# Corporations and Associations (GCA)

## Title 2. Corporations in General -- Formation, Organization, and Operation

### Subtitle 1. Formation and Powers

#### Section 2-101

(a) Except as otherwise expressly provided by law, a corporation may be formed under this title for any lawful purposes.

(b) If the purpose for which a corporation is organized or its form makes it subject to a special provision of law, the corporation also shall comply with that provision.

#### Section 2-102

(a) Except as provided elsewhere in this section, in order to form a corporation, one or more adult individuals acting as incorporators shall:

  (1) Sign and acknowledge articles of incorporation; and

  (2) File them for record with the Department.

(b)

  (1) A proposed corporation becomes a body corporate under the name and subject to the purposes, conditions, and provisions stated in the articles of incorporation, effective as of the later of:

    (i) The time the Department accepts the articles for record; or

    (ii) The time established under the articles, not later than 30 days after the Department accepts the articles for record.

  (2) Except in a proceeding by the State for forfeiture of a corporation's charter, acceptance of the articles for record by the Department is conclusive evidence of the formation of the corporation.

  (3)

    (i) The Department may not accept articles of incorporation from a fire or rescue organization to be located in Frederick County for the purpose of providing fire or rescue service in Frederick County unless the articles are accompanied by a written resolution of the governing body of Frederick County indicating approval of the proposed incorporation.

    (ii) Incorporated municipalities in Frederick County with primary responsibility for governmental funding for fire service shall within their jurisdiction hold those powers assigned to the governing body of Frederick County in this paragraph.

#### Section 2-103

Unless otherwise provided by law or its charter, a Maryland corporation has the general powers, whether or not they are set forth in its charter, to:

(1) Have perpetual existence;

(2) Sue, be sued, complain, and defend in all courts;

(3) Have, use, alter, or abandon a corporate seal;

(4) Transact its business, carry on its operations, and exercise the powers granted by this article in any state, territory, district, and possession of the United States and in any foreign country;

(5) Make contracts and guarantees, incur liabilities, and borrow money;

(6) Sell, lease, exchange, transfer, convey, mortgage, pledge, and otherwise dispose of any or all of its assets;

(7) Issue bonds, notes, and other obligations and secure them by mortgage or deed of trust of any or all of its assets;

(8) Acquire by purchase or in any other manner, and take, receive, own, hold, use, employ, improve, and otherwise deal with any interest in real or personal property, wherever located;

(9) Purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, loan, pledge, or otherwise dispose of and otherwise use and deal in and with stock and other interests in and obligations of other Maryland and foreign corporations, associations, partnerships, and individuals;

(10) Subject to the limitations provided in this article, acquire any of its own stock, bonds, notes, and other obligations and securities;

(11) Invest its surplus funds, lend money from time to time in any manner which may be appropriate to enable it to carry on the operations or fulfill the purposes specified in its charter, and take and hold real and personal property as security for the payment of funds so invested or loaned;

(12) Be a promoter, partner, member, associate, or manager of any partnership, joint venture, trust, or other enterprise;

(13) Make gifts or contributions in cash, other property, or stock or other securities of the corporation to or for the use of:

  (i) The United States, this State, another state of the United States, a territory, possession, or district of the United States, or any institution, agency, or political subdivision of any of them; and

  (ii) Any governmental or other organization, whether inside or outside the United States, for religious, charitable, scientific, civic, public welfare, literary, or educational purposes;

(14) Elect its officers and appoint its agents, define their duties, determine their compensation, and adopt and carry into effect employee and officer benefit plans;

(15) Renounce, in its charter or by resolution of its board of directors, any interest or expectancy of the corporation in, or in being offered an opportunity to participate in, business opportunities or classes or categories of business opportunities that are:

  (i) Presented to the corporation; or

  (ii) Developed by or presented to one or more of its directors or officers;

(16) Adopt, alter, and repeal bylaws not inconsistent with law or its charter for the regulation and management of its affairs;

(17) Exercise generally the powers set forth in its charter and those granted by law; and

(18) Do every other act not inconsistent with law which is appropriate to promote and attain the purposes set forth in its charter.

#### Section 2-104

(a) The articles of incorporation shall include:

  (1) The name and address of each incorporator and a statement that each incorporator is:

    (i) 18 years old or older; and

    (ii) Forming a corporation under the general laws of the State of Maryland;

  (2) The name of the corporation;

  (3) The purposes for which the corporation is formed or a statement that the corporation may engage in any lawful business or other activity;

  (4) The address of the principal office of the corporation;

  (5) The name and address of the resident agent of the corporation;

  (6)

    (i) The total number of shares of stock of all classes which the corporation has authority to issue;

    (ii) The number of shares of stock of each class;

    (iii) The par value of the shares of stock of each class or a statement that the shares are without par value; and

    (iv) If there are any shares of stock with par value, the aggregate par value of all the shares of all classes;

  (7) If the stock is divided into classes as permitted by Sec. 2-105 of this subtitle, a description of each class including any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption; and

  (8) The number of directors and the names of those individuals who will serve as directors until their successors are elected and qualify.

(b) The articles of incorporation may include:

  (1) Any provision not inconsistent with law that defines, limits, or regulates the powers of the corporation, its directors and stockholders, any class of its stockholders, or the holders of any bonds, notes, or other securities that it may issue;

  (2) Any restriction not inconsistent with law on the transferability of stock of any class;

  (3) Any provision authorized by this article to be included in the bylaws;

  (4) Any provision that requires for any purpose the concurrence of a greater proportion of the votes of all classes or series or of any class or series of stock than the proportion required by this article for that purpose;

  (5) A provision that requires for any purpose a lesser proportion of the votes of all classes or series or of any class or series of stock than the proportion required by this article for that purpose, but this proportion may not be less than a majority of all the votes entitled to be cast on the matter;

  (6) A provision that divides its directors into classes or series and specifies the term of office of each class or series;

  (7) A provision for minority representation through cumulative voting in the election of directors and the terms on which cumulative voting rights may be exercised;

  (8) A provision that varies in accordance with Sec. 2-405.2 of this title the standards for liability of the directors and officers of a corporation for money damages;

  (9) A provision that allows the board of directors, in considering a potential acquisition of control of the corporation, to consider the effect of the potential acquisition of control on:

    (i) Stockholders, employees, suppliers, customers, and creditors of the corporation; and

    (ii) Communities in which offices or other establishments of the corporation are located;

  (10) A provision that contains a future effective date for the articles of incorporation that is not later than 30 days after the articles are accepted by the Department for record; and

  (11) If adopted after May 31, 1908, a provision stating that:

    (i) The existence of the corporation is limited to a specific period; or

    (ii) The existence of the corporation shall be limited to a specific period that shall be continued, extended, or terminated on the occurrence of an event, an action, or a determination set forth in the charter.

(c) The inclusion or omission of a provision in the charter that allows the board of directors to consider the effect of a potential acquisition of control on persons specified in subsection (b)(9) of this section does not create an inference concerning factors that may be considered by the board of directors regarding a potential acquisition of control.

#### Section 2-105

(a) A corporation may provide by its charter:

  (1) For one or more classes or series of stock, the voting rights of each class or series, and any restriction on or denial of these rights;

  (2) That the holders of one or more classes or series of stock have exclusive voting rights on a charter amendment that would alter only the contract rights, as expressly set forth in the charter, of the specified class or series of stock;

  (3) As to each class or series of stock, either the par value of the shares or that the shares are without par value;

  (4)

    (i) That the corporation shall set apart dividends for or pay dividends to the holders of a specified class or series of stock before any dividends are set apart for or paid to the holders of another class or series of stock;

    (ii) The rate, amount, and time of payment of the dividends; and

    (iii) Whether the dividends are cumulative, cumulative to a limited extent, or noncumulative;

  (5) That any specified class or series of stock is preferred over another class or series as to its distributive share of the assets on voluntary or involuntary liquidation of the corporation and the amount of the preference;

  (6) That any specified class or series of stock may be redeemed at the option of the corporation or of the holders of the stock and the terms and conditions of redemption, including the time and price of redemption;

  (7) That any specified class or series of stock is convertible into shares of stock of one or more other classes or series and the terms and conditions of conversion;

  (8) That the holders of any specified securities issued or to be issued by the corporation have any voting or other rights which, by law, are or may be conferred on stockholders;

  (9) For any other preferences, rights, restrictions, including restrictions on transferability, and qualifications not inconsistent with law;

  (10) That the board of directors may classify or reclassify any unissued stock from time to time by setting or changing the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption of the stock;

  (11)

    (i) For any grant to the holders of the stock of the corporation, including a specified class or series of stock, of the preemptive right to subscribe to:

      (1) Any or all additional issues of the stock; or

      (2) Any securities of the corporation convertible into additional issues of stock; or

    (ii) For any definition or limitation of the preemptive rights of stockholders to acquire additional stock or securities in the corporation;

  (12) For restrictions on transferability or ownership for any purpose, including restrictions designed to permit a corporation to qualify as:

    (i) A real estate investment trust under the Internal Revenue Code or regulations adopted under the Internal Revenue Code; or

    (ii) An investment company under the Investment Company Act of 1940 or regulations adopted under the Investment Company Act of 1940; and

  (13) That the board of directors, with the approval of a majority of the entire board, and without action by the stockholders, may amend the charter to increase or decrease the aggregate number of shares of stock of the corporation or the number of shares of stock of any class or series that the corporation has authority to issue.

(b)

  (1) In this subsection, "facts ascertainable outside the charter" includes:

    (i) An action or determination by any person, including the corporation, its board of directors, an officer or agent of the corporation, and any other person affiliated with the corporation;

    (ii) The contents of any agreement to which the corporation is a party or any other document; and

    (iii) Any other event.

  (2) Any of the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption of any class or series of stock may be made dependent upon facts ascertainable outside the charter and may vary among holders thereof, provided that the manner in which such facts or variations shall operate upon the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption of such class or series of stock is clearly and expressly set forth in the charter.

(c) Notwithstanding subsection (a)(13) of this section, the board of directors of a corporation that is registered or intends to register as an open-end company under the Investment Company Act of 1940, after the registration as an open-end company takes effect, may increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class that the corporation has authority to issue, unless a provision has been included in the charter of the corporation after July 1, 1987, prohibiting an action by the board of directors to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class that the corporation has authority to issue.

#### Section 2-106

(a) A corporation shall record its name with the Department as provided in Title 1, Subtitle 5 of this article.

(b) The Department may permit a foreign corporation that has a name prohibited by Title 1, Subtitle 5 of this article to register or qualify to do business in this State, if the foreign corporation agrees:

  (1) To transact business in this State only under a disclosed assumed name that meets the requirements of Title 1, Subtitle 5 of this article; and

  (2) To use the assumed name in all of its dealings with the Department and the conduct of its affairs in this State.

#### Section 2-108

(a) Each Maryland corporation shall have:

  (1) A principal office in this State; and

  (2) A resident agent.

(b)

  (1) A corporation may designate or change its resident agent or principal office by filing for record with the Department a certified copy of a resolution of its board of directors which authorizes the designation or change.

  (2) A corporation may change the address of its resident agent by filing for record with the Department a statement of the change signed by its president or one of its vice-presidents.

  (3) A designation or change of a corporation's principal office or its resident agent or his address under this subsection is effective when the Department accepts the resolution or statement for record.

(c)

  (1) A resident agent who changes his address in the State may notify the Department of the change by filing for record with the Department a statement of the change signed by him or on his behalf.

  (2) The statement shall include:

    (i) The names of the corporations for which the change is effective;

    (ii) His old and new addresses; and

    (iii) The date on which the change is effective.

  (3) If the old and new addresses of the resident agent are the same as the old and new addresses of the principal office of the corporation, the statement may include a change of address for the principal office if:

    (i) The resident agent notifies the corporation in writing that the statement will be filed; and

    (ii) The statement recites that he has done so.

  (4) The change of address of the resident agent or principal office is effective when the Department accepts the statement for record.

(d)

  (1) A resident agent may resign by filing with the Department a counterpart or photocopy of his signed resignation.

  (2) Unless a later time is specified in the resignation, it is effective:

    (i) At the time it is filed with the Department, if the corporation has appointed a successor resident agent; or

    (ii) Ten days after it is filed with the Department, if the corporation has not appointed a successor resident agent.

#### Section 2-109

(a)

  (1) After the Department accepts the articles of incorporation for record, at the call of a majority of the directors named in the articles, the directors shall hold an organization meeting of the board of directors, to adopt bylaws, elect officers, and transact any other business which may come before the meeting.

  (2) The directors who call the meeting shall notify each director in writing of the time and place of the meeting at least three days before it is held.

(b) After the organization meeting of the board of directors, the power to adopt, alter, and repeal the bylaws of the corporation is vested in the stockholders except to the extent that the charter or bylaws vest it in the board of directors.

#### Section 2-110

(a) The bylaws may contain any provisions not inconsistent with law or the charter of the corporation for the regulation and management of the affairs of the corporation.

(b) The bylaws may divide the directors of the corporation into classes and specify the term of office of each class.

(c)

  (1) In this subsection, "facts ascertainable outside the bylaws" include:

    (i) An action or determination by any person, including the corporation, its board of directors, an officer or agent of the corporation, and any other person affiliated with the corporation;

    (ii) Any agreement or other document; or

    (iii) Any other event.

  (2) Any provision of the bylaws permitted under subsection (a) of this section may be made dependent upon facts ascertainable outside the bylaws.

#### Section 2-111

(a) Each corporation shall maintain, or cause to be maintained on its behalf, correct and complete:

  (1) Books and records of its accounts and transactions; and

  (2) Minutes of the proceedings of its stockholders and board of directors and of any executive or other committee when exercising any of the powers of the board of directors.

(b)

  (1) The books and records of a corporation may be in written form or in any other form that complies with Sec. 2-114 of this subtitle.

  (2) Minutes shall be recorded in written form but may be maintained in the form of a reproduction or in any other form that complies with Sec. 2-114 of this subtitle.

#### Section 2-112

(a)

  (1) In this section the following words have the meanings indicated.

  (2) "Closed-end investment company" means a corporation registered as a closed-end investment company under the Investment Company Act of 1940.

  (3) "Open-end investment company" means a corporation registered as an open-end investment company under the Investment Company Act of 1940.

(b) Notwithstanding any requirement of Sec. 2-604(b) or Sec. 2-607(a)(1) of this title or Sec. 3-403(b) of this article, the charter of a closed-end investment company or any prospectus filed by the closed-end investment company pursuant to the federal Investment Company Act of 1940 may require the company to submit to its stockholders, at an annual or special meeting of the stockholders, a proposal to amend its charter to convert to an open-end investment company, to dissolve, to require the closed-end investment company to make one or more tender offers for its shares, or to take other action intended to eliminate any trading discount to net asset value of the closed-end investment company's shares, even if the board of directors fails to recommend the proposal or declare the proposal advisable or recommends that the stockholders reject it.

#### Section 2-113

(a) The charter or bylaws of a corporation with capital stock may not impose liability on a stockholder who is a party to an internal corporate claim for the attorney's fees or expenses of the corporation or any other party in connection with an internal corporate claim.

(b)

  (1) Except as provided in paragraph (2) of this subsection, the charter or bylaws of a corporation may require, consistent with applicable jurisdictional requirements, that any internal corporate claim be brought only in:

    (i) Specified circuit courts of the State or a federal court sitting in the State; or

    (ii)

      (1) Courts sitting in one or more specified jurisdictions outside the State; and

      (2) Specified circuit courts of the State or a federal court sitting in the State.

  (2)

    (i) This paragraph does not apply to a provision contained in the charter or bylaws of a corporation on October 1, 2017, unless and until the provision is altered or repealed by an amendment to the charter or bylaws of the corporation, as applicable.

    (ii) The charter or bylaws of a corporation may not prohibit bringing an internal corporate claim in the courts of this State or a federal court sitting in this State.

#### Section 2-114

(a) This section applies to any books or records maintained by or on behalf of a corporation, including:

  (1) Bylaws;

  (2) Minutes of the proceedings of the stockholders;

  (3) Annual statements of affairs;

  (4) Stock ledgers;

  (5) Records of issuances, transfers, and cancellations of shares of stock; and

  (6) Voting trust agreements.

(b) The records of a corporation may be maintained by means of any information storage device, method, or electronic network or database, including a distributed electronic network or database, if:

  (1) The records can be converted within a reasonable time into clearly legible written form for visual inspection; and

  (2) With respect to records maintained on an electronic ledger or distributed electronic ledger, the records can be used for the purpose of:

    (i) Making a proper determination with respect to stockholders under Sec. 2-511(a) of this title; and

    (ii) Preparing a list of stockholders in accordance with Sec. 2-513(b)(2) of this title.

(c) A corporation shall convert a record maintained in accordance with subsection (b) of this section into a clearly legible written form on request of any person who is entitled to inspect the record under this title.

(d)

  (1) This subsection applies to records of a corporation that are maintained in accordance with subsection (b) of this section.

  (2) If a written form accurately portrays a record, a clearly legible written form prepared from or by means of the information storage device, method, or electronic network or database used to maintain the record shall be admissible as evidence and accepted for all other purposes to the same extent that an original written record of the same information would have been.

#### Section 2-115

(a) This section applies to the electronic transmission, by means of an electronic network or database, including a distributed electronic network or database, of any communication, consent, or request under this title, including:

  (1) A statement of the information, in accordance with Sec. 2-210(c) of this title;

  (2) An annual statement of the affairs of a corporation, in accordance with Sec. 2-313(b) of this title;

  (3) Corporate documents, in accordance with Sec. 2-512 of this title; and

  (4) Any notice to a stockholder.

(b) An electronic transmission described under subsection (a) of this section is not effective until the later of:

  (1) The posting of the information to the electronic network or database; or

  (2) The giving of a separate notice to the intended recipient of the information that the information has been posted to the electronic network or database.

#### Section 2-116

(a) In this section, "emergency" means a situation in which a quorum of the board of directors cannot readily be assembled because of some catastrophic event.

(b)

  (1) Unless the charter provides otherwise, the bylaws may contain provisions to be effective only during an emergency.

  (2) The emergency provisions may be adopted only in advance of an emergency.

  (3) The emergency provisions may make all provisions necessary for managing the corporation during an emergency, including:

    (i) Procedures for calling a meeting of the board of directors;

    (ii) Quorum requirements for a meeting; and

    (iii) Designation of additional or substitute directors.

(c) All provisions of the bylaws not inconsistent with the emergency provisions remain effective during an emergency.

(d) Any corporate act taken in good faith and in accordance with the emergency provisions:

  (1) Binds the corporation; and

  (2) May not be used to impose liability on a director, an officer, an employee, or an agent of the corporation.

(e) The emergency provisions may state that the standard of conduct required by Sec. 2-405.1 of this title shall apply to the conduct of a director acting pursuant to the emergency provisions.

#### Section 2-117

(a) In this section, "emergency" has the meaning stated in Sec. 2-116 of this subtitle.

(b) During an emergency, unless the bylaws contain emergency provisions providing otherwise, notice of a meeting of the board of directors may be given:

  (1) Only to those directors whom it is practicable to reach in the circumstances;

  (2) In any practicable manner given the circumstances; and

  (3) With shorter notice as is reasonable in the circumstances.

(c) Any corporate act taken in good faith under this section during an emergency:

  (1) Binds the corporation; and

  (2) May not be used to impose liability on a director, an officer, an employee, or an agent of the corporation.

#### Section 2-118

(a) In this section, "emergency" means a situation in which it is impracticable to convene a meeting of stockholders in accordance with the Maryland General Corporation Law or the bylaws or as specified in a notice for the meeting previously given, because of some catastrophic event.

(b) During an emergency, unless the bylaws contain emergency provisions providing otherwise, the board of directors may:

  (1) Postpone a meeting of stockholders for which notice has been given; or

  (2) Authorize stockholders to participate in a meeting by any means of remote communication authorized by Sec. 2-503(c)(2) of this title.

(c) The corporation shall give notice to stockholders of any action taken under this section, including any new date, time, or place of a meeting:

  (1) In any practicable manner given the circumstances; and

  (2) With shorter notice as is reasonable in the circumstances.

(d) Any corporate act taken in good faith under this section during an emergency:

  (1) Binds the corporation; and

  (2) May not be used to impose liability on a director, an officer, an employee, or an agent of the corporation.

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Md. Code Ann., Corps. & Ass'ns (as displayed at mgaleg.maryland.gov, October 16, 2026)