Shareholders

R.I. Gen. Laws tit. 7, ch. 7-1.2, pt. 7

in effect

R.I. Gen. Laws § 7-1.2-701 Meetings of shareholders.

7-1.2-701. Meetings of shareholders. (a) Meetings of shareholders may be held at any place, either within or without this state, that may be stated in or fixed in accordance with the bylaws. If no other place is stated or fixed, all meetings will be held at the registered office of the corporation. An annual meeting of shareholders may be held at any time that is stated or fixed in accordance with the bylaws. Failure to hold the annual meeting at the designated time does not work a forfeiture or dissolution of the corporation. If the annual meeting is not held within any thirteen (13) month period the superior court may, in its discretion, on the application of any shareholder, summarily order a meeting to be held. (b) Special meetings of the shareholders may be called by the board of directors, or by a person or persons that may be authorized by the articles of incorporation or by the bylaws. (c) Notice of any meeting of shareholders must be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting to each shareholder entitled to vote at the meeting in the manner prescribed by § 7-1.2-702. (d) Unless the bylaws require otherwise, if an annual or special shareholders’ meeting is adjourned to a different date, time or place, notice need not be given of the new date, time or place if the new date, time or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed pursuant to the articles of incorporation, the bylaws or otherwise, however, notice of the adjourned meeting must be given under this section to persons who are shareholders as of the new record date. (e) A shareholder’s attendance at a meeting: (1) Waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and (2) Waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. (f) Upon the application of any shareholder, director or person aggrieved, the superior court for the county where the principal office of the corporation is located, shall immediately hear and determine the petition of the aggrieved with respect to the following: (1) The validity of any election or appointment of any director or officer of a corporation and the right of any person to hold the office; (2) If any office is claimed by more than one individual, the individual entitled to the office; (3) The voting and other rights of persons claiming rights in respect of the contested election or appointment; or (4) Failure of the corporation to hold an annual meeting within any thirteen (13) month period. The superior court may confirm the election or appointment, order a new election, or direct any other relief that may be just and proper. (g) If authorized by the board of directors in its sole discretion or by the bylaws, and subject to such guidelines and procedures as the board of directors may adopt or the bylaws may prescribe, shareholders and proxy holders not physically present at a meeting of shareholders may, by means of remote communication: (1) Participate in a meeting of shareholders; and (2) Be deemed present in person and vote at a meeting of shareholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that: (i) The corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a shareholder or proxy holder; (ii) The corporation shall implement reasonable measures to provide such shareholders and proxy holders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and (iii) If any shareholder or proxy holder votes or takes other action at the meeting by means of remote communication, the corporation shall maintain a record of that vote or other action. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

R.I. Gen. Laws § 7-1.2-702 Notice to shareholders.

7-1.2-702. Notice to shareholders. (a) Any notice to shareholders given by the corporation under any provision of this chapter, the articles of incorporation or the bylaws is effective if given in writing, or by facsimile or a form of electronic transmission consented to by the shareholder to whom the notice is given. Any consent to alternative notice is revocable by the shareholder by written notice to the corporation. Any consent to alternative notice is deemed revoked if: (1) The corporation is unable to deliver by facsimile or electronic transmission two (2) consecutive notices given by the corporation in accordance with such consent; and (2) Such inability becomes known to the secretary or an assistant secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation does not invalidate the action. (b) If mailed, the notice is deemed to be delivered when deposited in the United States mail addressed to the shareholder at his or her address as it appears on the stock transfer books of the corporation, with prepaid postage on the mail. (c) In the case of any corporation which has fifty (50) or more shareholders of record, if two (2) successive notices, reports or other communications addressed to a shareholder of the corporation at the address of the shareholder appearing on the books of the corporation have been returned to the corporation by the United States postal service marked to indicate that the United States postal service is unable to deliver the notices, reports or other communications to the shareholder at the address, all future notices, reports or other communications are deemed to have been given without further mailing if they are available for the shareholder upon written demand of the shareholder at the principal executive office of the corporation for a period of one year from the date of the giving of the notice, report, or other communication to other shareholders. (d) A shareholder may waive any notice required by this section, the articles of incorporation, or bylaws before or after the date and time stated in the notice. The waiver must be in writing, be signed by the shareholder entitled to the notice, and be delivered to the corporation for inclusion in the minutes or filing with the corporate records. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

R.I. Gen. Laws § 7-1.2-703 Closing of transfer books and fixing record date.

7-1.2-703. Closing of transfer books and fixing record date. (a) For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment of a meeting of shareholders, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors of a corporation may provide that stock transfer books are closed for a stated period, not less than that specified in any applicable bylaw and not more than sixty (60) days. In lieu of closing the stock transfer books, the bylaws, or in the absence of an applicable bylaw, the board of directors may fix in advance a date as the record date for any determination of shareholders, the date in any case to be not more than sixty (60) days prior to the date on which the particular action, requiring the determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the board of directors declaring the dividend is adopted, as the case may be, is the record date for the determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, the determination applies to any adjournment of the meeting. (b) In order that the corporation may determine the shareholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which record date may not precede the date upon which the resolution fixing the record date is adopted by the board of directors. If no record date has been fixed by the board of directors, the record date for determining shareholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by this chapter, is the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in this state, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of shareholders are recorded. Delivery made to a corporation’s registered office must be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the board of directors and prior action by the board of directors is required by this chapter, the record date for determining shareholders entitled to consent to corporate action in writing without a meeting is the close of business on the day on which the board of directors adopts the resolution taking such prior action. (c) A determination of shareholders entitled to notice of or to vote at a shareholders’ meeting is effective for any adjournment of the meeting unless the board of directors fixes a new record date. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

R.I. Gen. Laws § 7-1.2-704 Voting list.

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 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. (c) The corporation shall make the shareholders’ list available to any shareholder in attendance, whether in person or by remote communication, and any shareholder, his or her 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. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2018, ch. 346, § 2.

R.I. Gen. Laws § 7-1.2-705 Quorum of shareholders required for shareholders’ action.

7-1.2-705. Quorum of shareholders required for shareholders’ action. (a) Unless otherwise provided in the articles of incorporation or bylaws, a majority of the shares entitled to vote, represented in person or by proxy, constitutes a quorum at a meeting of shareholders, but in no event does a quorum consist of less than one-third (⅓) of the shares entitled to vote at the meeting. If a quorum is present, unless the vote of a greater number or voting by classes is required by this chapter or the articles of incorporation or bylaws, in all matters other than the election of directors, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter is the act of the shareholders. (b) Directors are elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. No amendment to the bylaws made by the board of directors pursuant to § 7-1.2-203 may require a greater number or voting by classes. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

R.I. Gen. Laws § 7-1.2-706 Greater voting requirements.

7-1.2-706. Greater voting requirements. Whenever, with respect to any action to be taken by the shareholders of a corporation, the articles of incorporation require the vote of the holders of a greater proportion of the shares, or of any class or series of the shares, than required by this chapter with respect to the action, the provisions of the articles of incorporation control. An amendment of the articles of incorporation which changes or deletes a provision is authorized by the same vote as would be required to take action under the provision. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

R.I. Gen. Laws § 7-1.2-707 Action by shareholders without a meeting.

7-1.2-707. Action by shareholders without a meeting. (a) Any action required or permitted to be taken at a meeting of shareholders by this chapter, or the articles of incorporation or bylaws of a corporation, may be taken without a meeting if all the shareholders entitled to vote on the action consent to the action in writing. (b)(1) Except for actions pursuant to § 7-1.2-1002 or § 7-1.2-1102, any action required or permitted to be taken at a meeting of shareholders by this chapter or the articles of incorporation or bylaws of a corporation, may be taken without a meeting upon the written consent of less than all the shareholders entitled to vote on the action, if: (i) Shareholders who consent would be entitled to cast at least the minimum number of votes that would be required to take the action at a meeting at which all shareholders entitled to vote on the action are present and voting in person or by proxy; and (ii) Action pursuant to this section is authorized by the articles of incorporation. (2) Prompt notice of the action must be given to all shareholders who would have been entitled to vote upon the action if the meeting were held. (c) Whenever action is taken pursuant to this section, the written consents of the shareholders consenting to the action must be filed with the minutes of proceedings of shareholders. (d) Any action taken pursuant to this section has the same effect for all purposes as if the action had been taken at a meeting of the shareholders. (e) If any other provision of this chapter requires the filing of a certificate upon the taking of an action by shareholders, and action is taken in the manner authorized by this section, the certificate must state that the action was taken without a meeting pursuant to the written consents of the shareholders and must include the number of shares represented by the consents. (f) The record date for determining shareholders entitled to express consent in writing, without a meeting, is determined in accordance with § 7-1.2-703 and, if no record date is fixed for the determination of shareholders entitled to vote by written consent, the date on which such request for written consent is delivered, in accordance with § 7-1.2-702, to shareholders is the record date for the determination of shareholders entitled to express such written consent. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

R.I. Gen. Laws § 7-1.2-708 Voting of shares.

7-1.2-708. Voting of shares. (a) Each outstanding share, regardless of series or class, is entitled to one vote on each matter submitted to a vote at a meeting of shareholders, except to the extent that the voting rights of the shares of any class or classes are limited, enlarged or denied by the articles of incorporation as permitted by this chapter. If the articles of incorporation provide for more or less than one vote for any share, on any matter, every reference in this chapter to a majority or other proportion of shares refers to a majority or other proportion of votes entitled to be cast. (b) Shares held, directly or indirectly, by another corporation if a majority of the shares entitled to vote for the election of directors of the other corporation is held by the corporation, may not be voted at any meeting or counted in determining the total number of outstanding shares at any given time. Nothing contained in these provisions is construed as limiting the right of any corporation to vote shares, including, but not limited to, its own shares, held in a fiduciary capacity. (c) Every shareholder entitled to vote at a meeting of shareholders or to express consent without a meeting may authorize another person or persons to act for him or her by proxy, executed, in writing, by the shareholder or by his or her duly authorized attorney in fact. No proxy is valid after three (3) years from the date of its execution, unless otherwise provided in the proxy. (1) Without limiting the manner in which a shareholder may authorize another person or persons to act for him or her as proxy pursuant to subsection (c) of this section, the following constitutes a valid means by which a shareholder may grant that authority: (i) A shareholder may execute a writing authorizing another person or persons to act for him or her as proxy. Execution may be accomplished by the shareholder or his or her authorized officer, director, employee or agent signing the writing or causing his or her signature to be affixed to the writing by any reasonable means including, but not limited to, facsimile signature. (ii) A shareholder may authorize another person or persons to act for him or her as proxy by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission, including internet and telephonic transmissions, to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or an agent authorized by the person who will be the holder of the proxy to receive the transmission, provided that the telegram, cablegram or other means of electronic transmission must either state or be submitted or communicated with information from which it can be determined that the telegram, cablegram or other electronic transmission, including internet and telephonic transmissions, was authorized by the shareholder. If it is determined that the telegrams, cablegrams or other electronic transmissions, including internet and telephonic transmissions, are valid, the inspectors or, if there are no inspectors, the other persons making that determination, shall specify the information upon which they relied. (2) Any reliable reproduction of the writing or transmission created pursuant to this section may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that the copy, facsimile telecommunication or other reproduction is a complete reproduction of the entire original writing or transmission. (3) The death or incapacity of the shareholder appointing a proxy does not affect the right of the corporation to accept the proxy’s authority unless notice of the death or incapacity is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises his or her authority under the appointment. (d) The articles of incorporation may provide that at each election of directors, or at elections held under specified circumstances, every shareholder entitled to vote at the election has the right to vote, in person or by proxy, the number of shares owned by him or her for as many persons as there are directors to be elected and for whose election he or she has a right to vote, or to cumulate his or her votes by giving one candidate as many votes as the number of directors multiplied by the number of his or her shares equals, or by distributing the votes on the same principle among any number of the candidates. (e) Shares standing in the name of another corporation, domestic or foreign, may be voted by any officer, agent or proxy that the bylaws of the corporation may prescribe or, in the absence of a provision, as the board of directors of the corporation may determine. (f) Shares held by an administrator, executor, guardian, custodian under a gift to minors act, conservator or trustee may be voted by him or her, either in person or by proxy, without a transfer of the shares into his or her name. (g) Shares held by two (2) or more persons as joint tenants or as tenants in common may be voted at any meeting of the shareholders by any one of the persons, unless another joint tenant or tenant in common seeks to vote any of the shares in person or by proxy. In the latter event, the written agreement, if any, which governs the manner in which the shares are voted, controls if presented at the meeting. If there is no agreement presented at the meeting, the majority in number of the joint tenants or tenants in common present control the manner of voting. If there is no majority, or if there are two (2) joint tenants or tenants in common, both of whom seek to vote the shares, the shares, for the purpose of voting, must be divided equally among the joint tenants or tenants in common present. (h) Shares standing in the name of a receiver may be voted by the receiver, and shares held by or under the control of a receiver may be voted by the receiver without the transfer of those shares into his or her name if authority to do so is contained in an appropriate order of the court by which the receiver was appointed. (i) A shareholder whose shares are pledged is entitled to vote the shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee is entitled to vote the shares so transferred. (j) On and after the date on which written notice of redemption of redeemable shares has been mailed to the holders of the shares and a sum sufficient to redeem the shares has been deposited with a bank or trust company with irrevocable instruction and authority to pay the redemption price to the holders of the shares upon surrender of certificates for the shares, the shares are not entitled to vote on any matter and are not deemed to be outstanding shares. (k)(1) An executed proxy is irrevocable if it specifies that it is irrevocable and if, and only so long as, it is coupled with an interest sufficient in law to support an irrevocable power coupled with it. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the shares itself or an interest in the corporation generally. (2) Without limiting the generality of subsection (k)(1) and subject to that subsection, a proxy is coupled with an interest and is irrevocable if it is held by any of the following or a nominee of any of the following: (i) A pledgee under a valid pledge; (ii) A person who has agreed to purchase the shares under an executory contract of sale; (iii) A creditor or creditors of the corporation who extend or continue credit to the corporation in consideration of the proxy if the proxy states that it was given in consideration of the extension or continuation of credit, the amount of the credit, and the name of the person extending or continuing credit; and (iv) A person who has contracted to perform services for the corporation if a proxy is required by the contract of employment, as part of the consideration for the contract of employment, if the proxy states that it was given in consideration of the contract of employment, the name of the employee, and the period of employment contracted for; provided the proxies are respectively revocable after the pledge is redeemed, or the executory contract of sale is performed, or the debt of the corporation is paid, or the period of employment has terminated. (3) A provision contained in a proxy making it irrevocable is not enforceable against a purchaser for value of the shares subject to the provision without actual knowledge of the existence of the provision, unless notice of the proxy and its irrevocability appears plainly on the certificate or certificates representing the shares; provided that if such shares are uncertificated, a provision contained in a proxy making it irrevocable is enforceable against a purchaser for value of the shares subject to the provision without actual knowledge of the existence of the provision if, and only if, notice of the proxy and its irrevocability was provided in writing to such purchaser prior to the consummation of the purchase of such shares. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

R.I. Gen. Laws § 7-1.2-709 Voting trusts and agreements among shareholders.

7-1.2-709. Voting trusts and agreements among shareholders. (a) Any number of shareholders of a corporation may create a voting trust for the purpose of conferring upon a trustee or trustees the right to vote or otherwise represent their shares, for a period not to exceed ten (10) years, by entering into a written voting trust agreement specifying the terms and conditions of the voting trust, by depositing a counterpart of the agreement with the corporation at its registered office, and by transferring their shares to the trustee or trustees for the purposes of the agreement. The trustee or trustees shall keep a record of the holders of voting trust certificates evidencing a beneficial interest in the voting trust, giving the names and addresses of all the holders and the number and class of the shares in respect of which the voting trust certificates held by each are issued, and shall deposit a copy of the record with the corporation at its registered office. The counterpart of the voting trust agreement and the copy of the record deposited with the corporation are subject to the same right of examination by a shareholder of the corporation, in person or by agent or attorney, as are the books and records of the corporation, and the counterpart and the copy of the record is subject to examination by any holder of record of voting trust certificates, either in person or by agent or attorney, at any reasonable time for any proper purpose. The trust certificates must state that they are issued pursuant to the voting trust agreement, and that fact must be stated in the stock ledger of the corporation. (b) Agreements among shareholders regarding the voting of their shares are valid and enforceable in accordance with their terms for a period not to exceed ten (10) years. An agreement is not subject to the provision of this section regarding voting trusts unless it is stated in the agreement that it is a voting trust. (c) The provisions of this section are construed as permissive and should not be interpreted to invalidate any voting or other agreement among shareholders, or any irrevocable proxy which is otherwise not illegal. (d) A voting trust or shareholders agreement may at any time or times be extended for an additional period not in excess of ten (10) years, but the extension is binding only with respect to those shares owned of record or beneficially by parties to the extension. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

R.I. Gen. Laws § 7-1.2-710 Voting and inspection rights of bondholders and debenture holders.

7-1.2-710. Voting and inspection rights of bondholders and debenture holders. The articles of incorporation may, to the extent and in the manner provided in the articles of incorporation, confer on the holders of bonds or other evidences of indebtedness of the corporation rights to vote in the election of directors and on any other matters on which shareholders may vote and rights to inspect the books and records of the corporation. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

R.I. Gen. Laws § 7-1.2-711 Actions by shareholders.

7-1.2-711. Actions by shareholders. (a) Definitions. In this 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. (c) Demand. No shareholder may commence a derivative proceeding until: (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 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 subsection (e)(6), the determination in 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 (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 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 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 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. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2018, ch. 346, § 2.

Source: State of Rhode Island General Assembly (rilegislature.gov)URL: https://webserver.rilegislature.gov/Statutes/TITLE7/7-1.2/7-7/INDEX.htmFetched: 10/20/2026