COMMENT

Source: Model Act, § 8.10. This replaces provisions formerly found in § 14-2-144.

Section14-2-810 sets out a general rule for the filling of a vacancy. The vacancy, unless the articles of incorporation provide otherwise, may be filled by either the shareholders or the board of directors (or a majority of the remaining directors, if less than a quorum remain in office). The power is concurrent. The first group to act fills the vacancy. Formerly § 14-2-144(1) provided a sequence for action to fill vacancies: if the directors fail to act, then shareholders could fill the vacancy.

Subsection (b) provides that if a voting group of shares is entitled to elect a director, only that voting group is entitled to fill a vacant office which was held by a director elected by that voting group. Former § 14-2-144(2) provided for replacement by the remaining directors elected by a particular class or series, or if none remain, by the holders of that class or series. This section is part of the consistent treatment of directors elected by a voting group of shareholders. See Sections14-2-140,14-2-725,14-2-726,14-2-728,14-2-804, and14-2-808(b).

Subsection (c) permits vacancies that will arise on a specific later date to be filled in advance of that date so long as the designee does not actually take office until the vacancy occurs. The director in the office that will become vacant may participate in the selection of his successor. In a closely held corporation with a balance of power on the board of directors that was reached by agreement, a prospective resignation followed by the appointment of a successor under this section permits the board to act on the replacement before the change in balance caused by the resignation.

Note to 1989 Amendment The 1989 amendment to subsection (a) permits variance in rules about filling board vacancies in shareholder-approved bylaws as well as in the articles, consistent with other provisions of the Code. The 1989 amendments also changed subsection (b) of the Code which, following the Model Act, originally provided that if a voting group of shares is entitled to elect a director, only that voting group, was entitled to fill a vacant office which was held by a director elected by that voting group. The 1989 amendment restored the general approach of former § 14-2-144(2), which provided for replacement by the remaining directors elected by a particular class or series, or if they did not act or if none remained, by the holders of that class or series. The 1989 amendment provides concurrent rather than alternative power, so that either directors elected by the class or series or the holders of shares of the class or series may act. When one group acts, the vacancy no longer exists and the power of the other group to act is extinguished.

Note to 2008 Amendment The 2008 amendment to subsection (c) of Code Section 14-2-810 deleted the word "specific" before "later date" to clarify that subsection (c) also applies in the case of a resignation effective upon the happening of an event as contemplated in subsection (b) of Code Section 14-2-807. Subsection (c) of Code Section 14-2-810 also was amended to recognize that a resignation conditioned upon the happening of an event as contemplated in subsection (b) of Code Section 14-2-807 may never become effective and therefore a vacancy in such scenario may not occur.

Cross-References Election by voting group of shareholders, see § 14-2-804. Number of directors, see § 14-2-803. Quorum and voting of directors, see § 14-2-824. Removal of directors, see § 14-2-808. Resignation of directors, see § 14-2-807. Shareholders' meetings, see § 14-2-701 et seq. Terms of directors generally, see § 14-2-805. Voting by voting group, see §§ 14-2-725 &14-2-726. "Voting group" defined, see § 14-2-140.

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