law18346

Chapter 346

2018 -- H 8171
Enacted 07/10/2018

A N A C T

RELATING TO STATUTES AND STATUTORY CONSTRUCTION -- 2018

Introduced By: Representatives Shekarchi, and Morgan

Date Introduced: May 04, 2018

It is enacted by the General Assembly as follows:

ARTICLE I--STATUTORY REENACTMENT

SECTION 1. It is the express intention of the General Assembly to reenact the entirety of

title 7 contained in volume 2 part 2 of the General Laws of R.I., including every chapter and

section therein, and any chapters and sections of title 7 not included in this act may be, and are

hereby, reenacted as if fully set forth herein.

SECTION 2. Sections 7-1.2-704, 7-1.2-711 and 7-1.2-1405 of the General Laws in

Chapter 7-1.2 entitled "Rhode Island Business Corporation Act" are hereby amended to read as

follows:

7-1.2-704. Voting list.

(a) After fixing a record date for a meeting, a corporation shall prepare a list of the names

of all its shareholders who are entitled to notice of a shareholders' meeting.

(b) The shareholders' list must be available for inspection by any shareholder, at least ten

(10) days before the meeting is given for which the list was prepared and continuing through the

meeting, at the corporation's registered office or principal place of business. A shareholder, his or

her agent or attorney is entitled on written demand to inspect the list during regular business

hours during the period it is available for inspection.

attendance, whether in person or by remote communication, and any shareholder, his agent, or

attorney is entitled to inspect the list at any time during the meeting or any adjournment.

(d) The persons who appear from the list to be shareholders entitled to vote at the meeting

may vote at the meeting.

(e) If the right to vote at any meeting is challenged, the person presiding at the meeting,

shall rely on the list to determine the right of the challenged person to vote.

7-1.2-711. Actions by shareholders.

(a) Subchapter Definitions. In this subchapter section:

(1) "Derivative proceeding" means a civil suit in the right of a domestic corporation or, to

the extent provided in subsection (h) of this section, in the right of a foreign corporation.

(2) "Shareholder" includes a beneficial owner whose shares are held in a voting trust or

held by a nominee on the beneficial owner's behalf.

(b) Standing. A shareholder may not commence or maintain a derivative proceeding

unless the shareholder:

(i) Was a shareholder of the corporation at the time of the act or omission complained of

or became a shareholder through transfer by operation of law from one who was a shareholder at

that time; and

(ii) Fairly and adequately represents the interests of the corporation in enforcing the right

of the corporation.

(1) A written demand had been made upon the corporation to take suitable action; and

(2) Ninety (90) days have expired from the date the demand was made unless the

shareholder has earlier been notified that the demand has been rejected by the corporation or

unless irreparable injury to the corporation would result by waiting for the expiration of the

ninety (90) day period.

(d) Stay of proceedings. If the corporation commences an inquiry into the allegations

made in the demand or complaint, the court may stay any derivative proceeding for such period

as the court deems appropriate.

(e) Dismissal.

(1) On motion by the corporation, the court shall dismiss a derivative proceeding if one of

the groups specified in paragraphs (ii) or (vi) subsection (e)(2) or (e)(6) has determined in good

faith after conducting a reasonable inquiry upon which its conclusions are based that the

maintenance of the derivate proceedings is not in the best interests of the corporation.

(2) Unless a panel is appointed pursuant to paragraph (vi) subsection (e)(6), the

determination in paragraph (i) subsection (e)(1) must be made by:

(i) A majority vote of independent directors present at a meeting of the board of directors

if the independent directors constitute a quorum; or

(ii) A majority vote of a committee consisting of two (2) or more independent directors

appointed by majority vote of independent directors present at a meeting of the board of directors,

whether or not such independent directors constituted a quorum.

(3) None of the following by itself causes a director to be considered not independent for

purposes of this section:

(i) The nomination or election of the directors or persons who are defendants in the

derivative proceedings or against whom action is demanded;

(ii) The naming of the director as a defendant in the derivative proceeding or as a person

against whom action is demanded; or

(iii) The approval by the director of the act being challenged in the derivative proceeding

or demand if the act resulted in no personal benefit to the director.

(4) If a derivative proceeding is commenced after a determination has been made

rejecting a demand by a shareholder, the complaint must allege with particularity facts

establishing either (A) that a majority of the board of directors did not consist of independent

directors at the time the determination was made, or (B) that the requirements of subsection (a)

(e)(1) of this section have not been met.

(5) If a majority of the board of directors does not consist of independent directors at the

time the determination is made, the corporation has the burden of proving that the requirements of

paragraph (i) subsection (e)(1) have been met. If a majority of the board of directors consists of

independent directors at the time the determination is made, the plaintiff has the burden of

proving that the requirements of paragraph (i) subsection (e)(1) have not been met.

(6) The court may appoint a panel of one or more independent persons upon motion by

the corporation to make a determination whether the maintenance of the derivative proceeding is

in the best interests of the corporation. In such case, the plaintiff has the burden of proving that

the requirements of paragraph (i) subsection (e)(1) have not been met.

(f) Discontinuance or settlement. A derivative proceeding may not be discontinued or

settled without the court's approval. If the court determines that a proposed discontinuance or

settlement will substantially affect the interests of the corporation's shareholders or a class of

shareholders, the court shall direct that notice be given to the shareholders affected.

(g) Payment of expenses. On termination of the derivative proceeding the court may:

(1) Order the corporation to pay the plaintiff's reasonable expenses (including counsel

fees) incurred in the proceeding if it finds that the proceeding has resulted in a substantial benefit

to the corporation;

(2) Order the plaintiff to pay any defendant's reasonable expenses (including counsel

fees) incurred in defending the proceeding if it finds that the proceeding was commenced or

maintained without reasonable cause or for an improper purpose; or

(3) Order a party to pay an opposing party's reasonable expenses (including counsel fees)

incurred because of the filing of a pleading, motion or other paper, if it finds that the pleading,

motion or other paper was not well grounded in fact, after reasonable inquiry, or warranted by

existing law or a good faith argument for the extension, modification or reversal of existing law

and was interposed for an improper purpose, such as to harass or cause unnecessary delay or

needless increase in the cost of litigation.

(h) Applicability to foreign corporations. In any derivative proceeding in the right of a

foreign corporation, the matters covered by this subchapter are governed by the laws of the

jurisdiction of incorporation of the foreign corporation except for subsections (d), (f), and (g) of

this section.

7-1.2-1405. Application for certificate of authority.

In order to procure a certificate of authority to transact business in this state, a foreign

corporation must make application for the certificate of authority to the secretary of state, which

application includes:

(a) The name of the corporation and the state or country under the laws of which it is

incorporated.

(b) The name which the corporation elects to use in this state in accordance with § 7-1.2-

1403.

(d) The street address of the principal office of the corporation.

(e) The name and address of its proposed registered agent in this state.

(f) The purpose or purposes of the corporation which it proposes to pursue in the

transaction of business in this state.

(g) The names and respective addresses of the directors of the corporation if the state or

country under the laws of which it was incorporated requires that it have directors and if it does

and need not, then the names and respective addresses of its principal officers.

(h) A statement of the aggregate number of shares which the corporation has authority to

issue, itemized by classes, par value of shares, shares without par value, and series, if any, within

a class.

(i) An estimate, expressed as a percentage, of the proportion that the estimated value of

the property of the corporation to be located within this state during the following year bears to

the value of all property of the corporation to be owned during the following year, wherever

located, and an estimate, expressed as a percentage, of the proportion that the gross amount of

business to be transacted by the corporation at or from places of business in this state during the

following year bears to the gross amount which will be transacted by the corporation during the

following year.

SECTION 3. Section 7-5.1-2 of the General Laws in Chapter 7-5.1 entitled "Professional

Service Corporations" is hereby amended to read as follows:

7-5.1-2. Definitions.

As used in this chapter:

(1) "Professional services" means the rendering of personal services by a person

authorized to practice as one of the following professions as defined:

(i) Physicians;

(ii) Dentists;

(iii) Attorneys at law;

(iv) [Deleted by P.L. 2000, ch. 328, § 1, and by P.L. 2000, ch. 513, § 1.]

(v) Professional engineers;

(vi) Architects;

(vii) Certified public accountants and licensed public accountants;

(viii) Veterinarians;

(ix) Chiropractors;

(x) Podiatrists;

(xi) Registered nurses;

(xii) Optometrists;

(xiii) Physical therapists;

(xiv) Landscape architects;

(xv) Land surveyors;

(xvi) Opticians;

(xvii) Physician assistants;

(xviii) Psychologists; or

(xix) Midwives or nurse-midwives.

(2) "Regulatory agency" means:

(i) The professional licensing board contained within the department of health, as set

forth in title 5 of the general laws when referring to physicians, dentists, chiropractors,

podiatrists, registered nurses, optometrists, physical therapists, opticians, physician assistants, or

midwives or nurse-midwives;

(ii) The Supreme Court when referring to attorneys at law;

(iii) The board boards of registration of professional engineers and land surveyors when

referring to professional engineers and/or land surveyors;

(iv) The board of examination and registration of architects when referring to architects;

(v) The board of accountancy when referring to certified public accountants, and licensed

public accountants;

(vi) The board of veterinarians when referring to veterinarians;

(vii) The board of examiners of landscape architects when referring to landscape

architects;

(viii) The board of psychology when referring to psychologists.

(3) "Authorized to practice" means duly licensed, certified, or registered by the proper

regulatory agency.

SECTION 4. Sections 7-5.2-3 and 7-5.2-5 of the General Laws in Chapter 7-5.2 entitled

"Business Combination Act" are hereby amended to read as follows:

7-5.2-3. Definitions.

As used in this section chapter, unless the context requires otherwise, the term:

(1) "Affiliate" means a person that who directly, or indirectly through one or more

intermediaries, controls, or is controlled by, or is under common control with, a specified person.

(2) "Announcement date", when used in reference to any business combination, means

the date of the first public announcement of the final, definitive proposal for the business

combination.

(3) "Associate", when used to indicate a relationship with any person, means:

(i) Any corporation or organization of which the person is a director, officer, or partner or

is, directly or indirectly, the beneficial owner of ten percent (10%) or more of any class of voting

stock,

(ii) Any trust or other estate in which the person has a substantial beneficial interest or as

to which the person serves as trustee or in a similar fiduciary capacity, and

(iii) Any relative or spouse of the person, or any relative of the spouse, who has the same

residence as the person.

(4) "Beneficial owner", when used with respect to any stock means a person that who:

(i) Individually, or with or through any of its the person's affiliates or associates,

beneficially owns the stock, directly or indirectly; or

(ii) Individually, or with or through any of its the person's affiliates or associates, has:

(A) The right to acquire the stock, whether the right is exercisable immediately or only

after the passage of time, pursuant to any agreement, arrangement, or understanding, whether or

not in writing, or upon the exercise of conversion rights, exchange rights, warrants, or options, or

otherwise; provided, however, that a person is not deemed the beneficial owner of stock tendered

pursuant to a tender or exchange offer made by the person's affiliates or associates until the

tendered stock is accepted for purchase or exchange; or

(B) The right to vote the stock pursuant to any agreement, arrangement, or understanding,

whether or not in writing; provided, however, that a person is not deemed the beneficial owner of

any stock under this item if the agreement, arrangement, or understanding to vote the stock arises

solely from a revocable proxy or consent given in response to a proxy or consent solicitation

made in accordance with the applicable rules and regulations under the Exchange Act, 15 U.S.C.

§ 78a et seq., and is not then reportable on a Schedule 13D under the Exchange Act, or any

comparable or successor report; or

purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as

described in item (B) of clause (ii) of this subparagraph) (4)(ii)(B) of this section, or disposing

of the stock with any other person that who beneficially owns, or whose affiliate or associates

beneficially own, directly or indirectly, the stock.

(5) "Business combination", when used in reference to any resident domestic corporation

and any interested shareholder of the resident domestic corporation, means:

(i) Any merger or consolidation of the resident domestic corporation or any subsidiary of

the resident domestic corporation with:

(A) The interested shareholder, ; or

(B) Any other corporation, whether or not itself an interested shareholder of the resident

domestic corporation, which that is, or after the merger or consolidation would be, an affiliate or

associate of the interested shareholder;

(ii) Any sale, lease, exchange, mortgage, pledge, transfer, or other disposition, in one

transaction or a series of transactions, except proportionately as a stockholder of the corporation,

to or with the interested shareholder or any affiliate or associate of the interested shareholder,

whether as a part of a dissolution or otherwise, of assets of the resident domestic corporation or

any subsidiary of the resident domestic corporation:

(A) Having an aggregate market value equal to ten percent (10%) 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 ten percent (10%) or more of the

aggregate market value of all the outstanding stock of the resident domestic corporation, or

determined on a consolidated basis, of the resident domestic corporation;

(iii) (A) Any transaction which that results in the issuance or transfer by the resident

domestic corporation or by any subsidiary of the resident domestic corporation of any stock of the

resident domestic corporation or of the subsidiary to the interested shareholder, except:

(I) Pursuant to the exercise, exchange, or conversion of securities exercisable for,

exchangeable for, or convertible into stock of the resident domestic corporation or any subsidiary

which securities were outstanding prior to the time that the interested shareholder became such,

(II) Pursuant to a dividend or distribution paid or made, or the exercise, exchange, or

conversion of securities exercisable for, exchangeable for, or convertible into stock of the resident

domestic corporation or any subsidiary which security is distributed, pro rata to all holders of a

class or series of stock of the resident domestic corporation subsequent to the time the interested

shareholder became such,

(III) Pursuant to an exchange offer by the resident domestic corporation to purchase stock

made on the same terms to all holders of the stock, or

(IV) Any issuance or transfer of stock by the resident domestic corporation;

(B) Provided, however, that in no case under subdivisions (5)(iii)(A)(I) -- (IV) shall there

be an increase in the interested shareholder's proportionate share of the stock of any class or

series of the resident domestic corporation or of the voting stock of the resident domestic

corporation;

(iv) The adoption of any plan or proposal for the liquidation or dissolution of the resident

domestic corporation proposed by, or pursuant to any agreement, arrangement, or understanding,

whether or not in writing with the interested shareholder or any affiliate or associate of the

interested shareholder;

(v) Any reclassification of securities, including, without limitation, any stock split, stock

dividend, or other distribution of stock in respect to stock, any reverse stock split, or

recapitalization of the resident domestic corporation, any merger or consolidation of the resident

domestic corporation with any subsidiary of the resident domestic corporation, or any other

transaction, whether or not with or into or otherwise involving the interested shareholder,

proposed by, or pursuant to any agreement, arrangement, or understanding, whether or not in

writing, with the interested shareholder or any affiliate or associate of the interested shareholder,

which has the effect, directly or indirectly, of increasing the proportionate share of the

outstanding shares of any class or series of voting stock or securities convertible into voting stock

of the resident domestic corporation or any subsidiary of the resident domestic corporation which

is directly or indirectly owned by the interested shareholder or any affiliate or associate of the

interested shareholder, except as a result of immaterial changes due to fractional share

adjustments; or

(vi) Any receipt by the interested shareholder, or any affiliate or associate of the

interested shareholder of the benefit, directly or indirectly, except proportionately as a

shareholder of the resident domestic corporation, of any loans, advances, guarantees, pledges, or

other financial assistance, benefits, any tax credits, or other tax advantages provided by or

through the resident domestic corporation, except as expressly permitted in subdivisions (5)(i)

through (5)(vi).

(6) "Common stock" means any stock other than preferred stock.

(7) "Consummation date", with respect to any business combination, means the date of

consummation of the business combination, or, in the case of a business combination as to which

a shareholder vote is taken, the later of the business day prior to the vote or twenty (20) days prior

to the date of consummation of the business combination.

(8) "Control", including the terms "controlling", "controlled by", and "under common

control with", means the possession, directly or indirectly, or the power to direct or cause the

direction of the management and policies of a person, whether through the ownership of voting

stock, by contract, or otherwise. A person's beneficial ownership of ten percent (10%) or more of

a corporation's outstanding voting stock creates a presumption that the person has control of the

corporation. Notwithstanding what was previously stated, above, a person is not deemed to have

control of a corporation if the person holds voting stock, in good faith and not for the purpose of

circumventing this section 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.

(9) "Exchange Act" means the Act of Congress known as the Securities Exchange Act of

1934, 15 U.S.C. § 78a et seq., as it has been, and may subsequently be, amended.

(10) "Interested shareholder", 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 or any employee benefit plan maintained by the resident

domestic corporation, that:

(i) (A) Is the beneficial owner, directly or indirectly, of ten percent (10%) or more of the

outstanding voting stock of the resident domestic corporation; or

(B) Is an affiliate or associate of the resident domestic corporation and at any time within

a five (5) year period immediately prior to the date in question was the beneficial owner, directly

or indirectly, of ten percent (10%) or more of the then outstanding voting stock of the resident

domestic corporation.

(ii) The term "interested shareholder" does not include:

(A) Any person who:

(I) Owned shares in excess of the ten percent (10%) limitation stated in these provisions

as of, or acquired the shares pursuant to a tender offer commenced prior to, July 3, 1990 or

pursuant to an exchange offer announced prior to that date and commenced within ninety (90)

days subsequently and continued to own shares in excess of the percent limitation or would have

but for action taken by the resident domestic corporation, or

(II) Acquired the shares from a person described in (I) subsection 10(ii)(A)(I) by gift,

inheritance, or in a transaction in which no consideration was exchanged; or

(B) Any person whose ownership of shares in excess of the ten percent (10%) limitation

stated above is the result of action taken solely by the resident domestic corporation However, the

person becomes an interested shareholder if he or she subsequently acquires additional shares of

voting stock of the resident domestic corporation, except as a result of further corporate action not

caused, directly or indirectly, by the person.

(iii) For the purpose of determining whether a person is an interested shareholder, the

number of shares of voting stock of the resident domestic corporation deemed outstanding

includes shares deemed beneficially owned by the person through application of subdivision

subsection (4) of this section but does not include any other unissued shares of voting stock of

the resident domestic corporation which that are issuable pursuant to any agreement,

arrangement or understanding, or upon exercise of conversion rights, warrants, or options, or

otherwise.

(11) "Market value", when used in reference to stock or property of any resident domestic

corporation, means:

(i) In the case of stock, the highest closing sale price during the thirty-(30) day(30) period

immediately preceding the date in question of a share of stock on the composite tape for stocks

listed on the New York stock exchange Stock Exchange, or, if the stock is not quoted on the

composite tape or if the stock is not listed on the exchange, on the principal United States

securities exchange registered under the exchange act on which the stock is listed, or, if the stock

is not listed on any exchange, the highest closing bid quotation with respect to a share of the stock

during the thirty- (30) day (30) period preceding the date in question on the national association

of securities dealers, inc. automated quotations system or any system then in use, or if no

quotations are available, the fair market value on the date in question of a share of the stock as

determined in good faith by the board of directors of the resident domestic corporation; and

(ii) In the case of property other than cash or stock, the fair market value of the property

on the date in question as determined in good faith by the board of directors of the resident

domestic corporation.

(12) "Preferred stock" means any class or series of stock of a resident domestic

corporation that under which the bylaws or articles of incorporation of the resident domestic

corporation is entitled to receive payment of dividends prior to any payment of dividends on

some other class or series of stock, or is entitled in the event of any voluntary liquidation,

dissolution, or winding up of the resident domestic corporation to receive payment or distribution

of a preferential amount before any payments or distributions are received by some other class or

series of stock.

(13) "Resident domestic corporation" means an issuer of voting stock which that:

(i) Is organized under the laws of this state; and

(ii) Either (A) has its principal executive offices and significant business operations

located in this state; or (B) has, alone or in combination with one or more of its subsidiaries, at

least two hundred fifty (250) employees or twenty-five percent (25%) of the total number of all

employees of itself and the subsidiaries employed primarily within the state; and

(iii) Has at least five percent (5%) of its voting stock owned beneficially by residents of

this state or at least five percent (5%) of its shareholders are residents of this state. For purposes

of this section, the residence of a partnership, unincorporated association, trust, or similar

organization is the principal office of the organization.

(D) (iv) No resident domestic corporation, which that is organized under the laws of this

state, ceases to be a resident domestic corporation by reason of events occurring or actions taken

while the resident domestic corporation is subject to the provisions of this section.

(14) "Stock" means:

(i) Any stock or similar security, any certificate of interest, any participation in any profit

sharing agreement, any voting trust certificate, or any certificate of deposit for stock; and

(ii) Any security convertible, with or without consideration, into stock, or any warrant,

call, or other option or privilege of buying stock without being bound to do so, or any other

security carrying any right to acquire, subscribe to, or purchase stock.

(15) "Stock acquisition date", with respect to any person and any resident domestic

corporation, means the date that the person first becomes an interested shareholder of the resident

domestic corporation.

(16) "Subsidiary" of any person means any other corporation of which a majority of the

voting stock is owned, directly or indirectly, by the person.

(17) "Voting stock" means shares of capital stock of a corporation entitled to vote

generally in the election of directors.

7-5.2-5. Exemptions.

The provisions of this chapter do not apply:

(1) To any business combination of a resident domestic corporation that does not have a

class of voting stock registered with the securities and exchange commission pursuant to § 12 of

the Exchange Act, 15 U.S.C. § 781 78l, unless the articles of incorporation provide otherwise;

(2) To any business combination of a resident domestic corporation whose articles of

incorporation have been amended to provide that the resident domestic corporation is subject to

the provisions of this chapter, which did not have a class of voting stock registered with the

securities and exchange commission pursuant to § 12 of the Exchange Act, 15 U.S.C. § 781 78l,

on the effective date of the amendment, and which is a business combination with an interested

shareholder whose stock acquisition date is prior to the effective date of the amendment;

(3) To any business combination of a resident domestic corporation:

(i) The original articles of incorporation of which contain a provision expressly electing

not to be governed by this chapter,

(ii) Which That adopts an amendment to the resident domestic corporation's bylaws

prior to March 31, 1991, expressly electing not to be governed by this chapter, or

(iii) Which That adopts an amendment to the resident domestic corporation's articles of

incorporation, approved by the affirmative vote of the holders, other than interested shareholders

and their affiliates and associates, of two-thirds (2/3) of the outstanding voting stock of the

resident domestic corporations, excluding the voting stock of interested shareholders and their

affiliates and associates, expressly electing not to be governed by this chapter, provided that the

amendment to the articles of incorporation is not effective until twelve (12) months after the vote

of the resident domestic corporation's shareholders and does not apply to any business

combination of the resident domestic corporation with an interested shareholder whose stock

acquisition date is on or prior to the effective date of the amendment; or

(4) To any business combination of a resident domestic corporation with an interested

shareholder of the resident domestic corporation which became an interested shareholder

inadvertently, if the interested shareholder:

(i) As soon as practicable, divests itself of a sufficient amount of the voting stock of the

resident domestic corporation that it no longer is the beneficial owner, directly or indirectly, of

ten percent (10%) or more of the outstanding voting stock of the resident domestic corporation,

and

(ii) Would not at any time within the five- (5) year (5) period preceding the

announcement date with respect to the business combination have been an interested shareholder

but for the inadvertent acquisition.

SECTION 5. Sections 7-5.3-1 and 7-5.3-2 of the General Laws in Chapter 7-5.3 entitled

"Benefit Corporations" are hereby amended to read as follows:

7-5.3-1. Application and effect of chapter.

(a) This chapter shall be applicable to all benefit corporations.

(b) The existence of a provision of this chapter shall not of itself create an implication

that a contrary or different rule of law is applicable to a corporation that is not a benefit

corporation. This chapter shall not affect a statute or rule of law that is applicable to a corporation

that is not a benefit corporation.

law, including the Rhode Island Business Corporation Act, chapter 1.2 of this title, applicable to

domestic business corporations are applicable to corporations organized under this chapter. A

benefit corporation may be subject simultaneously to this chapter and chapters chapter 5.1 of

this title. The provisions of this chapter shall control over the provisions of any other chapter to of

this title to which a benefit corporation is subject.

(d) A provision of the articles of incorporation or bylaws of a benefit corporation may not

limit, be inconsistent with, or supersede a provision of this chapter.

7-5.3-2. Definitions.

As used in this chapter:

(1) "Benefit corporation" means a corporation for profit with purposes set forth in § 7-

5.3-6 that is subject to this chapter.

(2) "Benefit director" means either:

(i) The director designated as the benefit director of a benefit corporation under § 7-5.3-8;

(ii) A person with one or more of the powers, duties, or rights of a benefit director to the

extent provided in the bylaws articles of incorporation under subsection 7-5.3-8(f).

(3) "Benefit enforcement proceeding" means any claim or action or proceeding for:

(i) Failure of a benefit corporation to pursue or create general public benefit or a specific

public benefit purpose set forth in its articles; or

(ii) Violation of any obligation, duty, or standard of conduct under this chapter.

(4) "Benefit officer" means the individual, if any, designated as the benefit officer of a

benefit corporation under § 7-5.3-10.

(5) "General public benefit" means a material positive impact on society and the

environment, taken as a whole, assessed against a third-party standard, from the business and

operations of a benefit corporation.

(6) "Independent" means having no material relationship with a benefit corporation or a

subsidiary of the benefit corporation. Serving as benefit director or benefit officer does not make

an individual not independent. A material relationship between an individual and a benefit

corporation or any of its subsidiaries will be conclusively presumed to exist if any of the

following apply:

(i) The individual is, or has been within the last three (3) years, an employee other than a

benefit officer of the benefit corporation or a subsidiary.

(ii) An immediate family member of the individual is, or has been within the last three (3)

years, an executive officer other than a benefit officer of the benefit corporation or a subsidiary.

(iii) There is beneficial or record ownership of five percent (5%) or more of the

outstanding shares of the benefit corporation, calculated as if all outstanding rights to acquire

equity interests in the benefit corporation had been exercised, by:

(A) The individual; or

(B) An entity:

(I) Of which the individual is a director, an officer, or a manager; or

(II) In which the individual owns beneficially or of record five percent (5%) or more of

the outstanding equity interests, calculated as if all outstanding rights to acquire equity interests in

the entity had been exercised.

(7) "Minimum status vote" means:

(i) In the case of a corporation, in addition to any other required approval or vote, the

satisfaction of the following conditions:

(A) The shareholders of every class or series shall be entitled to vote as a class on the

corporate action regardless of a limitation stated in the articles of incorporation or bylaws on the

voting rights of any class or series.

(B) The corporate action must be approved by vote of the shareholders of each class or

series entitled to cast at least two-thirds (2/3) of the votes that all shareholders of the class or

series are entitled to cast on the action.

(ii) In the case of a domestic entity other than a corporation, in addition to any other

required approval, vote, or consent, the satisfaction of the following conditions:

(A) The holders of every class or series of equity interest in the entity that are entitled to

receive a distribution of any kind from the entity shall be entitled to vote on or consent to the

action regardless of any otherwise applicable limitation on the voting or consent rights of any

class or series.

(B) The action must be approved by vote or consent of the holders described in

subparagraph subsection (A) (7)(ii)(A) entitled to cast at least two-thirds (2/3) of the votes or

consents that all of those holders are entitled to cast on the action.

(8) "Publicly traded corporation" means a corporation that has shares listed on a national

securities exchange or traded in a market maintained by one or more members of a national

securities association.

(9) "Specific public benefit" includes:

(i) Providing low-income or underserved individuals or communities with beneficial

products or services;

(ii) Promoting economic opportunity for individuals or communities beyond the creation

of jobs in the normal course of business;

(iii) Protecting or restoring the environment;

(iv) Improving human health;

(v) Promoting the arts, sciences, or advancement of knowledge;

(vi) Increasing the flow of capital to entities with a purpose to benefit society or the

environment; and

(vii) Conferring any other particular benefit on society or the environment.

(10) "Subsidiary" means, in relation to a person, an entity in which the person owns

beneficially or of record fifty percent (50%) or more of the outstanding equity interests,

calculated as if all outstanding rights to acquire equity interests in the entity had been exercised.

(11) "Third-party standard" means a recognized standard for defining, reporting, and

assessing corporate social and environmental performance that is:

(i) Comprehensive because it assesses the effect of the business and its operations upon

the interests listed in paragraphs §§ 7-5.3-7(a)(1)(ii), (iii), (iv) and (v).

(ii) Developed by an entity that is not controlled by the benefit corporation.

(iii) Credible because it is developed by an entity that both:

(A) Has access to necessary expertise to assess overall corporate social and

environmental performance; and

(B) Uses a balanced multi-stakeholder approach to develop the standard, including a

reasonable public comment period.

(iv) Transparent because the following information is publicly available:

(A) About the standard:

(I) The criteria considered when measuring the overall social and environmental

performance of a business.

(II) The relative weightings, if any, of those criteria.

(B) About the development and revision of the standard:

(I) The identity of the directors, officers, material owners, and the governing body of the

entity that developed and controls revisions to the standard.

(II) The process by which revisions to the standard and changes to the membership of the

governing body are made.

(III) An accounting of the revenue and sources of financial support for the entity, with

sufficient detail to disclose any relationships that could reasonably be considered to present a

potential conflict of interest.

SECTION 6. Sections 7-6-34, 7-6-41.1, 7-6-42, 7-6-57, 7-6-58, 7-6-60, 7-6-72, 7-6-77

and 7-6-107 of the General Laws in Chapter 7-6 entitled "Rhode Island Nonprofit Corporation

Act" are hereby amended to read as follows:

7-6-34. Articles of incorporation.

(a) The articles of incorporation shall set forth:

(1) The name of the corporation.

(2) The period of duration, which may be perpetual.

(3) The purpose or purposes for which the corporation is organized.

(4) (i) Any provisions, not inconsistent with the law, which that the incorporators elect to

set forth in the articles of incorporation for the regulation of the internal affairs of the corporation,

including a provision eliminating or limiting the personal liability of a director to the corporation

or to its members for monetary damages for breach of the director's duty as a director. However,

the provision does not eliminate or limit the liability of a director:

(A) For any breach of the director's duty or of loyalty to the corporation or its members;

(B) For acts or omissions not in good faith or which that involve intentional misconduct

or a knowing violation of law; or

also including any provision which that under this chapter is required or permitted to be set forth

in the bylaws.

(ii) No provision eliminating or limiting the personal liability of a director will be

effective with respect to causes of action arising prior to the inclusion of the provision in the

articles of incorporation of the corporation.

(5) The address of its initial registered office, and the name of its initial registered agent

at the address.

(6) The number of directors constituting the initial board of directors, and the names and

addresses of the persons who are to serve as the initial directors.

(7) The name and residence or business address of each incorporator.

(b) It is not necessary to set forth in the articles of incorporation any of the corporate

powers enumerated in this chapter.

shall be made only by amendment to the articles of incorporation, a change in the number of

directors made by amendment to the bylaws is controlling. In all other cases, whenever a

provision of the articles of incorporation is inconsistent with a bylaw, the provision of the articles

of incorporation is controlling.

7-6-41.1. Certificate of correction.

(a) Whenever any instrument authorized to be filed with the secretary of state under any

provision of this chapter, has been so filed and is an inaccurate record of the corporate action

therein referred to, or was defectively or erroneously executed, sealed, or acknowledged, the

instrument may be corrected by filing with the secretary of state a certificate of correction, which

must be executed, acknowledged, and filed in accordance with this section.

(b) The corrected instrument must be specifically designated as such in its heading,

specify the inaccuracy or defect to be corrected, and set forth the entire instrument in corrected

form.

vice president, and by its secretary or an assistant secretary and shall set forth:

(1) The name of the corporation.

(2) The inaccuracy or defect to be corrected and set forth the portion of the instrument in

corrected form.

(3) If there are members entitled to vote on the correction:

(i) A statement setting forth the date of the meeting of members at which the correction

was adopted, that a quorum was present at the meeting, and that the correction received at least a

majority of the votes which members present at the meeting or represented by proxy were entitled

to cast; or

(ii) A statement that the correction was adopted by a consent in writing signed by all

members entitled to vote on it.

(4) If there are no members, or no members entitled to vote on the correction, a statement

of the fact, the date of the meeting of the board of directors at which the correction was adopted,

and a statement of the fact that the correction received the vote of a majority of the directors in

office.

(5) Attach the The entire instrument in corrected form attached.

(d) An instrument corrected in accordance with this section is effective as of the date the

original instrument was filed, except as to those individuals who are substantially and adversely

affected by the correction and as to those individuals the instrument as corrected is effective from

its filing date.

7-6-42. Restated articles of incorporation.

(a) A domestic corporation may at any time restate its articles of incorporation as

previously amended by filing with the secretary of state restated articles of incorporation. The

restated articles of incorporation may include one or more amendments to the articles of

incorporation adopted in accordance with the provisions of § 7-6-39. The corporation may restate

articles of incorporation in the following manner:

(1) If there are members entitled to vote on the restated articles, the board of directors

shall adopt a resolution setting forth the proposed restated articles of incorporation and directing

that they be submitted to a vote at a meeting of members entitled to vote on them, which may be

either an annual or a special meeting.

(2) Written notice setting forth the proposed restated articles or a summary of their

provisions shall be given to each member entitled to vote on them, within the time and in the

manner provided in this chapter for the giving of notice of meetings of members. If the meeting is

an annual meeting, the proposed restated articles or a summary of their provisions may be

included in the notice of the annual meeting.

(3) At the meeting, a vote of the members entitled to vote on the restated articles shall be

taken on them, which shall be adopted upon receiving the affirmative vote of a majority of the

members entitled to vote on them present at the meeting or represented by proxy.

(4) If there are no members, or no members entitled to vote on them, the proposed

restated articles shall be adopted at a meeting of the board of directors upon receiving the

affirmative vote of a majority of the directors in office.

(b) Upon approval, restated articles of incorporation shall be executed by the corporation

by its president or vice president and by its secretary or assistant secretary and shall set forth:

(1) The name of the corporation.

(2) The period of its duration.

(3) The purpose or purposes which that the corporation is authorized to pursue.

(4) Any other provisions, not inconsistent with law, which that are then set forth in the

articles of incorporation as previously amended, except that it is not necessary to set forth in the

restated articles of incorporation the registered office of the corporation, its registered agent, its

directors, or its incorporators.

provisions of the articles of incorporation as previously amended, that they have been duly

adopted as required by law, and the additional amendments to the articles of incorporation, if any,

together with a statement that such additional amendments were adopted in accordance with the

provisions of § 7-6-39, and a further statement that, except for the designated amendments, if any,

the restated articles of incorporation correctly set forth without change the corresponding

provisions of the articles of incorporation as previously amended, and that the restated articles of

incorporation, together with the designated amendments, if any, supersede the original articles of

incorporation and all previous amendments to the articles of incorporation.

(d) The restated articles of incorporation shall be delivered to the secretary of state. If the

secretary of state finds that the restated articles conform to law, the secretary of state shall, when

all fees have been paid as in this chapter prescribed:

(1) Endorse on the original the word "Filed," and the month, day, and year of the filing.

(2) File of the original in the secretary of state's office.

(3) Issue a restated certificate of incorporation.

(e) The restated certificate of incorporation shall be delivered to the corporation or its

representative.

(f) Upon the issuance of the restated certificate of incorporation by the secretary of state,

the restated articles of incorporation become effective and supersede the original articles of

incorporation and all amendments to them.

7-6-57. Issuance of certificate of revocation.

(a) Upon revoking any certificate of incorporation, the secretary of state shall:

(1) Issue a certificate of revocation in duplicate;

(2) File one of the certificates in the secretary of state's office;

(3) Send to the corporation by regular mail a certificate of revocation, addressed to the

registered office of the corporation in this state on file with the secretary of state's office;

provided, however, that if a prior mailing addressed to the registered office of the corporation in

this state currently on file with the secretary of state's office has been returned to the secretary of

state as undeliverable by the United States Postal Service for any reason, or if the certificate of

revocation is returned as undeliverable to the secretary of state's office by the United States Postal

Service for any reason, or if the secretary of state shall give notice as follows:

(i) To the corporation at its principal office of record as shown in its most recent annual

report, and no further notice shall be required; or

(ii) In the case of a domestic corporation which that has not yet filed an annual report,

then to any one of the incorporators listed on the articles of incorporation, and no further notice

shall be required.

(b) Upon the issuance of the certificate of revocation, the authority of the corporation to

transact business in this state ceases.

7-6-58. Withdrawal of certificate of revocation.

(a) Within ten (10) years after issuing a certificate of revocation as provided in § 7-6-57,

the secretary of state may withdraw the certificate of revocation and reinstate the corporation in

good standing:

(1) Upon filing by the corporation of the documents it had previously failed to file as set

forth in subsections (a)(3) -- (a)(6) of § 7-6-56(a)(3) – (a)(6); and

(2) Upon the payment by the corporation of a penalty in the amount of twenty-five

dollars ($25.00) for each year or part of a year that has elapsed since the issuance of the

certificate of revocation.

(b) If as permitted by § 7-6-11(b)(2) another corporation, whether business or nonprofit,

or domestic or foreign qualified to transact business in this state, bears or has filed a fictitious

business name statement with respect to or reserved or registered in a name which that is the

same as, the name of a corporation regarding which the certificate of revocation is proposed to be

withdrawn, the secretary of state shall condition the withdrawal of the certificate of revocation

upon the reinstated corporation's amending its articles of incorporation so as to designate a name

which that is distinguishable upon the records of the secretary of state from its former name.

corporation in good standing as provided in subsection (a), title to any real estate, or any interest

in real estate, held by the corporation at the time of the issuance of the certificate of revocation

and not conveyed subsequent to the revocation of its certificate of incorporation shall be deemed

to be re-vested in the corporation without further act or deed.

7-6-60. Jurisdiction of court to liquidate assets and affairs of the corporation.

(a) The superior court has full power to liquidate the assets and affairs of a corporation:

(1) In an action by a member or director when it is made to appear:

(i) That the directors are deadlocked in the management of the corporate affairs and that

irreparable injury to the corporation is being suffered or is threatened because of the deadlock,

and either that the members are unable to break the deadlock or there are no members having

voting rights; or

(ii) That the acts of the directors or those in control of the corporation are illegal,

oppressive, or fraudulent; or

(iii) That the members entitled to vote in the election of directors are deadlocked in

voting power and have failed for at least two (2) years to elect successors to directors whose

terms have expired or would have expired upon the election of their successors;

(iv) That the corporate assets are being misapplied or wasted; or

(v) That the corporation is unable to carry out its purposes.

(2) In an action by a creditor:

(i) When the claim of the creditor has been reduced to judgment and an execution on it

has been returned unsatisfied and it is established that the corporation is insolvent; or

(ii) When the corporation has admitted in writing that the claim of the creditor is due and

owing and it is established that the corporation is insolvent.

(3) Upon application by a corporation to have its dissolution continued under the

supervision of the court.

(4) When the corporation's certificate of incorporation is subject to revocation by the

secretary of state and it is established that liquidation of its affairs should precede the issuance of

a certificate of revocation.

(b) Proceedings under this section shall be brought in the county in which the registered

office or the principal office of the corporation is situated.

unless relief is sought against them personally.

7-6-72. Corporate name of foreign corporation.

No certificate of authority shall be issued to a foreign corporation unless the corporate

name of the corporation:

(1) Does not contain any word or phrase which that indicates or implies that it is

organized for any purpose other than one or more of the purposes contained in its articles of

incorporation.

(2) Is distinguishable upon the records of the secretary of state from the name of any

corporation, whether for-profit or not-for-profit, domestic or foreign, limited partnership, or

domestic or foreign, limited-liability company organized under the laws of, or registered or

qualified or authorized to transact business or conduct affairs in this state, or any name, or which

that is filed, reserved, or registered under this title.

(3) Is translated into letters of the English alphabet, if it is not in English.

(4) Words and/or abbreviations that are required by statute to identify the particular type

of business entity shall be disregarded when determining if a name is distinguishable upon the

records of the secretary of state.

(5) The secretary of state shall promulgate rules and regulations defining the term

"distinguishable upon the record" for the administration of this chapter.

7-6-77. Registered office and registered agent of foreign corporation.

Each foreign corporation authorized to conduct affairs in this state shall have and

continuously maintain in this state:

(1) A registered office, that may be the same as in its principal office.

(2) A registered agent, which agent may be either an individual resident in this state

whose business office is identical with the registered office, or a domestic corporation, whether

for profit or not for profit, or a foreign corporation, whether for profit or not for profit, authorized

to transact business or conduct affairs in this state, having an office identical with the registered

office.

7-6-107. Effect of repeal of prior chapters.

(a) The repeal of a prior chapter by this chapter does not affect any right accrued or

established, or any liability or penalty incurred, under the provisions of the prior chapter, prior to

its repeal.

(b) The limitation formerly set forth in § 7-6-8, as amended, which is repealed by this

section hereby, and any similar limitation does not subsequently apply to any existing

corporation whether created by special act of the General Assembly or otherwise, even if the

corporation's articles of incorporation or any special act of the General Assembly contain a

reference to § 7-6-8 or a recitation of the limitation previously contained in that section or any

similar limitation.

articles of incorporation contain other or different powers or contain a reference to or recitation of

the powers granted by any act at this time or subsequently repealed.

SECTION 7. Sections 7-6.1-11 and 7-6.1-13 of the General Laws in Chapter 7-6.1

entitled "Cooperative Housing Corporations" are hereby amended to read as follows:

7-6.1-11. Net savings -- Apportionment.

At least once a year the board of every cooperative housing corporation shall, after first

setting aside an adequate portion of the net savings in a reserve fund for the general operation of

the business, apportion the remainder of the net savings in one or more of the following ways:

(1) As a dividend not to exceed ten percent (10%), noncumulative, upon one or more

classes of stock;

(2) As an equitable distribution or refund to all patrons in proportion to their individual

patronage except that:

(i) in In the case of a subscriber patron, the distribution or refund may be credited to the

subscriber's account until the subscription has been fully paid, ; and

(ii) in In the case of a nonmember patron, the amount otherwise distributable may be

retained by the cooperative housing corporation;

(3) This section does not prevent a cooperative housing corporation from disposing of the

net savings by reducing the cost of goods, facilities, or services or by applying the net savings

otherwise for the common benefit of members or stockholders;

(4) This section does not prevent a cooperative housing corporation from adopting a

system by which the payment of net savings are is deferred for a fixed period of time, nor from

adopting a system in which the net savings distributed are partly in cash and partly in stock.

7-6.1-13. Loans.

Any financial institution organized, incorporated, chartered, or licensed to conduct

business under the laws of the state of Rhode Island are shall be authorized to make loans

secured by a pledge of a proprietary lease and the appurtenant stock of a cooperative housing

corporation on upon the same terms and with the same limitations as loans secured by

mortgages of real property.

SECTION 8. Section 7-7-8 of the General Laws in Chapter 7-7 entitled "Producers'

Cooperatives" is hereby amended to read as follows:

7-7-8. Qualifications of members.

Only persons, or associations of persons, engaged in the production of the such

agricultural products that as the association is authorized to handle, including lessees and

landlords receiving these products as rent, are shall be eligible to membership in the association

therein, subject to the terms and conditions prescribed in its articles of incorporation or bylaws

consistent with this chapter herewith. Following the ascertainment through procedure set forth

in its bylaws that a member has ceased to be eligible to membership in an association, his or her

rights in the association therein may be suspended.

SECTION 9. Sections 7-8-5, 7-8-9 and 7-8-17 of the General Laws in Chapter 7-8

entitled "Consumers' Cooperatives" are hereby amended to read as follows:

7-8-5. Federation and cooperation between associations.

In addition to the powers granted to it by § 7-1.2-302, an association has power to:

(1) Own and hold membership in other associations formed under any laws of this state,

or of any other state, country, nation, or government, and while the holder the membership

thereof , to exercise all the rights of membership.

(2) Make agreements of mutual aid or federation with other associations, other groups

organized on a cooperative basis, and other nonprofit groups.

7-8-9. Amendment of articles.

(a) The articles of association may be amended, as provided in chapter 1.2 of this title,

by an affirmative vote of two-thirds (2/3) of the members voting at a meeting duly called for the

purpose. If the amendment is to alter the preferences of outstanding shares of any type, or to

authorize the issuance of shares having preferences superior to outstanding shares of any type, the

affirmative vote of two-thirds (2/3) of the members owning the outstanding shares affected by the

change is also required for the adoption of the amendment. If the amendment is to alter the rule

by which members' property rights in a nonshare association are determined, a vote of two-thirds

(2/3) of the entire membership is required.

(b) Notice of any meeting to consider amendments to the articles of association must be

sent at least three (3) weeks in advance of the meeting to each member at his or her last known

address, accompanied by the full text of the proposal and the part of the articles to be amended.

articles of amendment a fee of five dollars ($5.00).

7-8-17. Membership of organizations -- Payment of capital as prerequisite to

membership.

No corporation or organization or group of any kind is shall be eligible to membership in

an association unless it is organized on a cooperative or nonprofit basis, and no person,

association, or organization or group of any kind is shall be deemed a member of an association

until the association has received payment in full for the par value of the minimum amount of

share or membership capital stated in the articles as necessary to qualify for membership.

SECTION 10. Section 7-9-2 of the General Laws in Chapter 7-9 entitled "Additional

Powers Of Corporations" is hereby amended to read as follows:

7-9-2. Power to execute bonds and obligations.

Any company authorized to do business in this state may make, sign, seal, execute,

acknowledge, and deliver any bond, guaranty, undertaking, or any other obligation in this state, or

may enter into any recognizance or other obligation of record in this state, by its attorney in fact

or by its officer or officers, agent or authorized agents; and the authority from the company may

be shown in the same manner that similar authority are may be shown in the case of other

corporations.

SECTION 11. Section 7-11-402 of the General Laws in Chapter 7-11 entitled "Rhode

Island Uniform Securities Act" is hereby amended to read as follows:

7-11-402. Exempt transactions.

The following transactions are exempt from §§ 7-11-301 and 7-11-404:

(1) An isolated nonissuer transaction, whether or not effected through a broker-dealer;

(2) A nonissuer transaction in an outstanding security if the issuer of the security has a

class of securities subject to registration under § 12 of the Securities Exchange Act of 1934, 15

U.S.C. § 78l, and has been subject to the reporting requirements of § 13 or § 15(d) of the

Securities Exchange Act of 1934, 15 U.S.C. §§ 78m and 78o(d), for not less than ninety (90) days

before the transaction; or has filed and maintained with the director for not less than ninety (90)

days before the transaction information, in any form that the director, by rule, specifies,

substantially comparable to the information which the issuer would be required to file under §

12(b) or § 12(g) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78l(b) or 78l(g), were the

issuer to have a class of its securities registered under § 12 of the Securities Exchange Act of

1934 and paid a fee with the filing of three hundred dollars ($300);

(3) A nonissuer transaction if in a security:

(i) of Of a class outstanding in the hands of the public for not less than ninety (90) days

before the transaction is if a nationally recognized securities manual designated by the director,

by rule or order, contains the names of the issuer's officers and directors, a statement of financial

condition of the issuer as of a date within the last eighteen (18) months, and a statement of

income or operations for either the last fiscal year before that date or the most recent year of

operation; or

(ii) if If the security has a fixed maturity or a fixed interest or dividend provision and

there has been no default during the current fiscal year or within the three (3) preceding years, or

during the existence of the issuer and any predecessors if less than three (3) years, in the payment

of principal, interest, or dividends on the security;

(4) A nonissuer transaction effected by or through a registered broker dealer pursuant to

an unsolicited order or offer to purchase; but the director may by rule require that the customer

acknowledge upon a specified form that the sale was unsolicited, and that a signed copy of each

form be preserved by the broker dealer for a specified period;

(5) A transaction between the issuer or other person on whose behalf the offering of a

security is made and an underwriter, or a transaction among underwriters;

(6) A transaction in a bond or other evidence of indebtedness secured by a real estate

mortgage, deed of trust, personal property security agreement, or by an agreement for the sale of

real estate or personal property, if the entire mortgage, deed of trust, or agreement, together with

all the bonds or other evidences of indebtedness secured by them, is offered and sold as a unit;

(7) A transaction by an executor, administrator, sheriff, marshal, receiver, trustee in

bankruptcy, guardian, or conservator;

(8) A transaction executed by a bona fide secured party without a purpose of evading this

chapter;

(9) An offer to sell or sale of a security to a financial or institutional investor or to a

broker dealer;

(10) A transaction pursuant to an offer directed by the offeror to no more than twenty-

five (25) purchasers in this state, other than those designated in subdivision (9), during any twelve

(12) consecutive months; no general solicitation or general advertising is used in connection with

the offer to sell or sale of the securities; and no commission or other similar compensation is paid

or given, directly or indirectly, to a person, other than a broker dealer licensed or not required to

be licensed under this chapter, for soliciting a prospective purchaser in this state; and either:

(i) the The seller reasonably believes that all the purchasers in this state, other than those

designated in subdivision subsection (9) are purchasing for investment; or

(ii) immediately Immediately before and immediately after the transaction, the issuer

reasonably believes that the securities of the issuer are held by fifty (50) or fewer beneficial

owners, other than those designated in paragraph subsection (9) and the transaction is part of an

aggregate offering that does not exceed one million dollars ($1,000,000) during any twelve (12)

consecutive months.

(11) An offer to sell or sale of a preorganization certificate or subscription if no

commission or other similar compensation is paid or given, directly or indirectly, for soliciting a

prospective subscriber; no public advertising or general solicitation is used in connection with the

offer to sell or sale; the number of subscribers does not exceed ten (10); and no payment is made

by a subscriber;

(12) An offer to sell or sale of a preorganization certificate or subscription agreement

issued in connection with the organization of a depository institution if that organization is under

the supervision of an official or agency of any state or of the United States which that has and

exercises the authority to regulate and supervise the organization of the depository institution. For

the purposes of this paragraph subsection, supervision of the organization by an official or

agency means that the official or agency by law has authority to require disclosures to prospective

investors similar to that required under § 7-11-304, impound proceeds from the sale of

preorganization certificates or subscription agreements until organization of the depository

institution is completed, and require refund to investors if the depository institution does not

obtain a grant of authority from the appropriate official or agency;

(13) A transaction pursuant to an offer to sell to existing security holders of the issuer,

including persons who at the time of the transaction are holders of transferable warrants

exercisable within not more than ninety (90) days after their issuance, convertible securities, or

nontransferable warrants, if:

(i) No commission or other similar compensation, other than a standby commission, is

directly or indirectly paid or given, for soliciting a security holder in this state; or

(ii) The issuer first files a notice specifying the terms of the offer to sell and the director

does not by order disallow the exemption within the next five (5) full business days;

(14) A transaction involving an offer to sell, but not a sale, of a security not exempt from

registration under the Securities Act of 1933, 15 U.S.C. § 77a et seq. if:

(i) A registration or offering statement or similar document as required under the

Securities Act of 1933, 15 U.S.C. § 77a et seq. has been filed, but is not effective;

(ii) A registration statement, if required, has been filed under this chapter, but is not

effective; and

(iii) No stop order of which the offeror is aware has been entered by the director or the

securities and exchange commission Securities and Exchange Commission, and no

examination or public proceeding that may culminate in that kind of order is known by the offeror

to be pending;

(15) A transaction involving an offer to sell, but not a sale, of a security exempt from

registration under the Securities Act of 1933, 15 U.S.C. § 77a et seq. if:

(i) A registration statement has been filed under this chapter, but is not effective; and

(ii) No stop order of which the offeror is aware has been entered by the director and no

examination or public proceeding that may culminate in that kind of order is known by the offeror

to be pending;

(16) A transaction involving the distribution of the securities of an issuer to the security

holders of another person in connection with a merger, consolidation, exchange of securities, sale

of assets, or other reorganization to which the issuer, or its parent or subsidiary, and the other

person, or its parent or subsidiary, are parties, if:

(i) The securities to be distributed are registered under the Securities Act of 1933, 15

U.S.C. § 77a et seq. before the consummation of the transaction; or

(ii) The securities to be distributed are not required to be registered under the Securities

Act of 1933, 15 U.S.C. § 77a et seq., written notice of the transaction and a copy of the materials,

if any, by which approval of the transaction will be solicited is given to the director at least ten

(10) days before the consummation of the transaction and the director does not disallow by order

the exemption within the next ten (10) days; and

(17) (i) A transaction involving the offer to sell or sale of one or more promissory notes

each of which is directly secured by a first lien on a single parcel of real estate, or a transaction

involving the offer to sell or sale of participation interests in the notes if the notes and

participation interests are originated by a depository institution and are offered and sold subject to

the following conditions:

(A) The minimum aggregate sales price paid by each purchaser may not be less than two

hundred and fifty thousand dollars ($250,000);

(B) Each purchaser must pay cash either at the time of the sale or within sixty (60) days

after the sale; and

(ii) A transaction involving the offer to sell or sale of one or more promissory notes

directly secured by a first lien on a single parcel of real estate or participation interests in the

notes, if the notes and participation interests are originated by a mortgagee approved by the

secretary of housing and urban development Housing and Urban Development under §§ 203

and 211 of the National Housing Act, 12 U.S.C. §§ 1709 and 1715b, and are offered or sold,

subject to the conditions specified in subsection (17)(i), to a depository institution or insurance

company, the federal home loan mortgage corporation, the federal national mortgage

association, or the government national mortgage association the Federal Home Loan

Mortgage Corporation, the Federal National Mortgage Association, or the Government

National Mortgage Association; and

(iii) A transaction between any of the persons described in subparagraph (ii) involving a

nonassignable contract to buy or sell the securities described in subparagraph (i) which contract is

to be completed within two (2) years if:

(A) The seller of the securities pursuant to the contract is one of the parties described in

paragraph (i) or (ii) of this subdivision who may originate securities;

(B) The purchaser of securities pursuant to a contract is any other person described in

paragraph (ii); and

(18) Any offer or sale of securities made in reliance on the exemptions provided by Rule

505 or 506 of regulation D as may be amended from time to time, under the Securities Act of

1933, 15 U.S.C. § 77a et seq., and the provisions of the rules under that Act as amended from

time to time; provided:

(i) No commission or other remuneration may be paid or given directly or indirectly, to

any person for soliciting or selling to any person in this state in reliance on this exemption, except

to persons registered under §§ 7-11-201 -- 7-11-204;

(ii) Not later than ten (10) days, or a shorter period that may be permitted by order of the

director, prior to the first sale of securities in reliance on this exemption, there is filed with the

director:

(A) A Uniform Consent to Service of Process (Form U2);

(B) A notice of original filing on Form D; and

No exemption is available for the securities of any issuer if any of the parties described in

securities and exchange commission regulation A. Rule 230.252, Section (c), (d), (e) or (f) under

the Securities Act of 1933 are disqualified pursuant to a rule adopted by the director.

SECTION 12. Section 7-12-49 of the General Laws in Chapter 7-12 entitled

"Partnerships" is hereby amended to read as follows:

7-12-49. Rights of partners to application of partnership property.

(a) When dissolution is caused in any way, except in contravention of the partnership

agreement, each partner, as against his or her copartners and all persons claiming through them in

respect of their interests in the partnership, unless otherwise agreed, may have the partnership

property applied to discharge its liabilities, and the surplus applied to pay in cash the net amount

owing to the respective partners. But if dissolution is caused by the expulsion of a bona fide

partner under the partnership agreement, and if the expelled partner is discharged from all

partnership liabilities, either by payment or agreement under § 7-12-47(2)(b), he or she receives

in cash only the net amount due him or her from the partnership.

(b) When dissolution is caused in contravention of the partnership agreement the rights of

the partners are as follows:

(1) Each partner who has not wrongfully caused dissolution has, :

(i) All the rights specified in subsection (a), ; and

(ii) The right, as against each partner who has wrongfully caused the dissolution, to

damages for breach of the agreement.

(2) The partners who have not wrongfully caused the dissolution, if they all desire to

continue the business in the same name, either by themselves or jointly with others, may do so,

during the agreed term for the partnership and for that purpose may possess the partnership

property, provided they secure the payment by bond approved by the court, or pay to any partner

who has wrongfully caused the dissolution, the value of his or her interest in the partnership at the

dissolution, less any damages recoverable under subsection (b)(1)(ii), and in like manner

indemnify him or her against all present or future partnership liabilities.

(3) A partner who has wrongfully caused the dissolution has:

(i) If the business is not continued under the provisions of subsection (b)(2), all the rights

of a partner under subsection (a); subject to subsection (b)(1)(ii). ;

(ii) If the business is continued under subsection (b)(2), the right as against his or her

copartners and all claiming through them as to their interests in the partnership, to have the value

of his or her interest in the partnership, less any damages caused to his or her copartners by the

dissolution, ascertained and paid to him or her in cash, or the payment secured by bond approved

by the court, and to be released from all existing liabilities of the partnership; but in ascertaining

the value of the partner's interest the value of the good will of the business is not considered.

SECTION 13. Section 7-13-44 of the General Laws in Chapter 7-13 entitled "Limited

Partnerships" is hereby amended to read as follows:

7-13-44. Nonjudicial dissolution.

A limited partnership is dissolved and its affairs shall be wound up upon the happening of

the first to occur of the following:

(1) At the time or upon the happening of any of the events specified in the partnership

agreement;

(2) Written consent of all partners;

(3) Unless otherwise provided in the partnership agreement, an event of withdrawal of a

general partner unless at the time there is at least one other general partner and the partnership

agreement permits the business of the limited partnership to be carried on by the remaining

general partner and that partner does so, but the limited partnership is not dissolved and is not

required to be wound up by reason of any event of withdrawal, if, within ninety (90) days after

the withdrawal, a majority interest of the partners agrees in writing to continue the business of the

limited partnership and to the appointment of one or more additional general partners if necessary

or desired; or

(4) Entry of a decree of judicial dissolution under § 7-13-45.

SECTION 14. Section 7-15-6 of the General Laws in Chapter 7-15 entitled "Racketeer

Influenced and Corrupt Organizations" is hereby amended to read as follows:

7-15-6. Application.

It is not a defense in any action brought under this chapter that the racketeering activity as

defined in § 7-15-1(a) (c) occurred prior to May 5, 1979.

SECTION 15. Sections 7-16-5.1, 7-16-5.2, 7-16-9, 7-16-50.1, 7-16-54, 7-16-63, 7-16-64

and 7-16-65 of the General Laws in Chapter 7-16 entitled "The Rhode Island Limited-Liability

Company Act" are hereby amended to read as follows:

7-16-5.1. Conversion of certain entities to a limited-liability company.

(a) As used in this section, the term "other entity" means a corporation, a business trust,

or association, a real estate investment trust, a common-law trust, a sole proprietorship or any

other unincorporated business, or entity including a partnership, whether general or limited,

(including a registered limited-liability partnership) or a foreign, limited-liability company.

(b) Any other entity may convert to a domestic, limited-liability company by complying

with subsection (h) of this section and filing in the office of the secretary of state in accordance

with § 7-16-8 articles of organization that comply with § 7-16-6 and have been executed by one

or more authorized persons in accordance with § 7-16-7, accompanied by a certificate of

conversion to a limited-liability company duly executed by one or more persons authorized to act

on behalf of the other entity and one or more persons authorized to sign a certificate of

conversion on behalf of the limited-liability company.

(1) The date on which and jurisdiction where the other entity was first created, formed, or

otherwise came into being and, if it has changed, its jurisdiction immediately prior to its

conversion to a domestic, limited-liability company;

(2) The name of the other entity immediately prior to the filing of the certificate of

conversion to limited-liability company;

(3) The name of the limited-liability company as set forth in its articles of organization

filed in accordance with subsection (b) of this section; and

(4) The future effective date or time (which is a date or time certain) of the conversion to

a limited-liability company if it is not to be effective upon the filing of the certificate of

conversion to limited-liability company and the articles of organization.

(d) Upon the filing in the office of the secretary of state of the certificate of conversion to

limited-liability company and the articles of organization or upon the future effective date or time

of the certificate of conversion to a limited-liability company and the articles of organization, the

other entity shall be converted into a domestic, limited-liability company and the limited-liability

company shall thereafter be subject to all of the provisions of this chapter, except that,

notwithstanding § 7-16-5, the existence of the limited-liability company shall be deemed to have

commenced on the date the other entity commenced its existence in the jurisdiction in which the

other entity was first created, formed, or otherwise came into being.

(e) The conversion of any other entity into a domestic, limited-liability company shall not

be deemed to affect any obligations or liabilities of the other entity incurred prior to its

conversion to a domestic, limited-liability company or the personal liability of any person

incurred prior to the conversion.

(f) When any conversion shall have become effective under this section, for all purposes

of the laws of the state of Rhode Island, all of the rights, privileges, and powers of the other entity

that has converted, and all property, real, personal, and mixed, and all debts due to such other

entity, as well as all other things and causes of action belonging to the other entity, shall be vested

in the domestic, limited-liability company and shall thereafter be the property of the domestic,

limited-liability company as they were of the other entity that has converted, and the title to any

real property vested by deed or otherwise in the other entity shall not revert or be in any way

impaired by reason of this chapter, but all rights of creditors and all liens upon any property of

such other entity shall be preserved unimpaired, and all debts, liabilities, and duties of the other

entity that has converted shall thenceforth attach to the domestic, limited-liability company and

may be enforced against it to the same extent as if those debts, liabilities, and duties had been

incurred or contracted by it.

(g) Unless otherwise agreed, or as required under applicable non-Rhode Island law, the

converting other entity shall not be required to wind up its affairs or pay its liabilities and

distribute its assets, and the conversion shall not be deemed to constitute a dissolution of the other

entity and shall constitute a continuation of the existence of the converting other entity in the

form of a domestic, limited-liability company.

(h) Prior to filing a certificate of conversion to limited-liability company with the office

of the secretary of state, the conversion shall be approved in the manner provided for by the

document, instrument, agreement, or other writing, as the case may be, governing the internal

affairs of the other entity and the conduct of its business or by applicable law, as appropriate, and

a limited-liability company agreement shall be approved by the same authorization required to

approve the conversion.

(i) In connection with a conversion hereunder, rights or securities of or interests in the

other entity which that is to be converted to a domestic, limited-liability company may be

exchanged for or converted into cash, property, or rights or securities of or interests in such

domestic, limited-liability company or, in addition to or in lieu thereof, may be exchanged for

or converted into cash, property, or rights or securities of or interests in such domestic

limited liability company or, in addition to or in lieu thereof, may be exchanged for or converted

into cash, property, or rights or securities of or interests in another domestic, limited-liability

company or other entity or may be cancelled.

(j) The provisions of this section shall not be construed to limit the accomplishment of a

change in the law governing, or the domicile of, an other another entity to the state of Rhode

Island by any other means provided for in a limited-liability company agreement or other

agreement or as otherwise permitted by law, including by the amendment of a limited-liability

company agreement or other agreement.

7-16-5.2. Approval of conversion of a limited-liability company. [Effective until July

1, 2020.].

(a) A domestic, limited-liability company may convert to a corporation, a business trust,

or association, a real estate investment trust, a common law trust, a sole proprietorship, or any

other unincorporated business or entity including a partnership (whether general or limited,

including a registered limited-liability partnership), or a foreign, limited-liability company upon

the authorization of the conversion in accordance with this section.

(b) If the limited-liability company agreement specified the manner of authorizing a

conversion of the limited-liability company, the conversion shall be authorized as specified in the

limited-liability company agreement. If the limited-liability company agreement does not specify

the manner of authorizing a conversion of the limited-liability company and does not prohibit a

conversion of the limited-liability company, the conversion shall be authorized in the same

manner as is specified in the limited-liability company agreement for authorizing a merger or

consolidation that involves the limited-liability company as a constituent party to the merger or

consolidation. If the limited-liability company agreement does not specify the manner of

authorizing a conversion of the limited-liability company or a merger or consolidation that

involves the limited-liability company as a constituent party and does not prohibit a conversion of

the limited-liability company, the conversion shall be authorized by the approval by the members

or, if there is more than one class or group of members, then by each class or group of members,

in either case, by members who own more than fifty percent (50%) of the then-current percentage

or other interest in the profits of the domestic, limited-liability company owned by all of the

members or by the members in each class or group, as appropriate.

another entity or business form pursuant to this section shall not require such the limited-liability

company to wind up its affairs under § 7-16-45 or pay its liabilities and distribute its assets under

§ 7-16-46, and the conversion shall not constitute a dissolution of such the limited-liability

company. When a limited-liability company has converted to another entity or business form

pursuant to this section, for all purposes of the laws of the state of Rhode Island, the other entity

or business form shall be deemed to be the same entity as the converting limited-liability

company and conversion shall constitute a continuation of the existence of the limited-liability

company in the form of such other entity or business form.

(d) In connection with a conversion of a domestic, limited-liability company to another

entity or business form pursuant to this section, rights or securities of or interests in the domestic,

limited-liability company that is to be converted may be exchanged for or converted into cash,

property, rights or securities of or interests in the entity or business form into which the domestic,

limited-liability company is being converted or, in addition to or in lieu thereof, may be

exchanged for or converted into cash, property, rights or securities of or interests in another entity

or business form or may be cancelled.

(e) If a limited-liability company shall convert in accordance with this section to another

entity or business form organized, formed, or created under the laws of a jurisdiction other than

the state of Rhode Island or to a Rhode Island unincorporated "other entity", a certificate of

conversion to non-Rhode Island entity shall be filed in the office of the secretary of state. The

certificate of conversion to non-Rhode Island entity shall state:

(1) The name of the limited-liability company and, if it has been changed, the name under

which its certificate of formation was originally filed;

(2) The date of filing of its original certificate of formation with the secretary of state;

(3) The jurisdiction in which the entity or business form, to which the limited-liability

company shall be converted, is organized, formed, or created, and the name and type of such

entity or business form;

(4) The future effective date or time (which shall be a date or time certain) of the

conversion if it is not to be effective upon the filing of the certificate of conversion to non-Rhode

Island entity;

(5) That the conversion has been approved in accordance with this section;

(6) The agreement of the limited-liability company that it may be served with process in

the state of Rhode Island in any action, suit, or proceeding for enforcement of any obligation to of

the limited-liability company arising while it was a limited-liability company of the state of

Rhode Island, and that it irrevocably appoints the secretary of state as its agent to accept service

of process in any such action, suit, or proceeding.

(f) Upon the filing in the office of the secretary of state of the certificate of conversion to

non-Rhode Island entity or upon the future effective date or time of the certificate of conversion

to non-Rhode Island entity and upon payment of all fees due by the limited-liability company, as

evidenced by an appropriate certificate of good standing issued by the Rhode Island division of

taxation, the secretary of state shall certify that the limited-liability company has filed all

documents and paid all fees required by this chapter, and thereupon the limited-liability company

shall cease to exist as a limited-liability company of the state of Rhode Island. Such certificate of

the secretary of state shall be prima facie evidence of the conversion by such limited-liability

company out of the state of Rhode Island.

(g) The conversion of a limited-liability company out of the state of Rhode Island in

accordance with this section and the resulting cessation of its existence as a limited-liability

company of the state of Rhode Island pursuant to a certificate of conversion to non-Rhode Island

entity shall not be deemed to affect any obligations or liabilities of the limited-liability company

incurred prior to such conversion or the personal liability of any person incurred prior to such

conversion, nor shall it be deemed to affect the choice of laws applicable to the limited-liability

company with respect to matters arising prior to such conversion.

(h) When a limited-liability company has been converted to another entity or business

form pursuant to this section, the other entity or business form shall, for all purposes of the laws

of the state of Rhode Island, be deemed to be the same entity as the limited-liability company.

When any conversion shall have become effective under this section, for all purposes of the laws

of the state of Rhode Island, all of the rights, privileges, and powers of the limited-liability

company that has converted, and all property, real, personal, and mixed, and all such debts due to

such limited-liability company, as well as all other things and causes of action belonging to such

limited-liability company, shall remain vested in the other entity or business form to which such

limited-liability company has converted and shall be the property of such other entity or business

form, and the title to any real property vested by deed or otherwise in such limited-liability

company shall not revert to such limited-liability company or be in any way impaired by reason

of this chapter; but all rights of creditors and all liens upon any property of such limited-liability

company shall be preserved unimpaired, and all debts, liabilities, and duties of the limited-

liability company that has converted shall remain attached to the other entity or business form to

which such limited-liability company has converted, and may be enforced against it to the same

extent as if said debts, liabilities, and duties had originally been incurred or contracted by it in its

capacity as such other entity or business form. The rights, privileges, powers, and interests in

property of the limited-liability company that has converted, as well as the debts, liabilities, and

duties of such limited-liability company, shall not be deemed, as a consequence of the

conversion, to have been transferred to the other entity or business form to which such limited-

liability company has converted for any purpose of the laws of the state of Rhode Island.

7-16-5.2. Approval of conversion of a limited-liability company. [Effective July 1,

2020.].