added to NRS by 1985, 1043)

NRS 78.627   Notice: Application for appointment of receiver or trustee.   Within 30 days after a corporation is notified that a creditor or stockholder has applied to the court for the appointment of a receiver or trustee for the corporation, the corporation shall file with the secretary of state a notice of that application, specifying:

1.   The date of the application;
2.   The name and address of the court where the application was filed; and
3.   The number assigned to the case by the court.
  (Added to NRS by 1985, 1043)

NRS 78.628   Notice: Application for dissolution of corporation.   Within 30 days after a corporation is notified that a creditor or stockholder has applied to the court for an order dissolving the corporation pursuant to NRS 78.650, the corporation shall file with the secretary of state a notice of that application, specifying:

1.   The date of the application;
2.   The name and address of the court in which the application was filed; and
3.   The number assigned to the case by the court.
  (Added to NRS by 1985, 1043)

NRS 78.630   Application of creditors or stockholders of insolvent corporation for injunction and appointment of receiver or trustee; hearing.

1.   Whenever any corporation becomes insolvent or suspends its ordinary business for want of money to carry on the business, or if its business has been and is being conducted at a great loss and greatly prejudicial to the interest of its creditors or stockholders, any creditors holding 10 percent of the outstanding indebtedness, or stockholders owning 10 percent of the outstanding stock entitled to vote, may, by petition setting forth the facts and circumstances of the case, apply to the district court of the county in which the registered office of the corporation is located for a writ of injunction and the appointment of a receiver or receivers or trustee or trustees.
2.   The court, being satisfied by affidavit or otherwise of the sufficiency of the application and of the truth of the allegations contained in the petition and upon hearing after such notice as the court by order may direct, shall proceed in a summary way to hear the affidavits, proofs and allegations which may be offered in behalf of the parties.
3.   If upon such inquiry it appears to the court that the corporation has become insolvent and is not about to resume its business in a short time thereafter, or that its business has been and is being conducted at a great loss and greatly prejudicial to the interests of its creditors or stockholders, so that its business cannot be conducted with safety to the public, it may issue an injunction to restrain the corporation and its officers and agents from exercising any of its privileges or franchises and from collecting or receiving any debts or paying out, selling, assigning or transferring any of its estate, money, lands, tenements or effects, except to a receiver appointed by the court, until the court otherwise orders.
  [46:177:1925; NCL 1645](NRS A 1993, 974, 2765, 2820)

NEVADA CASES.
GENERAL

Directors necessary parties when not guilty of negligence. In proceeding by stockholders under sec. 94, ch. 88, Stats. 1903 (cf. NRS 78.630 and 78.650), providing in effect that directors of corporation who have not been guilty of negligence shall have preferred right to be appointed as referees when tenth part in interest of stockholders petitions district court for dissolution of corporation, where complaint admitted that directors were guiltless, directors were necessary parties to proceeding and all orders made by trial court without making them parties were void. Golden v. Fifth Judicial Dist. Court, 31 Nev. 250, 101 Pac. 1021 (1909), cited, Shelton v. Second Judicial Dist. Court, 64 Nev. 487, at 492, 185 P.2d 320 (1947), State ex rel. Hersh v. First Judicial Dist. Court, 86 Nev. 73, at 79, 464 P.2d 783 (1970)

Purpose of preference for directors without guilt; court may find breach of duty without personal jurisdiction. Purpose of sec. 94, ch. 88, Stats. 1903 (cf. NRS 78.630 and 78.650), providing, in effect, that directors of corporation who have not been guilty of negligence shall have preferred right to be appointed as referees in proceeding for dissolution brought by stockholders, is to have affairs of corporation wound up by same persons who have constituted its board of directors, if they are blameless, and court has no authority to find them guilty of any breach of duty without having jurisdiction of their persons. Golden v. Fifth Judicial Dist. Court, 31 Nev. 250, 101 Pac. 1021 (1909), cited, Shelton v. Second Judicial Dist. Court, 64 Nev. 487, at 492, 185 P.2d 320 (1947)

Order void where holders of nine-tenths of stock not made parties or given opportunity to be heard. In proceeding under sec. 94, ch. 88, Stats. 1903 (cf. NRS 78.630 and 78.650), providing for dissolution of corporation upon application of stockholders, ex parte order obtained on application of one-tenth of stockholders to dissolve business of corporation through receivers was void, because no one representing the other nine-tenths of stock was made party or had opportunity to be heard, and result would have been deprivation of property without due process of law. Golden v. Fifth Judicial Dist. Court, 31 Nev. 250, 101 Pac. 1021 (1909), concurring opinion.

Statute to appoint receiver in pending action inapplicable; action need not be pending. NCL 8749 (cf. NRS 32.010), which enumerates situations in which receivers may be appointed where action is pending, is not applicable to actions to appoint receivers under NCL 1645 (cf. NRS 78.630), which provides for appointment of receivers to take control of insolvent corporations and does not require that there be action pending before receiver may be appointed. International Life Underwriters, Inc. v. Second Judicial Dist. Court, 61 Nev. 42, 113 P.2d 616 (1941), distinguished, Shelton v. Second Judicial Dist. Court, 64 Nev. 487, at 492, 185 P.2d 320 (1947)

Complaint sufficient to state cause of action. Complaint in action to appoint receiver for insurance company which alleged that corporation had suspended ordinary business for want of funds, and that its business was being conducted at great loss and was greatly prejudicial to interest of its creditors and stockholders, was sufficient to state cause of action under NCL 1645 (cf. NRS 78.630) for appointment of receiver, and was sufficient to indicate that its business could not be conducted with safety to the public. International Life Underwriters, Inc. v. Second Judicial Dist. Court, 61 Nev. 42, 113 P.2d 616 (1941), cited, Transcontinental Oil Co. v. Free, 80 Nev. 207, at 211, 391 P.2d 317 (1964)

Appointment of receiver for insolvent corporation not deprivation of property without due process. In action instituted under NCL 1645 (cf. NRS 78.630), which provides for appointment of receiver to take control of insolvent corporation, where majority of directors instituted action and appointed attorney to represent corporation, appointment of receiver did not constitute deprivation of private property without due process of law under federal constitution or Nev. Art. 1, 8. International Life Underwriters, Inc. v. Second Judicial Dist. Court, 61 Nev. 42, 113 P.2d 616 (1941)

Complaint defective for failure to allege ownership of 10 percent of stock. Where stockholder brought action against corporation in which he sought injunction and appointment of receiver, but failed to allege that he owned 10 percent of outstanding stock of corporation as required by NRS 78.630 and 78.650, complaint was defective. Transcontinental Oil Co. v. Free, 80 Nev. 207, 391 P.2d 317 (1964), cited, Searchlight Dev., Inc. v. Martello, 84 Nev. 102, at 109, 437 P.2d 86 (1968)

NOTICE

Notice directed only to corporation insufficient. In proceeding by stockholders to enjoin further operation of bank under sec. 94, ch. 88, Stats. 1903 (cf. NRS 78.630 and 78.650), providing for dissolution of corporation upon application of 10 percent of stockholders, where order appointing receivers and temporary injunction were issued upon notice directed only to corporation, notice was insufficient and order and decree void under statute providing for notice before injunction suspending business of corporation is granted. Golden v. Fifth Judicial Dist. Court, 31 Nev. 250, 101 Pac. 1021 (1909), cited, State ex rel. Howell v. Wildes, 34 Nev. 94, at 122, 116 Pac. 595 (1911), Shelton v. Second Judicial Dist. Court, 64 Nev. 487, at 495, 185 P.2d 320 (1947), distinguished, International Life Underwriters, Inc. v. Second Judicial Dist. Court, 61 Nev. 42, at 47, 113 P.2d 616 (1941), State ex rel. Hersh v. First Judicial Dist. Court, 86 Nev. 73, at 79, 464 P.2d 783 (1970)

Notice should be adequate to assure stockholders of opportunity to be heard. In proceeding by stockholders under sec. 94, ch. 88, Stats. 1903 (cf. NRS 78.630 and 78.650), providing that whenever assets of corporation are in danger of waste from litigation any holder of one-tenth of capital stock may apply to district court for dissolution, stockholders are at least proper parties, and notice given of hearing should be adequate to assure them opportunity of being heard if they so desire. Golden v. Fifth Judicial Dist. Court, 31 Nev. 250, 101 Pac. 1021 (1909), cited, Shelton v. Second Judicial Dist. Court, 64 Nev. 487, at 495, 185 P.2d 320 (1947), distinguished, Ex rel. Hatch v. Court, 50 Nev. 282, at 286, 257 Pac. 831 (1927), Schrader v. Third Judicial Dist. Court, 58 Nev. 188, at 194, 73 P.2d 493 (1937), International Life Underwriters, Inc. v. Second Judicial Dist. Court, 61 Nev. 42, at 47, 113 P.2d 616 (1941)

Majority of directors could petition for receiver under circumstances without notice to other directors or stockholders. Where majority of directors of corporation caused complaint to be prepared naming themselves plaintiffs and corporation defendant, and authorized attorney to prepare answer and appear in action brought under NCL 1645 (cf. NRS 78.630) to appoint receiver to manage corporation, there was sufficient hearing and presentation of facts to court to justify appointment of receiver, although notice of action was not given to other directors or stockholders. International Life Underwriters, Inc. v. Second Judicial Dist. Court, 61 Nev. 42, 113 P.2d 616 (1941), distinguished, Shelton v. Second Judicial Dist. Court, 64 Nev. 487, at 492, 185 P.2d 320 (1947)

Notice to other persons not required when action instituted by majority of directors. In action instituted under NCL 1645 (cf. NRS 78.630), which relates to appointment of receivers to take control of insolvent corporations, where majority of directors caused action to be instituted, it was not necessary to make all directors of corporation parties, and in absence of statutory provision, there was no jurisdictional requirement to make any other persons defendants or to give notice to other persons. International Life Underwriters, Inc. v. Second Judicial Dist. Court, 61 Nev. 42, 113 P.2d 616 (1941), distinguished, Shelton v. Second Judicial Dist. Court, 64 Nev. 487, at 492, 185 P.2d 320 (1947)

Prior decision not applicable to statute in which directors not preferred as receivers. Judicial decision which held that corporation could not be dissolved without notice, and that directors were necessary parties under statute which provided for dissolution of corporation, because directors had preferential right to be appointed receivers, was not applicable to action to appoint receiver under NCL 1645 (cf. NRS 78.630), which provides for appointment of receiver to take control of insolvent corporations and does not give directors preferential right to be appointed receivers. International Life Underwriters, Inc. v. Second Judicial Dist. Court, 61 Nev. 42, 113 P.2d 616 (1941), distinguished, Shelton v. Second Judicial Dist. Court, 64 Nev. 487, at 492, 185 P.2d 320 (1947)

MISCELLANEOUS

Court had jurisdiction to appoint receiver in action commenced before Nevada Insurance Code enacted. Ch. 189, Stats. 1941 (cf. NRS Title 57), relating to insurance companies, did not deprive court of jurisdiction under NCL 1645 (cf. NRS 78.630) to appoint receiver for insolvent insurance company where action was commenced prior to enactment of former statute and such statute contained express exemption which provided that no action or proceeding commenced prior to effective date of act was to be affected by provisions of act. International Life Underwriters, Inc. v. Second Judicial Dist. Court, 61 Nev. 42, 113 P.2d 616 (1941)

Court could set hearing to appoint temporary receiver when complaint dismissed with leave to amend. Where stockholder filed complaint against corporation in which he sought injunction and appointment of temporary receiver, and court dismissed complaint with leave to amend because it was defective for failure to allege that plaintiff owned 10 percent of outstanding stock as required by NRS 78.630 and 78.650, court was not without jurisdiction to enter at same time an order setting hearing on petition for appointment of temporary receiver, although order was made prior to amendment of complaint. Transcontinental Oil Co. v. Free, 80 Nev. 207, 391 P.2d 317 (1964), cited, Searchlight Dev., Inc. v. Martello, 84 Nev. 102, at 109, 437 P.2d 86 (1968)

FEDERAL AND OTHER CASES.

Federal jurisdiction presumed. In stockholder's action against corporation, where NRS 78.335, 78.345, 78.600 and 78.630-78.715 would have provided ample means for rectifying situation alleged in complaint, but complaint was not based on such sections, it was unnecessary to decide whether in diversity case a federal court could take jurisdiction of action based on any of such sections, but court presumed that it could. Pioche Mines Consol. v. Dolman, 333 F.2d 257 (9th Cir. 1964)

NRS 78.635   Appointment of receiver or trustee of insolvent corporation: Powers.

1.   The district court, at the time of ordering the injunction, or at any time afterwards, may appoint a receiver or receivers or a trustee or trustees for the creditors and stockholders of the corporation.
2.   The receiver or receivers or trustee or trustees shall have full power and authority:

(a) To demand, sue for, collect, receive and take into his or their possession all the goods and chattels, rights and credits, moneys and effects, lands and tenements, books, papers, choses in action, bills, notes and property, of every description of the corporation; and
(b) To institute suits at law or in equity for the recovery of any estate, property, damages or demands existing in favor of the corporation; and
(c) In his or their discretion to compound and settle with any debtor or creditor of the corporation, or with persons having possession of its property or in any way responsible at law or in equity to the corporation at the time of its insolvency or suspension of business, or afterwards, upon such terms and in such manner as he or they shall deem just and beneficial to the corporation; and
(d) In case of mutual dealings between the corporation and any person to allow just setoffs in favor of such person in all cases in which the same ought to be allowed according to law and equity.

3.   A debtor who shall have in good faith paid his debt to the corporation without notice of its insolvency or suspension of business, shall not be liable therefor, and the receiver or receivers or trustee or trustees shall have power to sell, convey and assign all the estate, rights and interests, and shall hold and dispose of the proceeds thereof under the directions of the district court.
  [Part 47:177:1925; NCL 1646](NRS A 1969, 93)

NEVADA CASES.

Duties of receiver. Receiver appointed by court is person who by such appointment becomes officer of court to receive, collect, care for, administer and dispose of property or fruits of property of another or others brought under orders of court by institution of proper action or actions. Jones v. Free, 83 Nev. 31, 422 P.2d 551 (1967)

NRS 78.640   Property and privileges of insolvent corporation vest in appointed receiver.   All real and personal property of an insolvent corporation, wheresoever situated, and all its franchises, rights, privileges and effects shall, upon the appointment of a receiver, forthwith vest in him, and the corporation shall be divested of the title thereto.
  [48:177:1925; NCL 1647]

NRS 78.645   Corporation may resume control upon payment of debts and receipt of capital to conduct business; order of court dissolving corporation and forfeiting charter.

1.   Whenever a receiver shall have been appointed as provided in NRS 78.635 and it shall afterwards appear that the debts of the corporation have been paid or provided for, and that there remains or can be obtained by further contributions sufficient capital to enable it to resume its business, the district court may, in its discretion, a proper case being shown, direct the receiver to reconvey to the corporation all its property, franchises, rights and effects, and thereafter the corporation may resume control of and enjoy the same as fully as if the receiver had never been appointed.
2.   In every case in which the district court shall not direct such reconveyance, the court may, in its discretion, make a decree dissolving the corporation and declaring its charter forfeited and void.
  [49:177:1925; NCL 1648]

NEVADA CASES.

Jurisdiction to dissolve corporations conferred. Courts are reluctant, in absence of statutory authority, to assume jurisdiction to dissolve corporations, but legislature may confer such jurisdiction, and in Nevada such power is given in NCL 1648 (cf. NRS 78.645). International Life Underwriters, Inc. v. Second Judicial Dist. Court, 61 Nev. 42, 113 P.2d 616 (1941)

NRS 78.650   Stockholders' application for injunction and appointment of receiver when corporation mismanaged.

1.   Any holder or holders of one-tenth of the issued and outstanding stock may apply to the district court, held in the district where the corporation has its principal place of business, for an order dissolving the corporation and appointing a receiver to wind up its affairs, and by injunction restrain the corporation from exercising any of its powers or doing business whatsoever, except by and through a receiver appointed by the court, whenever:

(a) The corporation has willfully violated its charter;
(b) Its trustees or directors have been guilty of fraud or collusion or gross mismanagement in the conduct or control of its affairs;
(c) Its trustees or directors have been guilty of misfeasance, malfeasance or nonfeasance;
(d) The corporation is unable to conduct the business or conserve its assets by reason of the act, neglect or refusal to function of any of the directors or trustees;
(e) The assets of the corporation are in danger of waste, sacrifice or loss through attachment, foreclosure, litigation or otherwise;
(f) The corporation has abandoned its business;
(g) The corporation has not proceeded diligently to wind up its affairs, or to distribute its assets in a reasonable time;
(h) The corporation has become insolvent;
(i) The corporation, although not insolvent, is for any cause not able to pay its debts or other obligations as they mature; or
(j) The corporation is not about to resume its business with safety to the public.

2.   The application may be for the appointment of a receiver, without at the same time applying for the dissolution of the corporation, and notwithstanding the absence, if any there be, of any action or other proceeding in the premises pending in such court.
3.   In any such application for a receivership, it is sufficient for a temporary appointment if notice of the same is given to the corporation alone, by process as in the case of an application for a temporary restraining order or injunction, and the hearing thereon may be had after 5 days' notice unless the court directs a longer or different notice and different parties.
4.   The court may, if good cause exists therefor, appoint one or more receivers for such purpose, but in all cases directors or trustees who have been guilty of no negligence nor active breach of duty must be preferred in making the appointment. The court may at any time for sufficient cause make a decree terminating the receivership, or dissolving the corporation and terminating its existence, or both, as may be proper.
5.   Receivers so appointed have, among the usual powers, all the functions, powers, tenure and duties to be exercised under the direction of the court as are conferred on receivers and as provided in NRS 78.635, 78.640 and 78.645, whether the corporation is insolvent or not.
  [49a:177:1925; added 1941, 405; 1931 NCL 1648.01](NRS A 1993, 2766)

REVISER'S NOTE.
  In subsection 3 of the revised section "a longer or different notice and parties" was replaced with "a longer or different notice and different parties."

NEVADA CASES.
GENERAL

Directors necessary parties when not guilty of negligence. In proceeding by stockholders under sec. 94, ch. 88, Stats. 1903 (cf. NRS 78.630 and 78.650), providing in effect that directors of corporation who have not been guilty of negligence shall have preferred right to be appointed as referees when a tenth part in interest of stockholders petitions district court for dissolution of corporation, where complaint admitted that directors were guiltless, directors were necessary parties to proceeding and all orders made by trial court without making them parties were void. Golden v. Fifth Judicial Dist. Court, 31 Nev. 250, 101 Pac. 1021 (1909), cited, Shelton v. Second Judicial Dist. Court, 64 Nev. 487, at 492, 185 P.2d 320 (1947), State ex rel. Hersh v. First Judicial Dist. Court, 86 Nev. 73, at 79, 464 P.2d 783 (1970)

Purpose of preference for directors without guilt; court may find breach of duty without personal jurisdiction. Purpose of sec. 94, ch. 88, Stats. 1903 (cf. NRS 78.630 and 78.650), providing, in effect, that directors of corporation who have not been guilty of negligence shall have preferred right to be appointed as referees in proceeding for dissolution brought by stockholders, is to have affairs of corporation wound up by same persons who have constituted its board of directors, if they are blameless, and court has no authority to find them guilty of any breach of duty without having jurisdiction of their persons. Golden v. Fifth Judicial Dist. Court, 31 Nev. 250, 101 Pac. 1021 (1909), cited, Shelton v. Second Judicial Dist. Court, 64 Nev. 487, at 492, 185 P.2d 320 (1947)

Order void where holders of nine-tenths of stock not made parties or given opportunity to be heard. In proceeding under sec. 94, ch. 88, Stats. 1903 (NRS 78.630 and 78.650), providing for dissolution of corporation upon application of stockholders, ex parte order obtained on application of one-tenth of stockholders to dissolve business of corporation through receivers was void, because no one representing the other nine-tenths of stock was made party or had opportunity to be heard, and result would have been deprivation of property without due process of law. Golden v. Fifth Judicial Dist. Court, 31 Nev. 250, 101 Pac. 1021 (1909), concurring opinion.

Prohibition available against injunction granted without bond or notice. In prohibition proceeding, where district court had exceeded its jurisdiction by granting injunction against control of corporation by president without requiring bond of applicant and by appointing receiver without notice to all directors and to corporation, as required by NCL 8696 (cf. N.R.C.P. 65(c)) and 1931 NCL 1648.01 (cf. NRS 78.650), remedy of prohibition was available. Shelton v. Second Judicial Dist. Court, 64 Nev. 487, 185 P.2d 320 (1947)

Complaint defective for failure to allege ownership of 10 percent of stock. Where stockholder brought action against corporation in which he sought injunction and appointment of receiver, but failed to allege that he owned 10 percent of outstanding stock of corporation as required by NRS 78.630 and 78.650, complaint was defective. Transcontinental Oil Co. v. Free, 80 Nev. 207, 391 P.2d 317 (1964), cited, Searchlight Dev., Inc. v. Martello, 84 Nev. 102, at 109, 437 P.2d 86 (1968)

Duties of receiver.

Receiver appointed by court is person who by such appointment becomes officer of court to receive, collect, care for, administer and dispose of property or fruits of property of another or others brought under orders of court by institution of proper action or actions. Jones v. Free, 83 Nev. 31, 422 P.2d 551 (1967)

No jurisdiction to appoint corporate receiver unless requisite number of applicants have title to stock when application considered. In proceeding where appointment of corporate receiver was part of relief sought, where applicants had been holders of one-tenth of issued and outstanding capital stock as required by NRS 78.650 and where such interest was sold prior to time court considered application, judgment appointing receiver, entered pursuant to N.R.C.P. 54(b), which provides for entry of judgment on less than all claims sought, was reversed and case was remanded for further proceedings, because court did not have jurisdiction to appoint corporate receiver unless such applicants had legal title to stock at time application was considered by court. Searchlight Dev., Inc. v. Martello, 84 Nev. 102, 437 P.2d 86 (1968)

Nonnegligent director may be rejected as receiver for good reason. In action for appointment of receiver for corporation, by terms of NRS 78.650 nonnegligent director is entitled to be preferred in making appointment; however, after having been considered, such director can be rejected if there appears reason to do so; and where nonnegligent director held no stock in corporation and was attorney employed by law firm which had been retained by corporation to contest appointment of receiver, good reason existed for denying appointment of such director as receiver because general rule is that attorney representing person who is securing or opposing such receivership shall not be appointed as receiver unless consent thereto is obtained from all interested parties. Peri-Gil Corp. v. Sutton, 84 Nev. 406, 442 P.2d 465 (1968)

Requirements of case law applicable. In proceeding by stockholder to obtain appointment of receiver for corporation, requirements of case law for notice and bringing in indispensable parties must be met in addition to those of NRS 78.650, but apply to appointment of permanent receiver and may be met by amendment at that stage. State ex rel. Hersh v. First Judicial Dist. Court, 86 Nev. 73, 464 P.2d 783 (1970)

Abuse of discretion to appoint receiver when injunction would suffice and party failed to show likelihood of prevailing. Where owner of 46 percent of capital stock of mining corporation presented evidence of physical interference with his access to mine and requested appointment of receiver (see NRS 78.650), district court abused its discretion in appointing receiver because cessation of interference could have been achieved by invoking lesser remedy of injunctive relief. Further, party opposing appointment of receiver had contributed bulk of money used to finance mining enterprise, and party seeking appointment of receiver did not show likelihood that he ultimately would be entitled to judgement in underlying action. Hines v.Plante, 99 Nev. 259, 661 P.2d 880(1983)

Exhaustion of internal remedies unnecessary. In derivative action brought by minority shareholder of corporation under N.R.C.P. 23.1 alleging that directors and controlling shareholders wrongfully appropriated corporate assets, where member of board of directors owned 42.95 percent of corporation and acted as chief executive officer, his wife was also member of board, and remaining member, along with chief executive officer, was officer of another corporation which used corporation's equipment and property without payment therefor, trial court erred in granting defendant's motion to dismiss for failure to exhaust internal corporate remedies because, as quorum of disinterested directors could not be assembled to appraise merits of plaintiff's claims, request for action from directors or shareholders would have been futile. Johnson v. Steel, Inc., 100 Nev. 181, 678 P.2d 676 (1984)

NOTICE

Notice directed only to corporation insufficient. In proceeding by stockholders to enjoin further operation of bank under sec. 94, ch. 88, Stats. 1903 (cf. NRS 78.630 and 78.650), providing for dissolution of corporation upon application of 10 percent of stockholders, where order appointing receivers and temporary injunction were issued upon notice directed only to corporation, notice was insufficient and order and decree void under statute providing for notice before injunction suspending business of corporation is granted. Golden v. Fifth Judicial Dist. Court, 31 Nev. 250, 101 Pac. 1021 (1909), cited, State ex rel. Howell v. Wildes, 34 Nev. 94, at 122, 116 Pac. 595 (1911), Shelton v. Second Judicial Dist. Court, 64 Nev. 487, at 495, 185 P.2d 320 (1947), distinguished, International Life Underwriters, Inc. v. Second Judicial Dist. Court, 61 Nev. 42, at 47, 113 P.2d 616 (1941), State ex rel. Hersh v. First Judicial Dist. Court, 86 Nev. 73, at 79, 464 P.2d 783 (1970)

Notice should be adequate to assure stockholders of opportunity to be heard. In proceeding by stockholders under sec. 94, ch. 88, Stats. 1903 (cf. NRS 78.630 and 78.650), providing that whenever assets of corporation are in danger of waste from litigation any holder of one-tenth of capital stock may apply to district court for dissolution, stockholders are at least proper parties, and notice given of hearing should be adequate to assure them opportunity of being heard if they so desire. Golden v. Fifth Judicial Dist. Court, 31 Nev. 250, 101 Pac. 1021 (1909), cited, Shelton v. Second Judicial Dist. Court, 64 Nev. 487, at 495, 185 P.2d 320 (1947), distinguished, Ex rel. Hatch v. Court, 50 Nev. 282, at 286, 257 Pac. 831 (1927), Schrader v. Third Judicial Dist. Court, 58 Nev. 188, at 194, 73 P.2d 493 (1937), International Life Underwriters, Inc. v. Second Judicial Dist. Court, 61 Nev. 42, at 47, 113 P.2d 616 (1941)

Notice to all directors essential to appoint receiver. Where district court issued injunction against corporation and appointed receiver on application of minority stockholders alleging mismanagement but not insolvency, without notice to majority stockholders who were also directors, and 1931 NCL 1648.01 (cf. NRS 78.650), providing for appointment of receiver in case of mismanagement, gave preference to directors not guilty of negligence or breach of duty, notice to all directors in order that they might present qualifications under preference provision was essential to valid appointment of receiver. Shelton v. Second Judicial Dist. Court, 64 Nev. 487, 185 P.2d 320 (1947), cited, State ex rel. Hersh v. First Judicial Dist. Court, 86 Nev. 73, at 79, 464 P.2d 783 (1970), distinguished, Peri-Gil Corp. v. Sutton, 84 Nev. 406, at 411, 442 P.2d 35 (1968)

Action not application for temporary appointment under circumstances; notice to all directors required. Where minority stockholders applied in district court for injunction against control of corporation by president and others, for appointment of receiver, and for accounting, and injunction was granted and receiver appointed upon simultaneous confession of judgment by corporation attorney, this was not application for temporary appointment within meaning of 1931 NCL 1648.01 (cf. NRS 78.650), permitting such appointment on notice to corporation alone. Notice to all directors was required. Shelton v. Second Judicial Dist. Court, 64 Nev. 487, 185 P.2d 320 (1947), cited, State ex rel. Hersh v. First Judicial Dist. Court, 86 Nev. 73, at 79, 464 P.2d 783 (1970)

Appointment of receiver without notice to directors in excess of jurisdiction and void. Where district court appointed receiver of corporation on application of minority stockholders alleging mismanagement, without complying with requirements of 1931 NCL 1648.01 (cf. NRS 78.650), providing for appointment of receiver on this ground, relating to notice to directors and to corporation, appointment was void because in excess of jurisdiction, and writ of prohibition was issued. Shelton v. Second Judicial Dist. Court, 64 Nev. 487, 185 P.2d 320 (1947)

Hearing for appointment of temporary receiver requires 5 days' notice. Where action was brought against corporation by shareholder in which issuance of injunction and appointment of temporary receiver was requested, NRS 78.650 required 5 days' notice before hearing on application for temporary receiver. Transcontinental Oil Co. v. Free, 80 Nev. 207, 391 P.2d 317 (1964)

Appointment of temporary receiver on notice to resident agent of corporation proper. In proceeding by stockholder to obtain appointment of receiver for corporation, appointment of temporary receiver upon notice to resident agent of corporation was proper, because neither N.R.C.P. 4(d)(1) nor NRS 78.650 requires service upon directors or officers and NRS 78.650 meets constitutional requirements of notice and opportunity to be heard. State ex rel. Hersh v. First Judicial Dist. Court, 86 Nev. 73, 464 P.2d 783 (1970)

MISCELLANEOUS

Corporation dissolved where substantially all property sold and business abandoned. In action by stockholders to set aside deed of trust executed by corporation to some of its directors and for other relief, although deed was valid, where evidence showed that substantially all real and personal property of corporation was sold, plaintiffs were entitled to decree dissolving corporation under NRS 78.650, providing for dissolution where corporation has abandoned business. Foster v. Arata, 74 Nev. 143, 325 P.2d 759 (1958)

Court could set hearing to appoint temporary receiver when complaint dismissed with leave to amend. Where stockholder filed complaint against corporation in which he sought injunction and appointment of temporary receiver, and court dismissed complaint with leave to amend because it was defective for failure to allege that plaintiff owned 10 percent of outstanding stock as required by NRS 78.630 and 78.650, court was not without jurisdiction to enter at same time order setting hearing on petition for appointment of temporary receiver, although order was made prior to amendment of complaint. Transcontinental Oil Co. v. Free, 80 Nev. 207, 391 P.2d 317 (1964), cited, Searchlight Dev., Inc. v. Martello, 84 Nev. 102, at 109, 437 P.2d 86 (1968)

Receiver appointed under circumstances where preemptive right violated. On appeal from appointment of receiver for corporation where evidence showed corporate stock was held by two stockholders, one stockholder, who at such time was sole stockholder with voting rights, approved amendment of articles of incorporation increasing amount of authorized capital, and then, without first offering pro rata share of new stock to other stockholder, he bought all of new shares, trial court did not abuse its discretion in appointing receiver because corporation willfully violated its charter and NRS 78.265 by selling new stock in such manner and such infraction brought corporation within NRS 78.650. Fact that other stockholder was nonvoting stockholder at the time did not in any way diminish his rights. Peri-Gil Corp. v. Sutton, 84 Nev. 406, 442 P.2d 35 (1968), cited, Nishon's, Inc. v. Kendigian, 91 Nev. 504, at 505, 538 P.2d 580 (1975)

Nonresident bond for receiver insufficient for temporary restraining order. In proceeding by stockholder under NRS 78.650 to obtain appointment of receiver for corporation, bond posted by plaintiff as nonresident pursuant to NRS 18.130 could not be treated as sufficient for temporary restraining order under N.R.C.P. 65(c), because bond of nonresident must remain available to defendant until action is dismissed or judgment entered. State ex rel. Hersh v. First Judicial Dist. Court, 86 Nev. 73, 464 P.2d 783 (1970)

FEDERAL AND OTHER CASES.

Error to appoint receiver when statutes inapplicable. In stockholder's action against corporation, where plaintiff failed to bring himself within provisions of NRS 78.650-78.715, relating to corporate receiverships in case of mismanagement, and federal law, if applicable, would not have authorized appointment of receiver, appointment of receiver was error, and it was unnecessary to decide which law applied. Pioche Mines Consol. v. Dolman, 333 F.2d 257 (9th Cir. 1964)

NRS 78.655   Reorganization of corporation by majority of stockholders during receivership.   Whenever stockholders holding stock entitling them to exercise at least a majority of the voting power of the corporation shall have agreed upon a plan for the reorganization of the corporation and a resumption by it of the management and control of its property and business, the corporation may, with the consent of the district court:

1.   Upon the reconveyance to it of its property and franchises, mortgage the same for such amount as may be necessary for the purposes of reorganization; and
2.   Issue bonds or other evidences of indebtedness, or additional stock of one or more classes, with or without nominal or par value, or both, or both bonds and stock, or certificates of investment or participation certificates, and use the same for the full or partial payment of the creditors who will accept the same, or otherwise dispose of the same for the purposes of the reorganization.
  [50:177:1925; NCL 1649]

NRS 78.660   Powers of district court.

1.   The court shall have power to send for persons and papers and to examine any persons, including the creditors and claimants, and the president, directors and other officers and agents of the corporation, on oath or affirmation, respecting its affairs and transactions and its estate, money, goods, chattels, credits, notes, bills and choses in action, real and personal estate and effects of every kind, and also respecting its debts, obligations, contracts and liabilities, and the claims against it.
2.   If any person shall refuse to be sworn or affirmed, or to make answers to such questions as shall be put to him, or refuse to declare the whole truth touching the subject matter of the examination, the district court may commit such person to a place of confinement, there to remain until he shall submit himself to be examined, and pay all the costs of the proceedings against him.
  [51:177:1925; NCL 1650]

NRS 78.665   Receiver to take possession of corporate assets upon court order.   The receiver, upon order of the court, with the assistance of a peace officer, may break open, in the daytime, the houses, shops, warehouses, doors, trunks, chests or other places of the corporation where any of its goods, chattels, choses in action, notes, bills, moneys, books, papers or other writings or effects have been usually kept, or shall be, and take possession of the same and of the lands and tenements belonging to the corporation.
  [52:177:1925; NCL 1651]

NRS 78.670   Inventory, list of debts and reports by receiver.   The receiver, as soon as convenient, shall lay before the district court a full and complete inventory of all the estate, property and effects of the corporation, its nature and probable value, and an account of all debts due from and to it, as nearly as the same can be ascertained, and make a report to the court of his proceedings at least every 3 months thereafter during the continuance of the trust, and whenever he shall be so ordered.
  [53:177:1925; NCL 1652]

NRS 78.675   Creditors' proofs of claims; when participation barred; notice.   All creditors shall present and make proof to the receiver of their respective claims against the corporation within 6 months from the date of appointment of the receiver or trustee for the corporation, or sooner if the court shall order and direct, and all creditors and claimants failing to do so within the time limited by this section, or the time prescribed by the order of the court, shall by the direction of the court be barred from participating in the distribution of the assets of the corporation. The court shall also prescribe what notice, by publication or otherwise, shall be given to creditors of such limitation of time.
  [54:177:1925; A 1949, 158; 1943 NCL 1653]

NEVADA CASES.

Timely claim not condition precedent to intervention for recovery of property. Although NCL 1653 and 1654 (cf. NRS 78.675 and 78.680) require that creditors present their claims to receiver of insolvent corporation within certain period of time or, upon order of court, be barred from participation in assets, such requirement is not condition precedent to jurisdiction of court to adjudicate petition in intervention seeking recovery of personal property or its value. Lindley & Co. v. Piggly Wiggly Nevada Co., 55 Nev. 257, 30 P.2d 223 (1934)

NRS 78.680   Creditors' claims to be in writing under oath; examination of claimants.   Every claim against any corporation for which a receiver has been appointed shall be presented to the receiver in writing and upon oath. The claimant, if required, shall submit himself to such examination in relation to the claim as the court shall direct, and shall produce such books and papers relating to the claim as shall be required. The court shall have power to authorize the receiver to examine, under oath or affirmation, all witnesses produced before him touching the claim or any part thereof.
  [55:177:1925; NCL 1654]

NEVADA CASES.

Timely claim not condition precedent to intervention for recovery of property. Although NCL 1653 and 1654 (cf. NRS 78.675 and 78.680) require that creditors present their claims to receiver of insolvent corporation within certain period of time or, upon order of court, be barred from participation in assets, such requirement is not condition precedent to jurisdiction of court to adjudicate petition in intervention seeking recovery of personal property or its value. Lindley & Co. v. Piggly Wiggly Nevada Co., 55 Nev. 257, 30 P.2d 223 (1934)

NRS 78.685   Action on creditors' claims; appeal of disallowed claims.

1.   The clerk of the district court, immediately upon the expiration of the time fixed for the filing of claims, shall notify the trustee or receiver of the filing of the claims. The trustee or receiver shall inspect the claims and within 30 days notify each claimant of his decision. The trustee or receiver may require all creditors whose claims are disputed to submit themselves to an examination in relation to their claims, and to produce such books and papers relating to their claims as the trustee or receiver requests. The trustee or receiver may examine, under oath or affirmation, all witnesses produced before him regarding the claims, and shall pass upon and allow or disallow the claims, or any part thereof, and notify the claimants of his determination.
2.   Every creditor or claimant who has received notice from the receiver or trustee that his claim has been disallowed in whole or in part may appeal to the district court within 30 days thereafter. The court, after a hearing, shall determine the rights of the parties.
  [56:177:1925; NCL 1655] + [Part 57:177:1925; NCL 1656](NRS A 1991, 1239)

NRS 78.695   Substitution of receiver as a party; abatement of actions.

1.   A receiver, upon application by him, shall be substituted as party plaintiff or complainant in the place and stead of the corporation in any suit or proceeding at law or in equity which was pending at the time of his appointment.
2.   No action against a receiver of a corporation shall abate by reason of his death, but, upon suggestion of the facts on the record, shall be continued against his successor, or against the corporation in case no new receiver be appointed.
  [58:177:1925; NCL 1657] + [59:177:1925; NCL 1658]

NRS 78.700   Sales of encumbered or deteriorating property.   Where property of an insolvent corporation is at the time of the appointment of a receiver encumbered with mortgages or other liens, the legality of which is brought in question, or the property is of a character which will materially deteriorate in value pending the litigation, the district court may order the receiver to sell the same, clear of encumbrances, at public or private sale, for the best price that can be obtained, and pay the money into court, there to remain subject to the same liens and equities of all parties in interest as was the property before sale, to be disposed of as the court shall direct.
  [60:177:1925; NCL 1659]

NRS 78.705   Compensation, costs and expenses of receiver.   Before distribution of the assets of an insolvent corporation among the creditors or stockholders, the district court shall allow a reasonable compensation to the receiver for his services and the costs and expenses of the administration of the trust, and the cost of the proceedings in the court, to be first paid out of the assets.
  [61:177:1925; NCL 1660]

NRS 78.710   Distribution of money to creditors and stockholders.   After payment of all allowances, expenses and costs, and the satisfaction of all special and general liens upon the funds of the corporation to the extent of their lawful priority, the creditors shall be paid proportionately to the amount of their respective debts, excepting mortgage and judgment creditors when the judgment has not been by confession for the purpose of preferring creditors. The creditors shall be entitled to distribution on debts not due, making in such case a rebate of interest, when interest is not accruing on the same. The surplus funds, if any, after payment of the creditors and the costs, expenses and allowances, shall be distributed among the stockholders or their legal representatives in proportion to their interests.
  [62:177:1925; NCL 1661]

NRS 78.715   Acts of majority of receivers effectual; removal and vacancies.

1.   Every matter and thing by this chapter required to be done by receivers or trustees shall be good and effectual, to all intents and purposes, if performed by a majority of them.
2.   The district court may remove any receiver or trustee and appoint another or others in his place to fill any vacancy which may occur.
  [63:177:1925; NCL 1662]

NRS 78.720   Employees' liens for wages when corporation insolvent.

1.   Whenever any corporation becomes insolvent or is dissolved in any way or for any cause, the employees doing labor or service, of whatever character, in the regular employ of the corporation, have a lien upon the assets thereof for the amount of wages due to them, not exceeding $1,000, which have been earned within 3 months before the date of the insolvency or dissolution, which must be paid before any other debt of the corporation.
2.   The word "employees" does not include any of the officers of the corporation.
  [86:177:1925; NCL 1685](NRS A 1959, 607; 1983, 1362)

REINCORPORATION; RENEWAL AND REVIVAL OF CHARTERS

NRS 78.725   Domestic corporations in existence on April 1, 1925, may reincorporate under this chapter.

1.   Any corporation organized and existing under the laws of this state on April 1, 1925, may reincorporate under this chapter, either under the same or a different name, by:

(a) Filing with the secretary of state a certificate executed by its president and attested by its secretary and duly authorized by a meeting of the stockholders called for that purpose, setting forth the statements required in an original certificate of incorporation by NRS 78.035; and
(b) Surrendering the existing charter or certificate of incorporation of the corporation, and accepting the provisions of this chapter.

2.   Upon the filing of the certificate, the corporation shall be deemed to be incorporated under this chapter and shall be entitled to and be possessed of all the privileges, franchises and powers as if originally incorporated under this chapter. All the properties, rights and privileges theretofore belonging to the corporation, which were acquired by gift, grant, conveyance, assignment or otherwise, shall be and the same are hereby ratified, approved and confirmed and assured to the corporation with like effect and to all intents and purposes as if the same had been originally acquired through incorporation under this chapter.
3.   Any corporation reincorporating under this chapter shall be subject to all the contracts, duties and obligations theretofore resting upon the corporation whose charter or certificate of incorporation is thus surrendered or to which the corporation shall then be in any way liable.
  [82:177:1925; NCL 1681](NRS A 1971, 1105)

ATTORNEY GENERAL'S OPINIONS.

No filing fee unless increase in capital stock. Corporation existing before 1925 not required to pay filing fee upon reincorporation under 1925 law unless there is increase in capital stock. AGO 181 (4-30-1925)

Fee required for issuance of new charter. Corporation organized before 1925 and desiring to reincorporate under 1925 law must pay fee for issuance of new charter. AGO 320 (10-8-1928)

NRS 78.730   Renewal or revival: Procedure; fee; certificate as evidence.

1.   Any corporation which did exist or is existing under the laws of this state may, upon complying with the provisions of NRS 78.180, procure a renewal or revival of its charter for any period, together with all the rights, franchises, privileges and immunities, and subject to all its existing and preexisting debts, duties and liabilities secured or imposed by its original charter and amendments thereto, or existing charter, by filing:

(a) A certificate with the secretary of state, which must set forth:

(1) The name of the corporation, which must be the name of the corporation at the time of the renewal or revival, or its name at the time its original charter expired.
(2) The name of the person designated as the resident agent of the corporation, his street address for the service of process, and his mailing address if different from his street address.
(3) The date when the renewal or revival of the charter is to commence or be effective, which may be, in cases of a revival, before the date of the certificate.
(4) Whether or not the renewal or revival is to be perpetual, and, if not perpetual, the time for which the renewal or revival is to continue.
(5) That the corporation desiring to renew or revive its charter is, or has been, organized and carrying on the business authorized by its existing or original charter and amendments thereto, and desires to renew or continue through revival its existence pursuant to and subject to the provisions of this chapter.

(b) A list of its president, secretary and treasurer and all of its directors and their post office box or street addresses, either residence or business.

2.   A corporation whose charter has not expired and is being renewed shall cause the certificate to be signed by its president or vice president and secretary or assistant secretary and acknowledged by those officers before any person authorized by the laws of this state to take acknowledgments of deeds. The certificate must be approved by a majority of the voting power of the shares.
3.   A corporation seeking to revive its original or amended charter shall cause the certificate to be signed by a person or persons designated or appointed by the stockholders of the corporation and acknowledged by the signer or signers before any person authorized to take acknowledgments of deeds. The execution and filing of the certificate must be approved by the written consent of stockholders of the corporation holding at least a majority of the voting power and must contain a recital that this consent was secured. If no stock has been issued, the certificate must contain a statement of that fact, and a majority of the directors then in office may designate the person to sign the certificate. The corporation shall pay to the secretary of state the fee required to establish a new corporation pursuant to the provisions of this chapter.
4.   The filed certificate, or a copy thereof which has been certified under the hand and seal of the secretary of state, must be received in all courts and places as prima facie evidence of the facts therein stated and of the existence and incorporation of the corporation therein named.
  [93:177:1925](NRS A 1937, 4; 1953, 314; 1985, 1872; 1993, 975; 1995, 2100; 1997, 705)

FEDERAL AND OTHER CASES.

Director may not avoid consequences of breach of trust by voting stock to revive corporation. NCL 1665 (cf. NRS 78.590) places obligation of trustee upon directors of corporations during dissolution, and provision of 1931 NCL 1692 (cf. NRS 78.730), which allows revival of corporation to date back to date of dissolution, does not allow director to avoid consequences of breaches of trust in acquiring stock during dissolution merely by voting that stock to revive corporation. Miller v. Wahyou, 235 F.2d 612 (9th Cir. 1956)

ATTORNEY GENERAL'S OPINIONS.

Filing of application by secretary of state. Dissolved corporation can apply for revival of charter under NCL 1692 (cf. NRS 78.730) and secretary of state must file certificate of revival if properly presented. AGO 119 (11-28-1951)

NRS 78.740   Renewal or revival: Status of corporation.   Any corporation existing on or incorporated after April 1, 1925, desiring to renew or revive its corporate existence, upon complying with the provisions of this chapter, is and continues for the time stated in its certificate of renewal to be a corporation, and in addition to the rights, privileges and immunities conferred by its original charter, possesses and enjoys all the benefits of this chapter that are applicable to the nature of its business, and is subject to the restrictions and liabilities by this chapter imposed on such corporations.
  [95:177:1925; NCL 1694](NRS A 1993, 976)

SUITS AGAINST CORPORATIONS, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND STOCKHOLDERS

NRS 78.745   Action against stockholder for unpaid subscriptions; limitation of action.   No action shall be brought by the corporation against any stockholder for any unpaid subscription unless within 2 years after the debt becomes due, and no action shall be brought against the stockholder after he shall cease to be the owner of the shares, unless brought within 2 years from the time he shall have ceased to be a stockholder.
  [17:177:1925; NCL 1616]

NRS 78.750   Service of process on corporations.

1.   In any action commenced against any corporation in any court of this state, service of process may be made in the manner provided by law and rule of court for the service of civil process.
2.   Service of process on a corporation which has been continued as a body corporate under NRS 78.585 may be made by mailing copies of the process and any associated documents by certified mail, with return receipt requested, to:

(a) The resident agent of the corporation, if there is one; and
(b) Each officer and director of the corporation as named in the list last filed with the secretary of state before the dissolution or expiration of the corporation or the forfeiture of its charter.

The manner of serving process described in this subsection does not affect the validity of any other service authorized by law.
  [81:177:1925; NCL 1680](NRS A 1979, 568; 1997, 474)

NRS CROSS REFERENCES.
 Court rules governing service of process, N.R.C.P. 4(d)(1), JCRCP 4(d)(1)

NRS 78.7502   Discretionary and mandatory indemnification of officers, directors, employees and agents: General provisions.

1.   A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and that, with respect to any criminal action or proceeding, he had reasonable cause to believe that his conduct was unlawful.
2.   A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys' fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.
3.   To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections 1 and 2, or in defense of any claim, issue or matter therein, the corporation shall indemnify him against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense.
  (Added to NRS by 1997, 694)

NRS 78.751   Authorization required for discretionary indemnification; advancement of expenses; limitation on indemnification and advancement of expenses.

1.   Any discretionary indemnification under NRS 78.7502 unless ordered by a court or advanced pursuant to subsection 2, may be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made:

(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion.

2.   The articles of incorporation, the bylaws or an agreement made by the corporation may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the corporation. The provisions of this subsection do not affect any rights to advancement of expenses to which corporate personnel other than directors or officers may be entitled under any contract or otherwise by law.
3.   The indemnification and advancement of expenses authorized in or ordered by a court pursuant to this section:

(a) Does not exclude any other rights to which a person seeking indemnification or advancement of expenses may be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, for either an action in his official capacity or an action in another capacity while holding his office, except that indemnification, unless ordered by a court pursuant to NRS 78.7502 or for the advancement of expenses made pursuant to subsection 2, may not be made to or on behalf of any director or officer if a final adjudication establishes that his acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a director, officer, employee or agent and inures to the benefit of the heirs, executors and administrators of such a person.

  (Added to NRS by 1969, 118; A 1987, 83; 1993, 976; 1997, 706)

NRS 78.752   Insurance and other financial arrangements against liability of directors, officers, employees and agents.

1.   A corporation may purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as such, whether or not the corporation has the authority to indemnify him against such liability and expenses.
2.   The other financial arrangements made by the corporation pursuant to subsection 1 may include the following:

(a) The creation of a trust fund.
(b) The establishment of a program of self-insurance.
(c) The securing of its obligation of indemnification by granting a security interest or other lien on any assets of the corporation.
(d) The establishment of a letter of credit, guaranty or surety.

No financial arrangement made pursuant to this subsection may provide protection for a person adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable for intentional misconduct, fraud or a knowing violation of law, except with respect to the advancement of expenses or indemnification ordered by a court.
3.   Any insurance or other financial arrangement made on behalf of a person pursuant to this section may be provided by the corporation or any other person approved by the board of directors, even if all or part of the other person's stock or other securities is owned by the corporation.
4.   In the absence of fraud:

(a) The decision of the board of directors as to the propriety of the terms and conditions of any insurance or other financial arrangement made pursuant to this section and the choice of the person to provide the insurance or other financial arrangement is conclusive; and
(b) The insurance or other financial arrangement:

(1) Is not void or voidable; and
(2) Does not subject any director approving it to personal liability for his action, even if a director approving the insurance or other financial arrangement is a beneficiary of the insurance or other financial arrangement.

5.   A corporation or its subsidiary which provides self-insurance for itself or for another affiliated corporation pursuant to this section is not subject to the provisions of Title 57 of NRS.
  (Added to NRS by 1987, 80)

NRS CROSS REFERENCES.
 Nevada Insurance Code, NRS Title 57

SECRETARY OF STATE: DUTIES AND FEES

NRS 78.755   Duties: Collection of fees; employment of new technology to aid in performance.

1.   The secretary of state, for services relating to his official duties and the records of his office, shall charge and collect the fees designated in NRS 78.760 to 78.785, inclusive.
2.   The secretary of state may accept the filing of documents by facsimile machine and employ new technology, as it is developed, to aid in the performance of all duties required by law. The secretary of state may establish rules, fee schedules and regulations not inconsistent with law, for filing documents by facsimile machine and for the adoption, employment and use of new technology in the performance of his duties.
[Part 1:52:1933; A 1949, 363; 1951, 393] + [Part 2:52:1933; A 1949, 409; 1943 NCL 7421.02](NRS A 1979, 76; 1991, 1239; 1997, 2810)

NRS 78.760   Filing fees: Articles of incorporation.

1.   The fee for filing articles of incorporation is prescribed in the following schedule:

If the amount represented by the total number of shares provided for in the articles or agreement is:
$25,000 or less ... $125
Over $25,000 and not over $75,000 ... 175
Over $75,000 and not over $200,000 ... 225
Over $200,000 and not over $500,000 ... 325
Over $500,000 and not over $1,000,000 ... 425
Over $1,000,000:

For the first $1,000,000 ... 425
For each additional $500,000 or fraction thereof ... 225

2.   The maximum fee which may be charged under this section is $25,000 for:

(a) The original filing of articles of incorporation.
(b) A subsequent filing of any instrument which authorizes an increase in stock.

3.   For the purposes of computing the filing fees according to the schedule in subsection 1, the amount represented by the total number of shares provided for in the articles of incorporation is:

(a) The aggregate par value of the shares, if only shares with a par value are therein provided for;
(b) The product of the number of shares multiplied by $1, regardless of any lesser amount prescribed as the value or consideration for which shares may be issued and disposed of, if only shares without par value are therein provided for; or
(c) The aggregate par value of the shares with a par value plus the product of the number of shares without par value multiplied by $1, regardless of any lesser amount prescribed as the value or consideration for which the shares without par value may be issued and disposed of, if shares with and without par value are therein provided for.
For the purposes of this subsection, shares with no prescribed par value shall be deemed shares without par value.

4.   The secretary of state shall calculate filing fees pursuant to this section with respect to shares with a par value of less than one-tenth of a cent as if the par value were one-tenth of a cent.
  [Part 1:52:1933; A 1949, 363; 1951, 393](NRS A 1975, 478; 1977, 402; 1983, 690; 1989, 978; 1991, 1240; 1993, 555, 978; 1995, 1115)

ATTORNEY GENERAL'S OPINIONS.
GENERAL

Fee payable by foreign corporation for amended articles. Foreign corporation must pay statutory fee upon filing its amended articles of incorporation. AGO 171 (9-3-1920)

Separate fees payable by foreign corporation for articles and amendments unless integrated. Foreign corporation filing articles and separate amendments must pay fee for filing articles and fee for each amendment. However, if amendments are integrated with articles to make one instrument only one filing fee must be paid. AGO 23 (4-23-1921)

CONSTITUTIONALITY

Filing fee constitutional. Filing fee based on entire authorized stock of foreign corporation does not deny foreign corporation equal protection of law since fee does not discriminate between domestic and foreign corporations; nor does such fee deprive foreign corporation of property without due process of law; nor does it impose undue burden upon interstate commerce. AGO 868 (2-10-1950), but see, State ex rel. Texas Co. v. Koontz, 69 Nev. 25, 240 P.2d 525 (1952)

State may collect nominal fee to amend articles without increase in stock. In State ex rel. Texas Co. v. Koontz, 69 Nev. 25, 240 P.2d 525 (1952), supreme court deals solely with question whether foreign corporation qualifying before March 29, 1949, must pay fee for filing amendment of articles pertaining to increase of capital stock. Decision does not deny state right to collect nominal filing fees for ministerial duties. Thus documents of foreign corporations qualifying before March 29, 1949, which do not relate to increase of capital stock are to be filed only on payment of nominal fee. AGO 155 (3-21-1952)

MISCELLANEOUS

Filing fee computed at rate of exchange when articles filed. Filing fee for Australian corporation to be computed upon rate of exchange between pound sterling and American dollar at time articles are filed. AGO 9 (1-19-1951)

Stock split alone does not increase capital stock; minimum filing fee required. Where foreign corporation doing business in Nevada amended articles of incorporation to reclassify shares of capital stock so that in exchange for each share of stock with par value held by stockholder, stockholder received two shares of stock without par value, and amendment stated that there would be no change in aggregate amount of stated capital applicable to issued shares, fee for filing amendment was minimum prescribed by statute because under NRS 78.760, 78.765 and 80.050 fee based on number of shares issued without par value is applicable only when there is increase in authorized capital stock, and stock split alone does not increase authorized capital stock. AGO 573 (4-29-1969)

NRS 78.765   Filing fees: Certificate changing number of authorized shares; amendment of articles; certificate of correction.

1.   The fee for filing a certificate changing the number of authorized shares pursuant to NRS 78.209 or a certificate of amendment to articles of incorporation that increases the corporation's authorized stock or a certificate of correction that increases the corporation's authorized stock is the difference between the fee computed at the rates specified in NRS 78.760 upon the total authorized stock of the corporation, including the proposed increase, and the fee computed at the rates specified in NRS 78.760 upon the total authorized capital, excluding the proposed increase. In no case may the amount be less than $75.
2.   The fee for filing a certificate of amendment to articles of incorporation that does not increase the corporation's authorized stock or a certificate of correction that does not increase the corporation's authorized stock is $75.
3.   The fee for filing a certificate pursuant to NRS 78.195 or an amended certificate pursuant to NRS 78.1955 is $75.
  [Part 1:52:1933; A 1949, 363; 1951, 393](NRS A 1983, 691; 1989, 978; 1991, 1240; 1993, 979; 1995, 1115, 2101; 1997, 708)

NEVADA CASES.

Unconstitutional to impose fee for amendment of articles of foreign corporation already admitted to state. Where foreign corporation engaged in interstate commerce was admitted to Nevada to conduct local business when state did not require foreign corporations to file amendments to articles of incorporation, and legislature thereafter enacted NCL 1841 (cf. NRS 80.030) requiring filing of such amendments, and NCL 7421.01 (cf. NRS 78.765) requiring payment of fee based upon total authorized capital stock, such provisions could not be conditions of entrance and were unconstitutional as applied to such corporation because they violated commerce clause and due process clause of federal constitution. State ex rel. Texas Co. v. Koontz, 69 Nev. 25, 240 P.2d 525 (1952)

ATTORNEY GENERAL'S OPINIONS.

Increase in filing fee for foreign corporations valid. Increase in filing fee based on entire authorized stock of foreign corporation is valid as to foreign corporation seeking to amend articles which were filed prior to increase. AGO 868 (2-10-1950), but see, State ex rel. Texas Co. v. Koontz, 69 Nev. 25, 240 P.2d 525 (1952)

Filing fee not applicable to foreign corporations. Fee for filing amendment authorizing increase in capital stock does not apply to foreign corporations as such corporations were not required to file amendments to articles at time statutory fee enacted. AGO 155 (3-21-1952)

Fee required to issue participation certificates. Where corporation increases capital stock by issuance of participation certificates in lieu of stock, fee for filing amendment to articles increasing authorized capital stock must still be paid. AGO 283 (7-21-1953)

Stock split alone does not increase capital stock; minimum filing fee required. Where foreign corporation doing business in Nevada amended articles of incorporation to reclassify shares of capital stock so that in exchange for each share of stock with par value held by stockholder, stockholder received two shares of stock without par value, and amendment stated that there would be no change in aggregate amount of stated capital applicable to issued shares, fee for filing amendment was minimum prescribed by statute because under NRS 78.760, 78.765 and 80.050 fee based on number of shares issued without par value is applicable only when there is increase in authorized capital stock, and stock split alone does not increase authorized capital stock. AGO 573 (4-29-1969)

NRS 78.767   Filing fees: Certificates of restated articles of incorporation.

1.   The fee for filing a certificate of restated articles of incorporation that does not increase the corporation's authorized stock is $75.
2.   The fee for filing a certificate of restated articles of incorporation that increases the corporation's authorized stock is the difference between the fee computed pursuant to NRS 78.760 based upon the total authorized stock of the corporation, including the proposed increase, and the fee computed pursuant to NRS 78.760 based upon the total authorized stock of the corporation, excluding the proposed increase. In no case may the amount be less than $75.
  (Added to NRS by 1959, 682; A 1983, 691; 1989, 979; 1993, 979; 1995, 1116)

NRS 78.770   Filing fees: Articles of merger; articles of exchange.

1.   The fee for filing articles of merger of two or more domestic corporations is the difference between the fee computed at the rates specified in NRS 78.760 upon the aggregate authorized stock of the corporation created by the merger and the fee so computed upon the aggregate amount of the total authorized stock of the constituent corporations.
2.   The fee for filing articles of merger of one or more domestic corporations with one or more foreign corporations is the difference between the fee computed at the rates specified in NRS 78.760 upon the aggregate authorized stock of the corporation created by the merger and the fee so computed upon the aggregate amount of the total authorized stock of the constituent corporations which have paid fees as required by NRS 78.760 and 80.050.
3.   In no case may the amount paid be less than $75, and in no case may the amount paid pursuant to subsection 2 exceed $25,000.
4.   The fee for filing articles of exchange is $125.
  [Part 1:52:1933; A 1949, 363; 1951, 393](NRS A 1960, 226; 1961, 398; 1983, 691; 1989, 979; 1991, 1241)

NRS 78.780   Filing fees: Certificates of extension and dissolution.

1.   The fee for filing a certificate of extension of corporate existence of any corporation is an amount equal to one-fourth of the fee computed at the rates specified in NRS 78.760 for filing articles of incorporation.
2.   The fee for filing a certificate of dissolution whether it occurs before or after payment of capital and beginning of business is $30.
  [Part 1:52:1933; A 1949, 363; 1951, 393](NRS A 1981, 1890; 1989, 979; 1993, 979)

NRS 78.785   Miscellaneous fees.

1.   The fee for filing a certificate of change of location of a corporation's registered office and resident agent, or a new designation of resident agent, is $15.
2.   The fee for certifying articles of incorporation where a copy is provided is $10.
3.   The fee for certifying a copy of an amendment to articles of incorporation, or to a copy of the articles as amended, where a copy is furnished, is $10.
4.   The fee for certifying an authorized printed copy of the general corporation law as compiled by the secretary of state is $10.
5.   The fee for reserving a corporate name is $20.
6.   The fee for executing a certificate of corporate existence which does not list the previous documents relating to the corporation, or a certificate of change in a corporate name, is $15.
7.   The fee for executing a certificate of corporate existence which lists the previous documents relating to the corporation is $20.
8.   The fee for executing, certifying or filing any certificate or document not provided for in NRS 78.760 to 78.785, inclusive, is $20.
9.   The fee for copies made at the office of the secretary of state is $1 per page.
10.   The fee for filing articles of incorporation, articles of merger, or certificates of amendment increasing the basic surplus of a mutual or reciprocal insurer must be computed pursuant to NRS 78.760, 78.765 and 78.770, on the basis of the amount of basic surplus of the insurer.
11.   The fee for examining and provisionally approving any document at any time before the document is presented for filing is $100.
  [Part 1:52:1933; A 1949, 363; 1951, 393](NRS A 1959, 689; 1975, 565; 1977, 403; 1979, 398; 1981, 141; 1983, 692; 1985, 1873; 1987, 1058; 1989, 979; 1991, 1241; 1993, 979; 1995, 1116)

MISCELLANEOUS PROVISIONS

NRS 78.795   Registration of natural person or corporation willing to serve as resident agent for corporation, limited-liability company or limited partnership.

1.   Any natural person or corporation residing or located in this state may, on or after January 1 of any year but before January 31 of that year, register his willingness to serve as the resident agent of a domestic or foreign corporation, limited-liability company or limited partnership with the secretary of state. The registration must be accompanied by a fee of $250.
2.   The secretary of state shall maintain a list of those persons who are registered pursuant to subsection 1 and make the list available to persons seeking to do business in this state.
  (Added to NRS by 1995, 1111)

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