Article XVII, South Dakota Constitution

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Article XVII of the South Dakota Constitution is entitled Corporations and consists of 24 sections.

Section 1

Text of Section 1: Special Corporation Laws Prohibited--State-Controlled Corporations Excepted No corporation shall be created or have its charter extended, changed or amended by special laws, except those for charitable, educational, penal or reformatory purposes, which are to be and remain under the patronage and control of the state; but the Legislature shall provide, by general laws, for the organization of all corporations hereafter to be created.

Section 2

	Text of Section 2: Invalidation of Charters without Bona Fide Organization and Business All existing charters, or grants of special or exclusive privileges under which a bona fide organization shall not have taken place and business been commenced in good faith at the time this Constitution takes effect, shall thereafter have no validity.

Section 3

Text of Section 3: Laws for Benefit of Corporation as Conditioned on Compliance with Constitutional Provision The Legislature shall not remit the forfeiture of the charter of any corporation now existing nor alter or amend the same nor pass any other general or special law for the benefit of such corporation, except upon the condition that such corporation shall thereafter hold its charter subject to the provisions of this Constitution.

Section 4

Text of Section 4: Corporations Subject to Eminent Domain--Police Power The exercise of the right of eminent domain shall never be abridged or so construed as to prevent the Legislature from taking the property and franchises of incorporated companies and subjecting them to public use, the same as the property of individuals; and the exercise of the police power of the state shall never be abridged or so construed as to permit corporations to conduct their business in such manner as to infringe the equal rights of individuals or the general well-being of the state.

History: Repeal proposed by SL 1975, ch 3, rejected Nov. 2, 1976.

Section 5

	Text of Section 5: Casting of Votes for Directors or Managers In all elections for directors or managers of a corporation, each member or shareholder may cast the whole number of his votes for one candidate, or distribute them upon two or more candidates, as he may prefer.

History: Repeal proposed by SL 2008, ch 1, § 2 rejected Nov. 4, 2008.

Section 6

	Text of Section 6: Place of Business and Authorized Agent Required of Foreign Corporation No foreign corporation shall do any business in this state without having one or more known places of business and an authorized agent or agents in the same upon whom process may be served.

Section 7

	Text of Section 7: Business to Be Expressed in Charter--Real Estate Restricted No corporation shall engage in any business other than that expressly authorized in its charter, nor shall it take or hold any real estate except such as may be necessary and proper for its legitimate business.

Section 8

Text of Section 8: Indebtedness Increase No corporation shall issue stocks or bonds except for money, labor done, or money or property actually received; and all fictitious increase of stock or indebtedness shall be void. The stock and indebtedness of corporations shall not be increased except in pursuance of general law, nor without the consent of the persons holding the larger amount in value of the stock first obtained, at a meeting to be held after sixty days notice given in pursuance of law.

History: Repeal proposed by SL 2008, ch 1, § 3 rejected Nov. 4, 2008.

Section 9

Text of Section 9: Legislature's Power to Alter, Revise, or Annul Corporate Charters--Creation, Renewal, or Extension The Legislature shall have the power to alter, revise or annul any charter of any corporation now existing and revocable at the taking effect of this Constitution, or any that may be created, whenever in their opinion it may be injurious to the citizens of this state, in such a manner, however, that no injustice shall be done to the incorporators. No law hereafter enacted shall create, renew or extend the charter of more than one corporation.

Section 10

	Text of Section 10: Local Consent Required for Grant of Street Railroad Right No law shall be passed by the Legislature granting the right to construct and operate a street railroad within any city, town or incorporated village, without requiring the consent of the local authorities having the control of the street or highway proposed to be occupied by such street railroad.

Section 11

Text of Section 11: Construction and Maintenance of Telegraph Lines--Controlling Interest in Competing Company Prohibited Any association or corporation organized for the purpose, or any individual, shall have the right to construct and maintain lines of telegraph in this state and to connect the same with other lines; and the Legislature shall by general law of uniform operation provide reasonable regulations to give full effect to this section. No telegraph company shall consolidate with or hold a controlling interest in the stock or bonds of any other telegraph company owning a competing line, or acquire by purchase or otherwise, any other competing line of telegraph.

Section 12

Text of Section 12: Railroad Corporations Every railroad corporation organized or doing business in this state under the laws or authority thereof shall have and maintain a public office or place in this state for the transaction of its business, where transfers of its stock shall be made, and in which shall be kept for public inspection books in which shall be recorded the amount of capital stock subscribed, and by whom; the names of the owners of its stock, and the amount owned by them respectively; the amount of stock paid in, and by whom; the transfers of said stock; the amount of its assets and liabilities; and the names and place of residence of its officers. The directors of every railroad corporation shall annually make a report, under oath, to the auditor of public accounts or some officer or officers to be designated by law, of all their acts and doings, which report shall include such matters relating to railroads as may be prescribed by law, and the Legislature shall pass laws enforcing by suitable penalties the provisions of this section.

Section 13

Text of Section 13: Movable Property of Railroad Corporation Considered Personalty--Execution and Sale The rolling stock, and all other movable property belonging to any railroad company or corporation in this state shall be considered personal property, and shall be liable to execution and sale in the same manner as the personal property of individuals, and the Legislature shall pass no laws exempting such property from execution and sale.

Section 14

Text of Section 14: Consolidation of Railroad Lines--Forfeiture of Charter for Evasion of Provisions No railroad corporation shall consolidate its stock, property or franchises with any other railroad corporation owning a parallel or competing line; and in no case shall any consolidation take place except upon public notice given out, at least sixty days to all stockholders, in such manner as may be provided by law. Any attempt to evade the provisions of this section, by any railroad corporation, by lease or otherwise, shall work a forfeiture of its charter.

Section 15

Text of Section 15: Railways and Rail Companies Declared Public Highways and Common Carriers-- Regulation of Rates Railways heretofore constructed or that may hereafter be constructed, in this state are hereby declared public highways, and all railroad and transportation companies are declared to be common carriers and subject to legislative control; and the Legislature shall have power to enact laws regulating and controlling the rates of charges for the transportation of passengers and freight as such common carriers from one point to another in this state.

Section 16

Text of Section 16: Right to Construct and Operate Railroad--Passengers, Tonnage, and Cars Any association or corporation organized for the purpose shall have the right to construct and operate a railroad between any points within this state, and to connect at the state line with railroads of other states. Every railroad company shall have the right with its road to intersect, connect with, or cross any other railroad, and shall receive and transport each the other's passengers, tonnage and cars, loaded or empty, without delay or discrimination.

Section 17

	Text of Section 17: Rate Discrimination Prevention The Legislature shall pass laws to correct abuses and prevent discrimination and extortion in the rates of freight and passenger tariffs on the different railroads in this state, and enforce such laws by adequate penalties, to the extent, if necessary for that purpose, of forfeiture of their property and franchises.

Section 18

Text of Section 18: Compensation for Private Property Taken for Public Use--Assessment of Damages Municipal and other corporations and individuals invested with the privilege of taking private property for public use shall make just compensation for property taken, injured or destroyed, by the construction or enlargement of their works, highways or improvements, which compensation shall be paid or secured before such taking, injury or destruction. The Legislature is hereby prohibited from depriving any person of an appeal from any preliminary assessment of damages against any such corporation or individuals made by viewers or otherwise; and the amount of such damages in all cases of appeal shall, on the demand of either party, be determined by a jury as in other civil cases.

History: Repeal proposed by SL 1975, ch 3, rejected Nov. 2, 1976.

Section 19

	Text of Section 19: Corporations Defined The term "corporations," as used in this article, shall be construed to include all joint stock companies or associations having any of the powers or privileges of corporations not possessed by individuals or partnerships.

History: Repeal proposed by SL 2008, ch 1, § 4 rejected Nov. 4, 2008.

Section 20

Text of Section 20: Monopolies and Trusts Prohibited--Combinations in Restraint of Trade--Legislative Powers Monopolies and trusts shall never be allowed in this state and no incorporated company, copartnership or association of persons in this state shall directly or indirectly combine or make any contract with any incorporated company, foreign or domestic, through their stockholders or the trustees or assigns of such stockholders, or with any copartnership or association of persons, or in any manner whatever to fix the prices, limit the production or regulate the transportation of any product or commodity so as to prevent competition in such prices, production or transportation or to establish excessive prices therefore. The Legislature shall pass laws for the enforcement of this section by adequate penalties and in the case of incorporated companies, if necessary for that purpose may, as a penalty, declare a forfeiture of their franchises.

History: Section proposed by SL 1895, ch 37, adopted Nov., 1896.

Section 21

Text of Section 21: Corporate or Syndicate Farming Prohibited--Definitions--Restrictions No corporation or syndicate may acquire, or otherwise obtain an interest, whether legal, beneficial, or otherwise, in any real estate used for farming in this state, or engage in farming. The term, corporation, means any corporation organized under the laws of any state of the United States or any country. The term, syndicate, includes any limited partnership, limited liability partnership, business trust, or limited liability company organized under the laws of any state of the United States or any country. A syndicate does not include general partnerships, except general partnerships in which nonfamily farm syndicates or nonfamily farm corporations are partners. The term, farming, means the cultivation of land for the production of agricultural crops, fruit, or other horticultural products, or the ownership, keeping, or feeding of animals for the production of livestock or livestock products.

History: Section proposed by initiated measure, ch 333, adopted Nov. 3, 1998.

Section 22

Text of Section 22: Restrictions--Application The restrictions in § 21 of Article XVII do not apply to: (1) A family farm corporation or syndicate. A family farm corporation or syndicate is a corporation or syndicate engaged in farming or the ownership of agricultural land, in which a majority of the partnership interests, shares, stock, or other ownership interests are held by members of a family or a trust created for the benefit of a member of that family. The term, family, means natural persons related to one another within the fourth degree of kinship according to civil law, or their spouses. At least one of the family members in a family farm corporation or syndicate shall reside on or be actively engaged in the day-to-day labor and management of the farm. Day-to-day labor and management shall require both daily or routine substantial physical exertion and administration. None of the corporation's or syndicate's partners, members, or stockholders may be nonresident aliens, or other corporations or syndicates, unless all of the stockholders, members, or partners of such entities are persons related within the fourth degree of kinship to the majority of partners, members, or stockholders in the family farm corporation or syndicate; (2) Agricultural land acquired or leased, or livestock kept, fed or owned, by a cooperative organized under the laws of any state, if a majority of the shares or other interests of ownership in the cooperative are held by members in the cooperative who are natural persons actively engaged in the day-to-day labor and management of a farm, or family farm corporations or syndicates, and who either acquire from the cooperative, through purchase or otherwise, such livestock, or crops produced on such land, or deliver to the cooperative, through sale or otherwise, crops to be used in the keeping or feeding of such livestock; (3) Nonprofit corporations organized under state nonprofit corporation law; (4) Agricultural land, which, as of the approval date of this amendment, is being farmed, or which is owned or leased, or in which there is a legal or beneficial interest, directly or indirectly owned, acquired, or obtained by a corporation or syndicate, if such land or other interest is held in continuous ownership or under continuous lease by the same such corporation or syndicate. For the purposes of this exemption, land purchased on a contract signed as of the approval date of this amendment is considered as owned on that date; (5) Livestock, which as of the approval date of this amendment, is owned by a corporation or syndicate. For the purposes of this exemption, livestock to be produced under contract for a corporation or syndicate are considered as owned, if the contract is for the keeping or feeding of livestock and is signed as of the approval date of this amendment, and if the contract remains in effect and is not terminated by either party to the contract. This exemption does not extend beyond the term of any contract signed as of the approval date of this amendment; (6) A farm operated for research or experimental purposes, if any commercial sales from the farm are only incidental to the research or experimental objectives of the corporation or syndicate; (7) Land leases by alfalfa processors for the production of alfalfa; (8) Agricultural land operated for the purpose of growing seed, nursery plants, or sod; (9) Mineral rights on agricultural land; (10) Agricultural land acquired or leased by a corporation or syndicate for immediate or potential nonfarming purposes, for a period of five years from the date of purchase. A corporation or syndicate may hold such agricultural land in such acreage as may be necessary to its nonfarm business operation, but pending the development of the agricultural land for nonfarm purposes, such land may not be used for farming except under lease to a family farm corporation or family farm syndicate or a non syndicate or noncorporate farm; (11) Agricultural lands or livestock acquired by a corporation or syndicate by process of law in the collection of debts, or by any procedures for the enforcement of a lien, encumbrance, or claim thereon, whether created by mortgage or otherwise. Any lands so acquired shall be disposed of within a period of five years and may not be used for farming before being disposed of, except under a lease to a family farm corporation or syndicate, or a nonsyndicate or noncorporate farm. Any livestock so acquired shall be disposed of within six months; (12) Agricultural lands held by a state or nationally chartered bank as trustee for a person, corporation or syndicate that is otherwise exempt from the provisions of §§ 21 to 24, inclusive, of Article XVII; (13) A bona fide encumbrance taken for purposes of security; (14) Custom spraying, fertilizing, or harvesting; (15) Livestock futures contracts, livestock purchased for slaughter within two weeks of the purchase date, or livestock purchased and resold within two weeks.

History: Section proposed by initiated measure, ch 333, adopted Nov. 3, 1998.

Section 23

Text of Section 23: Loss of Qualification--Requalification or Dissolution If a family farm corporation or family farm syndicate that has qualified under all the requirements of a family farm corporation or a family farm syndicate ceases to meet the defined criteria, it has twenty years, if the ownership of the majority of the stock of such corporation, or the majority of the ownership interest of such syndicate, continues to be held by persons related to one another within the fourth degree of kinship or their spouses, and their land holdings are not increased, to either requalify as a family farm corporation or family farm syndicate or dissolve and return to personal ownership.

History: Section proposed by initiated measure, ch 333, adopted Nov. 3, 1998.

Section 24

Text of Section 24: Annual Report--Violations--Action and Enforcement Any corporation or syndicate that owns agricultural land or engages in farming is required to report information necessary for the enforcement of §§ 21 to 24, inclusive, of Article XVII to the secretary of state on an annual basis, under rules promulgated by the secretary pursuant to state law. The secretary of state shall monitor such reports and notify the attorney general of any possible violations, and any resident of the state may also notify the attorney general of any possible violations. If a corporation or syndicate violates any provision of §§ 21 to 24, inclusive, of Article XVII, the attorney general shall commence an action in circuit court to enjoin any pending illegal purchase of land or livestock, or to force divestiture of land or livestock held in violation of §§ 21 to 24, inclusive, of Article XVII. The court shall order any land held in violation of §§ 21 to 24, inclusive, of Article XVII to be divested within two years and any livestock to be divested within six months. If land so ordered by the court has not been divested within two years, the court shall declare the land escheated to the state. If the attorney general fails to bring an action in circuit court to enforce §§ 21 to 24, inclusive, of Article XVII, any resident of the state has standing in circuit court to sue for enforcement.

History: Section proposed by initiated measure, ch 333, adopted Nov. 3, 1998.

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• South Dakota Constitution