Corporation acts

AN ACT Relating to making updates to Washington's corporation 1
acts; and amending RCW 23B.06.240, 23B.08.250, 23B.11A.070, 2
23B.13.020, 23B.14.020, 24.03A.575, and 24.06.145. 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
Sec. 1. RCW 23B.06.240 and 2020 c 194 s 6 are each amended to 5
read as follows: 6
(1) Unless the articles of incorporation provide otherwise, a 7
corporation may issue rights, options, or warrants for the purchase 8
of shares or other securities of the corporation. The board of 9
directors ((shall)) must determine the terms and conditions upon 10
which the rights, options, or warrants are issued ((, their form and 11
content, and the terms and conditions relating to their exercise, 12
including the time or times, the conditions precedent, and the 13
consideration for which and the holders by whom the rights, options, 14
or warrants may be exercised )) and may become exercisable, 15
exchangeable, or convertible, including the consideration for which 16
the shares or other securities are to be issued. The authorization by 17
the board of directors for the corporation to issue such rights, 18
options, or warrants constitutes authorization of the issuance of the 19
shares or other securities for which the rights, options, or warrants 20
are exercisable. 21
Z-0146.1
SENATE BILL 5006
State of Washington 69th Legislature 2025 Regular Session
By Senators Pedersen, Holy, Nobles, and Wellman; by request of
Washington State Bar Association
Prefiled 12/03/24. Read first time 01/13/25. Referred to Committee
on Law & Justice.
p. 1 SB 5006
(2) The terms and conditions of such rights, options, or 1
warrants((, including the time or times, the conditions precedent, 2
and the consideration for which and the holders by whom the rights, 3
options, or warrants may be exercised, as well as their duration (a) 4
may preclude)) may include restrictions or conditions that:5
(a) Preclude or limit the exercise, transfer, or receipt of such 6
rights, options, or warrants ((or invalidate )) by any person or 7
persons owning or offering to acquire any number or percentage of the 8
outstanding shares or other securities of the corporation or by any 9
transferee or transferees of any such person or persons;10
(b) Invalidate or void any rights, options, or warrants ((and (b) 11
may be made)) held by any person or persons or any such transferee or 12
transferees; or13
(c) Are dependent upon facts ascertainable outside the documents 14
evidencing them or outside the resolution or resolutions adopted by 15
the board of directors creating such rights, options, or warrants if 16
the manner in which those facts operate on the rights, options, or 17
warrants or the holders thereof is clearly set forth in the documents 18
or the resolutions. For purposes of this section, "facts 19
ascertainable outside the documents evidencing them or outside the 20
resolution or resolutions adopted by the board of directors creating 21
such rights, options, or warrants" includes, but is not limited to, 22
the existence of any condition or the occurrence of any event, 23
including, without limitation, a determination or action by any 24
person or body, including the corporation, its board of directors, or 25
an officer, employee, or agent of the corporation.26
(3) The board of directors may authorize one or more officers to: 27
(a) Designate the recipients of rights, options, warrants, or other 28
equity awards that involve the issuance of shares of the corporation; 29
and (b) determine, within an amount and subject to other limitations 30
established by the board of directors and, if applicable, the 31
shareholders, the number of such rights, options, warrants, or other 32
equity awards, and the terms and conditions of such rights, options, 33
warrants, or other equity awards to be received by the recipients. An 34
officer may not use such authority to designate himself or herself or 35
any other persons as the board of directors may specify as a 36
recipient of such rights, options, warrants, or other equity awards.37
Sec. 2. RCW 23B.08.250 and 2009 c 189 s 27 are each amended to 38
read as follows: 39
p. 2 SB 5006
(1) Unless this title, the articles of incorporation , or the 1
bylaws provide otherwise, a board of directors may ((create)) 2
establish one or more board committees ((of directors. Each committee 3
must have two or more members, who serve at the pleasure )) composed 4
exclusively of one or more directors to perform functions of the 5
board of directors. 6
(2) The ((creation)) establishment of a board committee and 7
appointment of members to it must be approved by the greater of (a) a 8
majority of all the directors in office when ((the creation of the 9
committee is approved )) this corporate action is taken or (b) the 10
number of directors required by the articles of incorporation or 11
bylaws to ((approve the creation of the committee under RCW 12
23B.08.240)) take corporate action under RCW 23B.08.240, unless, in 13
either case, this title or the articles of incorporation provide 14
otherwise. 15
(3) RCW 23B.08.200 through 23B.08.240((, which govern meetings, 16
approval of corporate action without meetings, notice and waiver of 17
notice, and quorum and voting requirements of the board of directors, 18
apply to committees and their members as well )) apply to board 19
committees and their members. 20
(4) ((To the extent specified by the board of directors or in the 21
articles of incorporation or bylaws, each committee may exercise the 22
authority of the board of directors under RCW 23B.08.010.23
(5) A committee may not, however:24
(a) Approve a distribution )) A board committee may exercise the 25
powers of the board of directors under RCW 23B.08.010, to the extent 26
specified by the board of directors or in the articles of 27
incorporation or bylaws, except that a board committee may not:28
(a) Authorize or approve distributions, except according to a 29
((general)) formula or method , or within limits, prescribed by the 30
board of directors; 31
(b) Approve or propose to shareholders corporate action that this 32
title requires be approved by shareholders; 33
(c) Fill vacancies on the board of directors or , subject to 34
subsection (5) of this section, on any ((of its )) board committees; 35
or36
(d) ((Amend articles of incorporation pursuant to RCW 23B.10.020;37
(e))) Adopt, amend, or repeal bylaws((;38
(f) Approve a plan of merger not requiring shareholder approval; 39
or40
p. 3 SB 5006
(g) Approve the issuance or sale or contract for sale of shares, 1
or determine the designation and relative rights, preferences, and 2
limitations of a class or series of shares, except that the board of 3
directors may authorize a committee, or a senior executive officer of 4
the corporation to do so within limits specifically prescribed by the 5
board of directors.6
(6) The creation of, delegation of authority to, or approval of 7
corporate action by a committee does not alone constitute compliance 8
by a director with the standards of conduct described in RCW 9
23B.08.300)). 10
(5) The board of directors may appoint one or more directors as 11
alternate members of any board committee to replace any absent or 12
disqualified member during the member's absence or disqualification. 13
If the articles of incorporation, the bylaws, or the resolution 14
creating the board committee so provide, the member or members 15
present at any board committee meeting and not disqualified from 16
voting may, by unanimous action, appoint another director to act in 17
place of an absent or disqualified member during that member's 18
absence or disqualification.19
Sec. 3. RCW 23B.11A.070 and 2024 c 22 s 9 are each amended to 20
read as follows: 21
(1) When a merger becomes effective: 22
(a) The domestic corporation or other entity that is designated 23
in the plan of merger as the surviving entity continues;24
(b) The separate existence of every domestic corporation or other 25
entity that is merged into the surviving entity ceases;26
(c) All property owned by, and every contract right possessed by, 27
each domestic corporation or other entity that is merged into the 28
surviving entity are the property and contract rights of the 29
surviving entity without transfer, reversion, or impairment;30
(d) All debts, obligations, and other liabilities of each 31
domestic corporation or other entity that is merged into the 32
surviving entity are debts, obligations, or liabilities of the 33
surviving entity; 34
(e) The name of the surviving entity may, but need not be, 35
substituted in any pending proceeding for the name of any party to 36
the merger whose separate existence ceased in the merger;37
(f) If the surviving entity is a domestic entity, the articles of 38
incorporation and bylaws or the organic rules of the surviving entity 39
p. 4 SB 5006
are amended, or amended and restated, to the extent provided in the 1
plan of merger; 2
(g) The shares of or interests in each entity that is a party to 3
the merger that are to be converted in accordance with the terms of 4
the merger into shares or other securities, interests, obligations, 5
rights to acquire shares, other securities, or interests, cash, other 6
property, or any combination of the foregoing, are converted, and the 7
former holders of such shares or interests are entitled only to the 8
rights provided to them by those terms or to any rights they may have 9
under chapter 23B.13 RCW or the organic law governing the other 10
entity; 11
(h) Except as provided by law or the plan of merger, all the 12
rights, privileges, franchises, and immunities of each entity that is 13
merged into the surviving entity, are the rights, privileges, 14
franchises, and immunities of the surviving entity;15
(i) All the property and contract rights of the surviving entity 16
remain its property and contract rights without transfer, reversion, 17
or impairment; 18
(j) The surviving entity remains subject to all its debts, 19
obligations, and other liabilities; and 20
(k) Except as provided by law or the plan of merger, the 21
surviving entity continues to hold all of its rights, privileges, 22
franchises, and immunities. 23
(2) When a share exchange becomes effective, the shares in the 24
acquired entity that are to be exchanged for shares or other 25
securities, obligations, rights to acquire shares, other securities, 26
cash, other property, or any combination of the foregoing, are 27
exchanged, and the former holders of such shares are entitled only to 28
the rights provided to them in the plan of share exchange or to any 29
rights they may have under chapter 23B.13 RCW. 30
(3) Except as provided otherwise in the articles of incorporation 31
of a domestic corporation or the organic law governing or organic 32
rules of an other entity, the effect of a merger or share exchange on 33
owner liability is as follows: 34
(a) A person who becomes subject to new owner liability in 35
respect of an entity as a result of a merger or share exchange will 36
have that new owner liability only in respect of owner liabilities 37
that arise after the merger or share exchange becomes effective;38
(b) If a person had owner liability with respect to a party to 39
the merger or the acquired entity before the merger or share exchange 40
p. 5 SB 5006
becomes effective with respect to shares or interests of such party 1
or acquired entity which were exchanged in the merger or share 2
exchange, which were canceled in the merger, or the terms and 3
conditions of which relating to owner liability were amended under 4
the terms of the merger: 5
(i) The merger or share exchange does not discharge that prior 6
owner liability with respect to any owner liabilities that arose 7
before the merger or share exchange becomes effective;8
(ii) The provisions of the organic law governing any entity for 9
which the person had that prior owner liability will continue to 10
apply to the collection or discharge of any owner liabilities 11
preserved by (b)(i) of this subsection (3), as if the merger or share 12
exchange had not occurred; 13
(iii) The person will have such rights of contribution from other 14
persons as are provided by the organic law governing the entity for 15
which the person had that prior owner liability with respect to any 16
owner liabilities preserved by (b)(i) of this subsection (3), as if 17
the merger or share exchange had not occurred; and18
(iv) The person will not, by reason of such prior owner 19
liability, have owner liability with respect to any owner liabilities 20
that arise after the merger or share exchange becomes effective;21
(c) If a person has owner liability both before and after a 22
merger becomes effective with unchanged terms and conditions with 23
respect to the entity that is the surviving entity by reason of 24
owning the same shares or interests before and after the merger 25
becomes effective, the merger has no effect on such owner liability; 26
and 27
(d) A share exchange has no effect on owner liability related to 28
shares of the acquired entity that were not exchanged in the share 29
exchange. 30
(4) Upon a merger becoming effective, a foreign other entity that 31
is the surviving entity of the merger is deemed to:32
(a) Appoint the secretary of state as its agent for service of 33
process in a proceeding to enforce the rights of shareholders of each 34
domestic corporation that is a party to the merger who are entitled 35
to and exercise dissenters' rights under chapter 23B.13 RCW; and36
(b) Agree that it will promptly pay the amount, if any, to which 37
such shareholders are entitled under chapter 23B.13 RCW.38
(5) Except as provided in the organic law governing a party to a 39
merger or in its articles of incorporation or organic rules, the 40
p. 6 SB 5006
merger does not give rise to any rights that a shareholder, interest 1
holder, governor, or third party would have upon a dissolution, 2
liquidation, or winding up of that party. The merger does not require 3
a party to the merger to wind up its affairs and does not constitute 4
or cause its dissolution or termination. 5
Sec. 4. RCW 23B.13.020 and 2024 c 22 s 22 are each amended to 6
read as follows: 7
(1) A shareholder is entitled to dissent from, and obtain payment 8
of the fair value of the shareholder's shares in the event of, any of 9
the following corporate actions: 10
(a) Consummation of a merger to which the corporation is a party 11
(i) if shareholder approval is required for the merger by RCW 12
23B.11A.040 or the articles of incorporation, or would be required 13
but for the provisions of RCW 23B.11A.045, and the shareholder is, or 14
but for the provisions of RCW 23B.11A.045 would be, entitled to vote 15
on the merger, except that the right to dissent will not be available 16
to any shareholder of the corporation with respect to shares of any 17
class or series that remain outstanding after consummation of the 18
merger; or (ii) if the corporation is a subsidiary and the merger is 19
governed by RCW 23B.11A.050; 20
(b) A plan of share exchange, which has become effective, to 21
which the corporation is a party as the corporation whose shares have 22
been acquired, if the shareholder was entitled to vote on the plan;23
(c) A sale, lease, exchange, or other disposition, which has 24
become effective, of all, or substantially all, of the property and 25
assets of the corporation other than in the usual and regular course 26
of business, if the shareholder was entitled to vote on the sale, 27
lease, exchange, or other disposition, including a disposition in 28
dissolution, but not including a disposition pursuant to court order 29
or a disposition for cash pursuant to a plan by which all or 30
substantially all of the net proceeds of the disposition will be 31
distributed to the shareholders within one year after the date of the 32
disposition; 33
(d) An amendment of the articles of incorporation, whether or not 34
the shareholder was entitled to vote on the amendment, if the 35
amendment effects a redemption or cancellation of all of the 36
shareholder's shares in exchange for cash or other consideration 37
other than shares of the corporation; 38
(e) Any action described in RCW 23B.25.120; 39
p. 7 SB 5006
(f) Any corporate action approved pursuant to a shareholder vote 1
to the extent the articles of incorporation, bylaws, or a resolution 2
of the board of directors provides that voting or nonvoting 3
shareholders are entitled to dissent and obtain payment for their 4
shares; ((or))5
(g) A plan of entity conversion in the case of a conversion of a 6
domestic corporation to a foreign corporation, which has become 7
effective, to which the domestic corporation is a party as the 8
converting entity, if: (i) The shareholder was entitled to vote on 9
the plan; and (ii) the shareholder does not receive shares in the 10
surviving entity that have terms as favorable to the shareholder in 11
all material respects and that represent at least the same percentage 12
interest of the total voting rights of the outstanding shares of the 13
surviving entity as the shares held by the shareholder before the 14
conversion; or15
(h) Consummation of a conversion of the corporation to another 16
entity which is not a foreign corporation pursuant to RCW 23B.09.010.17
(2) A shareholder entitled to dissent and obtain payment for the 18
shareholder's shares under this chapter may not challenge the 19
corporate action creating the shareholder's entitlement unless the 20
action fails to comply with the procedural requirements imposed by 21
this title, RCW 25.10.831 through 25.10.886, the articles of 22
incorporation, or the bylaws, or is fraudulent with respect to the 23
shareholder or the corporation. 24
(3) The right of a dissenting shareholder to obtain payment of 25
the fair value of the shareholder's shares shall terminate upon the 26
occurrence of any one of the following events: 27
(a) The proposed corporate action is abandoned or rescinded;28
(b) A court having jurisdiction permanently enjoins or sets aside 29
the corporate action; or 30
(c) The shareholder's demand for payment is withdrawn with the 31
written consent of the corporation. 32
Sec. 5. RCW 23B.14.020 and 2011 c 328 s 8 are each amended to 33
read as follows: 34
(1) A corporation's board of directors may propose dissolution 35
for submission to the shareholders. 36
(2) For a proposal to dissolve to be approved:37
(a) The board of directors must recommend dissolution to the 38
shareholders unless (i) the board of directors determines that 39
p. 8 SB 5006
because of conflict of interest or other special circumstances it 1
should make no recommendation or (ii) RCW 23B.08.245 applies, and in 2
either case the board of directors communicates the basis for so 3
proceeding to the shareholders; and 4
(b) The shareholders entitled to vote must approve the proposal 5
to dissolve as provided in subsection (5) of this section.6
(3) The board of directors may condition its submission of the 7
proposal for dissolution on any basis, including the affirmative vote 8
of holders of a specified percentage of shares held by any group of 9
shareholders not otherwise entitled under this title or the articles 10
of incorporation to vote as a separate voting group on the proposed 11
dissolution. 12
(4) The corporation shall notify each shareholder, whether or not 13
entitled to vote, of the proposed dissolution either (a) by giving 14
notice of a shareholders' meeting in accordance with RCW 23B.07.050 15
and stating that the purpose or one of the purposes of the meeting is 16
to consider dissolving the corporation, or (b) in accordance with the 17
requirements of RCW 23B.07.040 for approving the proposed dissolution 18
without a meeting. 19
(5) ((In addition to any other voting conditions imposed by the 20
board of directors under subsection (3) of this section, the proposed 21
dissolution must be approved by two-thirds of the voting group 22
comprising all )) (a) With respect to a corporation formed before 23
August 1, 2024:24
(i) Unless the articles of incorporation, or the board of 25
directors acting in accordance with subsection (3) of this section, 26
requires a different vote, shareholder approval of the proposed 27
dissolution requires:28
(A) The approval of two-thirds of the votes entitled to be cast 29
on the proposed dissolution; and30
(B) The approval of two-thirds of the votes entitled to be cast 31
on the proposed dissolution ((, and of )) by each other voting group 32
entitled under the articles of incorporation to vote separately on 33
the proposed dissolution. 34
(ii) The articles of incorporation may require a ((greater or 35
lesser)) different vote than that provided in this subsection (5)(a), 36
or a ((greater or lesser )) different vote by ((any)) separate voting 37
groups ((provided for in the articles of incorporation )), so long as 38
the required vote is not less than a majority of all the votes 39
p. 9 SB 5006
entitled to be cast on the proposed dissolution and of each other 1
voting group entitled to vote separately on the proposed dissolution.2
(b) With respect to a corporation formed on or after August 1, 3
2024, unless the articles of incorporation, or the board of directors 4
acting in accordance with subsection (3) of this section, requires a 5
greater vote, shareholder approval of the proposed dissolution 6
requires:7
(i) The approval of a majority of the votes entitled to be cast 8
on the proposed dissolution; and9
(ii) The approval of a majority of the votes entitled to be cast 10
on the proposed dissolution by each other voting group entitled under 11
the articles of incorporation to vote separately on the proposed 12
dissolution.13
Sec. 6. RCW 24.03A.575 and 2021 c 176 s 2506 are each amended to 14
read as follows: 15
(1) Unless this chapter, the articles, or the bylaws provide 16
otherwise, a board may create one or more committees of the board 17
that consist of ((two)) one or more directors. A committee of the 18
board shall not include as voting members persons who are not 19
directors, except: 20
(a) As provided in Title 48 RCW or the regulations promulgated 21
thereunder; 22
(b) If the only powers delegated to the committee are those 23
necessary for the committee to serve in any fiduciary capacity with 24
respect to one or more employee benefit plans established under the 25
federal employee retirement income security act of 1974, or any 26
successor statute; or 27
(c) Unless without the inclusion of persons who are not directors 28
it is impossible or impracticable for the corporation to comply with 29
applicable law other than this chapter. 30
(2) Unless this chapter otherwise provides, the creation of a 31
committee of the board and appointment of directors to it shall be 32
approved by the greater of: 33
(a) A majority of all the directors in office when the action is 34
taken; or 35
(b) The number of directors required by the articles or bylaws to 36
take action under RCW 24.03A.565. 37
(3) RCW 24.03A.550 through 24.03A.570 apply to both committees of 38
the board and their members to the greatest practicable extent.39
p. 10 SB 5006
(4) To the extent specified by the board or in the articles or 1
bylaws, each committee of the board may exercise the powers of the 2
board granted through RCW 24.03A.490(2), except as limited by 3
subsection (5) of this section. 4
(5) A committee of the board may not: 5
(a) Authorize distributions; 6
(b) Adopt, amend, alter, or repeal bylaws; 7
(c) In the case of a membership corporation, approve or propose 8
to members action that must be approved by members under the articles 9
or bylaws; 10
(d) Elect, appoint(([,])), or remove any member of any committee 11
of the board or any director or officer of the corporation;12
(e) Amend the articles; 13
(f) Adopt a plan of merger with another corporation;14
(g) Adopt a plan of domestication, for-profit conversion, or 15
entity conversion; 16
(h) Authorize the sale, lease, or exchange of all or 17
substantially all of the property and assets of the corporation not 18
in the ordinary course of business; 19
(i) Authorize the voluntary dissolution of the corporation or 20
revoke proceedings therefor; 21
(j) Adopt a plan for the distribution of the assets of the 22
corporation; or 23
(k) Amend, alter, or repeal any resolution of the board, unless 24
the resolution provides by its terms that it may be amended, altered, 25
or repealed by a committee. 26
(6) The creation of, delegation of authority to, or action by a 27
committee of the board does not alone constitute compliance by a 28
director with the standards of conduct described in RCW 24.03A.495.29
(7) A nonprofit corporation may create or authorize the creation 30
of one or more advisory committees whose members need not be 31
directors or meet the qualification requirements for directors. The 32
board shall not delegate any of its authority to an advisory 33
committee. An advisory committee: 34
(a) Is not a committee of the board; and 35
(b) May not exercise any of the powers of the board.36
Sec. 7. RCW 24.06.145 and 2011 c 336 s 667 are each amended to 37
read as follows: 38
p. 11 SB 5006
If the articles of incorporation or the bylaws so provide, the 1
board of directors, by resolution adopted by a majority of the 2
directors in office, may designate and appoint one or more committees 3
each of which shall consist of ((two)) one or more directors, which 4
committees, to the extent provided in such resolution, in the 5
articles of incorporation, or in the bylaws of the corporation, shall 6
have and exercise the authority of the board of directors in the 7
management of the corporation: PROVIDED, That no such committee shall 8
have the authority of the board of directors in reference to:9
(1) Amending, altering, or repealing the bylaws;10
(2) Electing, appointing, or removing any member of any such 11
committee or any director or officer of the corporation;12
(3) Amending the articles of incorporation; 13
(4) Adopting a plan of merger or a plan of consolidation with 14
another corporation; 15
(5) Authorizing the sale, lease, exchange, or mortgage, of all or 16
substantially all of the property and assets of the corporation;17
(6) Authorizing the voluntary dissolution of the corporation or 18
revoking proceedings therefor; or 19
(7) Amending, altering, or repealing any resolution of the board 20
of directors which by its terms provides that it shall not be 21
amended, altered, or repealed by such committee. 22
The designation and appointment of any such committee and the 23
delegation thereto of authority shall not operate to relieve the 24
board of directors, or any individual director of any responsibility 25
imposed upon it or him or her by law. 26
--- END ---
p. 12 SB 5006