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S.B. 22

             1     

WATER COMPANIES AND ASSOCIATIONS -

             2     
ASSESSMENT AND VOTING RIGHTS

             3     
2000 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: Mike Dmitrich

             6      AN ACT RELATING TO CORPORATIONS; DEFINING TERMS; AMENDING
             7      ASSESSMENT PROVISIONS FOR CERTAIN COMPANIES AND ASSOCIATIONS;
             8      ADDRESSING VOTING RIGHTS; AND MAKING TECHNICAL CHANGES.
             9      This act affects sections of Utah Code Annotated 1953 as follows:
             10      AMENDS:
             11          16-4-7, as last amended by Chapter 29, Laws of Utah 1961
             12          16-4-24, Utah Code Annotated 1953
             13          16-6-19, as last amended by Chapter 108, Laws of Utah 1990
             14          16-6-30, as enacted by Chapter 17, Laws of Utah 1963
             15          31A-5-101, as last amended by Chapter 6, Laws of Utah 1992, Third Special Session
             16          31A-9-101, as last amended by Chapter 108, Laws of Utah 1990
             17      ENACTS:
             18          16-4-1.5, Utah Code Annotated 1953
             19      Be it enacted by the Legislature of the state of Utah:
             20          Section 1. Section 16-4-1.5 is enacted to read:
             21          16-4-1.5. Definitions.
             22          For purposes of this chapter:
             23          (1) "Articles of incorporation" is as defined in Section 16-6-19 .
             24          (2) "Bylaws" is as defined in Section 16-6-19 .
             25          Section 2. Section 16-4-7 is amended to read:
             26           16-4-7. Equal assessments required.
             27          [In the case of full-paid stock,] Except as provided in Section 16-4-24 , all fully-paid stock


             28      subject to assessment [must] shall be assessed equally.
             29          Section 3. Section 16-4-24 is amended to read:
             30           16-4-24. Certain water companies and associations -- Assessments -- Other than pro
             31      rata basis.
             32          [Any] (1) If the conditions of Subsection (2) are met, an irrigation company, canal
             33      company, ditch company, reservoir company, or water users' association [hereafter] organized
             34      under the laws of this state [shall have the power to] may make assessments against its shares of
             35      stock on other than a pro rata basis:
             36          (a) for the purpose of raising funds to accomplish the [purpose or] one or more purposes
             37      for which the company or association is organized; or
             38          (b) to pay [its] the company's or association's debts or obligations [when].
             39          (2) A company or association described in Subsection (1) may make assessments against
             40      its shares of stock on other than a pro rata basis if:
             41          (a) at the time of the assessments, the articles of incorporation [so] permit[.] assessments
             42      on other than a pro rata basis;
             43          (b) [The provisions of this section shall also apply to any irrigation company, canal
             44      company, ditch company, reservoir company or water users' association heretofore organized the
             45      articles of incorporation of which now expressly so permit assessments to be made on other than
             46      a pro rata basis or to any irrigation company, canal company, ditch company, reservoir company,
             47      or water users' association heretofore or hereafter organized when] the company or association is
             48      required to make assessments on other than a pro rata basis under [existing or future] a contract
             49      [or contracts] between:
             50          (i) (A) the United States; and [any such]
             51          (B) the company or [water users'] association [or between];
             52          (ii) (A) the United States; and
             53          (B) the stockholders of [any such] the company or [water users'] association; or [between
             54      any such]
             55          (iii) (A) the company or [water users'] association; and [its]
             56          (B) the stockholders [or when] of the company or association;
             57          (c) required by [any] a contract of subscription for shares of stock to [any such] the
             58      company or [water users'] association [so] contracting with the United States; or [under present


             59      or future]
             60          (d) required by the laws or regulations of the United States.
             61          Section 4. Section 16-6-19 is amended to read:
             62           16-6-19. Definitions.
             63          As used in this chapter:
             64          (1) "Articles of incorporation" means the original articles of incorporation and all
             65      amendments to them, including any articles of merger.
             66          (2) "Bylaws" means the rules adopted for the regulation or management of the affairs of
             67      the corporation irrespective of the names by which the rules are designated.
             68          (3) "Cooperative association" means a corporation organized or existing under this chapter
             69      subject to Section 16-6-108 .
             70          (4) "Corporation" or "domestic corporation" means a nonprofit corporation subject to the
             71      provisions of this chapter, except a foreign corporation.
             72          (5) "Division" means the Division of Corporations and Commercial Code.
             73          (6) "Filed" means the division has received and approved as to form a document submitted
             74      under the provisions of this chapter, and has marked on the face of the document a stamp or seal
             75      indicating the time of day and date of approval, the name of the division, the division director's
             76      signature and division seal, or facsimiles of the signature or seal.
             77          (7) "Foreign corporation" means a nonprofit corporation organized under the laws of a
             78      state, territory, or country other than Utah.
             79          (8) "Governing board" means the group of persons vested with the management of the
             80      affairs of the corporation irrespective of the name by which the group is designated.
             81          (9) "Insolvent" means inability of a corporation to pay its debts as they become due in the
             82      usual course of its affairs.
             83          (10) "Member" means one having membership rights in a corporation in accordance with
             84      its articles of incorporation or bylaws.
             85          (11) "Nonprofit corporation" means a corporation which does not distribute any part of its
             86      income to its members, trustees, or officers, and includes a nonprofit cooperative association.
             87          (12) "State agency" means any of the following of the state:
             88          (a) a department;
             89          (b) a commission;


             90          (c) a board;
             91          (d) a council;
             92          (e) an agency;
             93          (f) an institution;
             94          (g) an officer;
             95          (h) a corporation;
             96          (i) a fund;
             97          (j) a division;
             98          (k) an office;
             99          (l) a committee;
             100          (m) an authority;
             101          (n) a laboratory;
             102          (o) a library;
             103          (p) a unit;
             104          (q) a bureau;
             105          (r) a panel; or
             106          (s) an administrative unit.
             107          [(12)] (13) "Trustee" means one of the group of persons on the governing board
             108      irrespective of the name by which the person is designated.
             109          Section 5. Section 16-6-30 is amended to read:
             110           16-6-30. Voting -- Rights of members.
             111          (1) (a) The right of the members, or any class or classes of members, to vote may be
             112      limited, enlarged or denied to the extent specified in the articles of incorporation or the bylaws.
             113          (b) Unless [so] limited, enlarged, or denied in accordance with Subsection (1)(a), each
             114      member, regardless of class, shall be entitled to one vote on each matter submitted to a vote of
             115      members.
             116          (c) Notwithstanding Subsection (1)(a) or (b), if a state agency is a member of a nonprofit
             117      corporation that has as one of its primary purposes the delivery of water to its members, the state
             118      agency shall have no voting rights unless the articles of incorporation or the bylaws of the
             119      nonprofit corporation specifically provide that the state agency has voting rights.
             120          (2) (a) A member may vote:


             121          (i) in person; or[,]
             122          (ii) unless the articles of incorporation or the bylaws otherwise provide, [may vote] by
             123      proxy executed in writing by the member or by [his] the member's duly authorized attorney in fact.
             124      [Where]
             125          (b) If trustees or officers are to be elected by members, the governing board by resolution
             126      or the bylaws may provide that such elections may be conducted by mail.
             127          Section 6. Section 31A-5-101 is amended to read:
             128           31A-5-101. Definitions.
             129          In this chapter, unless the context requires otherwise:
             130          (1) The definitions applicable to the Utah Revised Business Corporation Act in
             131      Subsections 16-10a-102 (2), (22), and (23) apply to stock corporations.
             132          (2) The definitions applicable to nonprofit corporations in Subsections 16-6-19 (1), (2), (8),
             133      (10), and [(12)] (13) apply to mutuals.
             134          (3) "Promoter securities" are securities issued by a stock insurer to the incorporators,
             135      directors, officers, or their families or nominees at any time prior to, and up to one year following,
             136      the issuance of a certificate of authority to the stock insurer.
             137          Section 7. Section 31A-9-101 is amended to read:
             138           31A-9-101. Definitions.
             139          (1) As used in this chapter:
             140          (a) "Fraternal" or "fraternal benefit society" means a corporation organized or operating
             141      under this chapter that:
             142          (i) has no capital stock;
             143          (ii) exists solely for:
             144          (A) the benefit of its members and their beneficiaries; and
             145          (B) any lawful social, intellectual, educational, charitable, benevolent, moral, fraternal,
             146      patriotic, or religious purpose for the benefit of its members or the public, carried on through
             147      voluntary activity of its members in their local lodges or through institutional programs of the
             148      fraternal or its local lodges;
             149          (iii) has a lodge system;
             150          (iv) has a representative form of government; and
             151          (v) provides insurance benefits authorized under this chapter.


             152          (b) "Laws of a fraternal" include its articles of incorporation and bylaws, however
             153      designated.
             154          (c) "Lodge system" means one in which:
             155          (i) there is a supreme governing body;
             156          (ii) subordinate to the supreme governing body are local lodges, however designated, into
             157      which natural persons are admitted as members in accordance with the laws of the fraternal;
             158          (iii) the local lodges are required by the laws of the fraternal to hold regular meetings at
             159      least monthly; and
             160          (iv) the local lodges regularly engage in programs involving member participation to
             161      implement the purposes of Subsection (1)(a)(ii).
             162          (d) "Representative form of government" means the fraternal complies with Section
             163      31A-9-403 .
             164          (2) In any provisions of law made applicable to fraternals by this chapter, the technical
             165      terms used in those provisions are applicable to fraternals despite the use of other parallel terms
             166      by fraternals.
             167          (3) The definitions provided in Subsections 16-6-19 (1), (2), (8), (10), and [(12)] (13), and
             168      Section 31A-1-301 apply to fraternals.




Legislative Review Note
    as of 1-3-00 2:05 PM


A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


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