Chapter 180

180.1815 180.1815 Termination of statutory close corporation status.

180.1815(1) (1) A statutory close corporation ceases to be subject to ss. 180.1801 to 180.1837 upon the effectiveness of articles of amendment deleting from its articles of incorporation the statement that it is a statutory close corporation. If the corporation has elected under s. 180.1821 not to have a board of directors, the amendment shall also delete the statement in the articles of incorporation to that effect and shall specify the number, names and addresses of its directors.

180.1815(2) (2) An amendment under sub. (1) must be approved by the holders of two-thirds of the votes of each class or series of shares of the statutory close corporation, voting as separate voting groups, whether or not the holders are otherwise entitled to vote on amendments.

180.1815(3) (3) If the amendment to terminate the corporation’s status as a statutory close corporation is approved, a shareholder who did not vote in favor of the amendment is entitled to assert dissenters’ rights under ss. 180.1301 to 180.1331.

180.1815 History History: 1989 a. 303.

180.1817 180.1817 Effect of termination of statutory close corporation status.

180.1817(1) (1) The termination of statutory close corporation status does not affect the rights of any shareholder or the corporation under an agreement or the corporation’s articles of incorporation, except to the extent that the agreement or the articles of incorporation are invalid under this chapter.

180.1817(2) (2) The corporation shall adopt bylaws if it has no bylaws on termination of statutory close corporation status.

180.1817 History History: 1989 a. 303.

180.1819 180.1819 Payment for shares.

180.1819(1) (1) A compromise or forgiveness of a note or other obligation to transfer money or other property to a statutory close corporation in payment for shares is valid only if approved by all of the shareholders of the corporation, unless the articles of incorporation or a final judgment in a proceeding brought to enforce the obligation provides otherwise.

180.1819(2) (2) In the absence of fraud, the judgment of the persons responsible for the issuance of shares as to the value of the consideration received for shares is conclusive.

180.1819 History History: 1989 a. 303.

180.1821 180.1821 Election not to have a board of directors.

180.1821(1) (1) A statutory close corporation may operate without a board of directors if the articles of incorporation contain a statement to that effect. All of the following apply while a statement under this subsection is effective:

180.1821(1)(a) (a) All corporate powers shall be exercised by, or under authority of, and the business and affairs of the corporation shall be managed under the direction of, the shareholders of the corporation, and all powers and duties conferred or imposed upon the board of directors by this chapter shall be exercised or performed by the shareholders.

180.1821(1)(b) (b) Liability that would otherwise be imposed on the directors may not be imposed on a shareholder by virtue of any act or failure to act unless the shareholder was entitled to vote on the action.

180.1821(1)(c) (c) A requirement that an instrument filed with a governmental agency contain a statement that a specified action has been taken by the board of directors is satisfied by a statement that the corporation is a statutory close corporation without a board of directors and that the action was duly approved by the shareholders.

180.1821(1)(d) (d) The shareholders may appoint, by resolution, one or more shareholders to sign documents as “Designated Directors”.

180.1821(1)(e) (e) Except as provided in the articles of incorporation:

180.1821(1)(e)1. 1. An action requiring director approval or both director and shareholder approval is authorized if approved by the shareholders.

180.1821(1)(e)2. 2. An action requiring a vote of a majority or greater percentage of the board of directors is authorized if approved by the majority or greater percentage of the votes of shareholders entitled to vote on the action.

180.1821(2) (2) 

180.1821(2)(a) (a) An amendment to the articles of incorporation to operate without a board of directors must be approved by the holders of all of the shares of the statutory close corporation whether or not otherwise entitled to vote on amendments, or, if no shares have been issued, by all of the subscribers for shares, if any, or if none, by all of the incorporators.

180.1821(2)(b) (b) An amendment to the articles of incorporation to delete the election must be approved by the holders of at least two-thirds of the votes of each class or series of shares of the corporation, voting as separate voting groups, whether or not the holders are otherwise entitled to vote on amendments.

180.1821 History History: 1989 a. 303.

180.1823 180.1823 Agreements among shareholders.

180.1823(1) (1) The shareholders of a statutory close corporation may, by unanimous action, enter into one or more written agreements to regulate the exercise of the corporate powers and the management of the business and affairs of the corporation or the relations among the shareholders of the corporation. Except as otherwise provided in an agreement authorized by this section, the terms of the agreement are binding on all successors in interest.

180.1823(2) (2) An agreement authorized by this section is valid and enforceable according to its terms even if the agreement does any of the following:

180.1823(2)(a) (a) Eliminates the board of directors, if sub. (4) is satisfied.

180.1823(2)(b) (b) Restricts the discretion or powers of the board of directors or authorizes director proxies or weighted voting rights.

180.1823(2)(c) (c) Has the effect of treating the statutory close corporation as a partnership.

180.1823(2)(d) (d) Creates a relationship among the shareholders or between the shareholders and the corporation that would otherwise be appropriate only among partners.

180.1823(3) (3) If the statutory close corporation has a board of directors, an agreement authorized by this section that restricts the discretion or powers of the directors relieves the directors of, and imposes upon each person in whom the directors’ discretion or powers are vested, the liability for acts or omissions imposed by law upon directors, unless the agreement provides otherwise.

180.1823(4) (4) An election not to have a board of directors in an agreement authorized by this section is not valid unless the articles of incorporation contain a statement to that effect adopted under s. 180.1821.

180.1823(5) (5) A shareholder agreement authorized by this section may not be amended except by the unanimous written consent of the shareholders, unless otherwise provided in the agreement.

180.1823(6) (6) Any action permitted by this section to be taken by shareholders may be taken by the subscribers for shares of the statutory close corporation if no shares have been issued at the time of the agreement authorized by this section.

180.1823(7) (7) This section does not prohibit any other agreement among 2 or more shareholders.

180.1823 History History: 1989 a. 303.

180.1824 180.1824 Irrevocable proxies.

180.1824(1) (1) A shareholder in a statutory close corporation may execute a proxy which is irrevocable for the period specified in the proxy when it is held by any of the following or a nominee of any of the following:

180.1824(1)(a) (a) A pledgee of shares.

180.1824(1)(b) (b) A person who has purchased or agreed to purchase or holds an option to purchase the shares or a person who has sold a portion of the person’s shares in the corporation to the maker of the proxy.

180.1824(1)(c) (c) A creditor of the corporation or the shareholder who extended or continued credit to the corporation or the shareholder in consideration of the proxy if the proxy states that it was given in consideration of the extension or continuation of credit and the name of the person extending or continuing credit.

180.1824(1)(d) (d) A person who has contracted to perform services as an employee of the corporation, if a proxy is required by the contract of employment and if the proxy states that it was given in consideration of such contract of employment, the name of the employee and the period of employment contracted for.

180.1824(1)(e) (e) A person, including an arbitrator, designated by or under a shareholders’ agreement authorized by s. 180.1823.

180.1824(2) (2) Regardless of the period of irrevocability specified in a proxy executed under sub. (1), the proxy becomes revocable when the pledge is redeemed, the option or agreement to purchase is terminated or the seller no longer owns any shares of the corporation or dies, the debt of the corporation or the shareholder is paid, the period of employment provided for in the contract of employment has terminated or the shareholders’ agreement has terminated.

180.1824(3) (3) In addition to sub. (1), a proxy given to secure the performance of a duty or to protect a title, either legal or equitable, may be irrevocable until the happening of events which, under the terms of the proxy agreement, discharge the obligations secured by it.

180.1824(4) (4) A proxy may be revoked, regardless of a provision making it irrevocable, by a purchaser of shares without actual knowledge of the existence of the provision, unless the existence of the proxy and its irrevocability appears on the certificate representing the shares.

180.1824 History History: 1989 a. 303.

180.1825 180.1825 Bylaws. A statutory close corporation need not adopt bylaws if provisions required by law to be contained in corporate bylaws are contained in the articles of incorporation or in an agreement authorized under s. 180.1823.

180.1825 History History: 1989 a. 303.

180.1827 180.1827 Annual meeting.

180.1827(1) (1) Notwithstanding s. 180.0701 (1), the annual meeting date for a statutory close corporation is the first business day after May 31, unless the corporation’s articles of incorporation or bylaws or an agreement authorized under s. 180.1823 fixes a different date.

180.1827(2) (2) Notwithstanding s. 180.0701 (1), except as otherwise provided in the articles of incorporation, a statutory close corporation need not hold an annual meeting unless a written request is delivered to the corporation by a shareholder at least 30 days before the meeting date determined under sub. (1).

180.1827 History History: 1989 a. 303.

180.1829 180.1829 Shareholder sale option at death.

180.1829(1) (1) Opt-in or modify.

180.1829(1)(a) (a) This section applies to a statutory close corporation only if so provided in the articles of incorporation. A modification of this section by the corporation is valid if it is stated in the articles of incorporation.

180.1829(1)(b) (b) An amendment to the articles of incorporation to provide that this section applies or to delete or modify the provisions of this section must be approved by the holders of at least two-thirds of the votes of each class or series of shares of the corporation, voting as separate voting groups, whether or not the holders are otherwise entitled to vote on amendments. If the corporation has no shareholders when the amendment is proposed, it must be approved by at least two-thirds of all of the subscribers for shares, if any, or, if none, by all of the incorporators.

180.1829(1)(c) (c) A shareholder who did not vote in favor of an amendment to delete or modify the provisions of this section is entitled to assert dissenters’ rights under ss. 180.1301 to 180.1331, if the amendment terminates or substantially alters the existing rights of the shareholder under this section to have his or her shares purchased.

180.1829(2) (2) Purchase shares or dissolve. If the articles of incorporation of a statutory close corporation make this section applicable to the corporation in whole or modified form, a deceased shareholder’s personal representative may, subject to the shareholder’s will, require the corporation to elect one of the following:

180.1829(2)(a) (a) To purchase or cause the purchase of, under subs. (3) and (4), all, but not less than all, of the decedent’s shares.

180.1829(2)(b) (b) Dissolution of the corporation.

180.1829(3) (3) Exercise of compulsory purchase.

180.1829(3)(a) (a) A person exercising rights under this section shall, within 6 months after the death of the beneficial owner of shares, deliver a written notice to the statutory close corporation. The notice shall comply with s. 180.0141, shall specify the number and class or series of all shares beneficially owned by the deceased shareholder and shall state that an offer by the corporation to purchase the shares is being solicited under this section.

180.1829(3)(b) (b) Within 20 days after receipt of the notice, the corporation shall call a special meeting of shareholders, which shall be held within 60 days after receipt of the notice, for the purpose of determining whether to offer to purchase the shares. A purchase offer must be approved by the holders of a majority of the votes entitled to be cast at the meeting, excluding votes in respect of the shares covered by the notice.

180.1829(3)(c) (c) With the consent of all of the shareholders entitled to vote for approval of the purchase offer, the corporation may allocate some or all of the shares to one or more shareholders or to other persons, except as provided in par. (d).

180.1829(3)(d) (d)

180.1829(3)(d)1. 1. If all shares are not accepted for purchase by the corporation, the remaining shares shall be offered to shareholders of the class or series being offered for sale in proportion to their ownership of shares of that class or series.

180.1829(3)(d)2. 2. If all shares are not accepted for purchase by shareholders under subd. 1., the remaining shares shall be allocated among shareholders of the class or series being offered for sale who are willing to purchase the shares in proportion to their ownership of shares of that class or series after the acquisitions under subd. 1.

180.1829(3)(d)3. 3. If all shares are not accepted for purchase by shareholders under subds. 1. and 2., the remaining shares shall be offered to all other shareholders in proportion to their ownership of shares of the corporation.

180.1829(3)(d)4. 4. If all shares are not accepted for purchase by shareholders under subd. 3., the remaining shares shall be allocated among shareholders who are willing to purchase the shares in proportion to their ownership of shares of the corporation before the acquisitions under subd. 3.

180.1829(3)(e) (e) The corporation must deliver written notice of an offer to purchase approved by the shareholders or written notice that no offer to purchase was approved, to the person exercising rights under this section, within 75 days after receipt of the notice under par. (a) soliciting the offer to purchase. The notice must comply with s. 180.0141. An offer to purchase must be accompanied by copies of the corporation’s balance sheets as of the end of, and profit and loss statements for, its preceding 2 accounting years and any available interim balance sheet and profit and loss statement.

180.1829(3)(f) (f)

180.1829(3)(f)1. 1. To the extent that the price and other terms for purchasing shares of a transferring shareholder by the corporation or remaining shareholders are fixed or are to be determined under provisions in the articles of incorporation or bylaws of the corporation, or by written agreement, those provisions are binding, except as provided in subd. 2.

180.1829(3)(f)2. 2. In the event of a default in any payment due, sub. (4) (e) applies, and the person exercising rights under this section may petition for dissolution of the corporation.

180.1829(3)(g) (g) A person exercising rights under this section must accept or reject an offer to purchase in writing within 15 days after the offer.

180.1829(4) (4) Action to compel.

180.1829(4)(a) (a) If an offer to purchase is rejected, or if no offer to purchase is made, the person exercising rights under this section may commence an action in the circuit court for the county where the corporation’s principal office or, if none in this state, its registered office is located to compel purchase or dissolution. The statutory close corporation shall be made a party defendant and shall, at its expense, give notice of the commencement of the action to all of its shareholders and other persons as the court may direct.

180.1829(4)(b) (b) The court shall, under s. 180.1833 (3), determine the fair value of the shares of the person exercising rights under this section and enter an order requiring the corporation to cause the purchase of the shares at fair value and on other terms determined by the court or to give the person the right to have the corporation dissolved.

180.1829(4)(c) (c) Upon the petition of the corporation, the court may modify its decree to change the terms of payment if it finds that the changed financial or legal ability of the corporation or other purchasers of the shares to complete the purchase justifies a modification.

180.1829(4)(d) (d) A person making a payment to prevent or cure a default by the corporation or other purchaser is entitled to recover the excess payment from the defaulting person.

180.1829(4)(e) (e) If the corporation or other purchaser fails to make a payment specified in the court order within 30 days after it is due, the court shall, upon the petition of the person to whom the payment is due and in the absence of good cause shown by the corporation, enter an order dissolving the corporation.

180.1829(5) (5) Court costs and other expenses.

180.1829(5)(a) (a) The court may assess all or a portion of the costs and expenses of an action commenced under sub. (4) as follows:

180.1829(5)(a)1. 1. Against the person exercising rights under this section if the fair value of the shares as determined by the court does not materially exceed the last offer made by the statutory close corporation before the person commenced the action under sub. (4) and the court finds that the failure of the person to accept the corporation’s last offer was arbitrary, vexatious or not otherwise in good faith.

180.1829(5)(a)2. 2. Against the corporation if the fair value of the shares as determined by the court materially exceeds the amount of the last offer made by the corporation before an action was commenced under sub. (4) and the court finds that the corporation’s last offer was arbitrary, vexatious or otherwise not made in good faith.

180.1829(5)(b) (b) Expenses assessable under par. (a) include reasonable compensation for, and reasonable expenses of, appraisers appointed by the court and the reasonable fees and expenses of counsel for, and experts employed by, any party.