AI-assisted research summary: This section defines key terms used for nonprofit corporate actions, defective corporate actions, overissues, valid membership interests, and validation timing.
In this Division: (1) “CORPORATE ACTION” means any action taken by or on behalf of the nonprofit corporation, including any action taken by the incorporator, the board of directors, a committee of the board of directors, an officer or agent of the nonprofit corporation, or the members, if any. (2) “DATE OF THE DEFECTIVE CORPORATE ACTION” means the date (or the approximate date, if the exact date is unknown) the defective corporate action was purported to have been taken. (3) “DEFECTIVE CORPORATE ACTION” means (i) any corporate action purportedly taken that is, and at the time that corporate action was purportedly taken would have been, within the power of the nonprofit corporation, but is void or voidable due to a failure of authorization, and (ii) an overissue. (4) “FAILURE OF AUTHORIZATION” means the failure to authorize, approve, or otherwise effect a corporate action in compliance with the provisions of this chapter, the certificate of incorporation or bylaws, a corporate resolution, or any plan or agreement to which the nonprofit corporation is a party, if and to the extent that failure would render that corporate action void or voidable. (5) “OVERISSUE” means the purported issuance of: (i) membership interests of a class in excess of the number, if any, of membership interests of a class the nonprofit corporation has the power to issue under its certificate of incorporation or bylaws at the time of issuance; or (ii) membership interests of any class that is not then authorized for issuance by the certificate of incorporation or bylaws. (6) “PUTATITVE MEMBERSHIP INTEREST” means a membership interest of any class (including a membership interest issued upon exercise of rights, options, warrants, or other securities convertible into a membership interest of the nonprofit corporation, or interests with respect to that membership interest) that was created or issued as a result of a defective corporate action, that (i) but for any failure of authorization would constitute a valid membership interest, or (ii) cannot be determined by the board of directors to be a valid membership interest. (7) “VALID MEMBERSHIP INTEREST” means the membership interest of any class that has been duly authorized and validly issued in accordance with this chapter, including as a result of ratification or validation under this article. (8) “VALIDATION EFFECTIVE TIME” with respect to any defective corporate action ratified under this article means the later of: (i) the time at which the ratification of the defective corporate action is approved by the members, if any, and if none, by the board of directors; and (ii) the time at which any certificate of validation filed in accordance with Section 10A-3A-1.26 becomes effective. The validation effective time shall not be affected by the filing or pendency of a judicial proceeding under Section 10A-3A-1.27 or otherwise, unless otherwise ordered by the court.