2013 North Dakota Century Code Title 10 Corporations Chapter 10-06.1 Corporate or Limited Liability Company Farming
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CHAPTER 10-06.1
CORPORATE OR LIMITED LIABILITY COMPANY FARMING
10-06.1-01. Definitions.
For the purposes of this chapter, unless the language or context clearly indicates that a
different meaning is intended:
1. "Farming or ranching" means cultivating land for production of agricultural crops or
livestock, or the raising or producing of livestock or livestock products, poultry or
poultry products, milk or dairy products, or fruit or horticultural products. It does not
include production of timber or forest products, nor does it include a contract whereby
a processor or distributor of farm products or supplies provides grain, harvesting, or
other farm services.
2. "Farming or ranching corporation" means a farm or ranch corporation, joint-stock
company, or association which, at all times, complies with the requirements of this
chapter.
3. "Farming or ranching limited liability company" means a farm or ranch limited liability
company which, at all times, complies with the requirements of this chapter.
4. "Nonprofit organization" means an organization or trust that has tax-exempt status
under at least one of the following sections of the Internal Revenue Code:
a. An organization that was in existence on December 31, 1984, and that is
organized and operated exclusively for religious, charitable, scientific, testing for
public safety, literary, or educational purposes, or for the prevention of cruelty to
children or animals under section 501(c)(3), or is a domestic fraternal
organization under section 501(c)(10).
b. A charitable, religious, educational, or scientific organization classified as either a
private foundation or as a public charity having status as an organization
described in section 509(a)(1) or (3).
c. A trust described in section 4947 for which a deduction is allowable under section
170.
10-06.1-02. Farming or ranching by corporations and limited liability companies
prohibited.
All corporations and limited liability companies, except as otherwise provided in this chapter,
are prohibited from owning or leasing land used for farming or ranching and from engaging in
the business of farming or ranching. A corporation or a limited liability company may be a
partner in a partnership that is in the business of farming or ranching only if that corporation or
limited liability company complies with this chapter.
10-06.1-03. Retention of mineral interests prohibited.
For land and minerals acquired after July 1, 1985, any corporation or limited liability
company that acquires mineral interests through foreclosure or in lieu of foreclosure which were
not specifically valued at the time the security interest in the minerals was acquired, and which
is prohibited from owning or leasing land used in farming or ranching, is prohibited from
retaining mineral interests in land used for farming or ranching when the corporation or limited
liability company divests itself of the land, and the mineral interests must be passed with the
surface estate of the land when the corporation or limited liability company divests itself of the
land under this chapter.
10-06.1-04. Conversion of corporations.
A business corporation organized under chapter 10-19.1 may convert to a farming or
ranching corporation by adopting an amendment to its articles of incorporation which specifies
that the corporation elects to be subject to this chapter and by complying with all requirements
of this chapter. The amendment must be filed with the secretary of state with the prescribed fee
and with the initial report required by section 10-06.1-15. A farming or ranching corporation may
convert to a business corporation by adopting an amendment to its articles of incorporation. The
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amendment must be filed with the secretary of state with the prescribed fee. The amendment
must be accompanied by a report outlining the information, as of the date of the amendment,
which is required under section 10-06.1-17, and the manner in which the corporation has
divested itself of its owned or leased land holdings and its business of farming or ranching.
10-06.1-05. Conversion of limited liability company.
A domestic business limited liability company organized under chapter 10-32 may convert to
a farming or ranching limited liability company by adopting an amendment to its articles of
organization which specifies that the limited liability company elects to be subject to this chapter
and by complying with all requirements of this chapter. The amendment must be filed with the
secretary of state with the prescribed fee and with the initial report required by section
10-06.1-15. A farming or ranching limited liability company may convert to a domestic business
limited liability company by adopting an amendment to its articles of organization. The
amendment must be filed with the secretary of state with the prescribed fee. The amendment
must be accompanied by a report outlining the information, as of the date of the amendment,
which is required under section 10-06.1-17 and the manner in which the limited liability company
has divested itself of its owned or leased land holdings and its business of farming or ranching.
10-06.1-06. Surface coal mining - Exception.
A corporation or limited liability company not engaged in the business of farming or ranching
may own or lease lands used for farming or ranching, when the business of such a corporation
or limited liability company is the conducting of surface coal mining operations or related energy
conversion, and when the owning or leasing of lands used for farming or ranching is reasonably
necessary in the conduct of the business of surface coal mining or related energy conversion.
When the necessity for owning or leasing of lands used for farming or ranching no longer exists,
the exception provided in this section ceases and the corporation or limited liability company
owning or leasing such lands is subject to this chapter.
10-06.1-07. Industrial and business purpose exception.
A corporation or limited liability company that is not engaged in the business of farming or
ranching may own or lease land used for farming or ranching when the land is necessary for
residential or commercial development; the siting of buildings, plants, facilities, industrial parks,
or similar business or industrial purposes of the corporation or limited liability company; or for
uses supportive of or ancillary to adjacent nonagricultural land for the benefit of both land
parcels. The farmland or ranchland while not being immediately used for any purpose of the
corporation or limited liability company must be available to be leased by persons who farm or
ranch as sole proprietorships or partnerships, or by corporations or limited liability companies
allowed to engage in farming or ranching under section 10-06.1-12.
10-06.1-08. Cooperative corporations allowed to engage in the business of farming or
ranching - Requirements.
This chapter does not prohibit cooperative corporations, seventy-five percent of whose
members or shareholders are actual farmers or ranchers residing on farms or ranches or
depending principally on farming or ranching for their livelihood, from acquiring real estate and
engaging in cooperative farming or ranching.
10-06.1-09. Certain nonprofit organizations or trusts may own or lease land - Certain
nonprofit organizations may continue farming or ranching - Restriction on acquisition
and ownership of land.
1. A nonprofit organization or a trust for the benefit of an individual or a class of
individuals related within the degrees of kinship specified in subsection 2 of section
10-06.1-12 may own or lease farmland or ranchland if that land is leased to a person
who farms or ranches the land as a sole proprietorship or partnership, or a corporation
or limited liability company allowed to engage in farming or ranching under section
10-06.1-12.
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To the extent farming or ranching is essential to a nonprofit organization's charitable
purposes, a nonprofit organization actively engaged in the business of farming or
ranching in this state on January 1, 1983, may continue to engage in the business of
farming or ranching without interruption after January 1, 1983.
A nonprofit organization that owned farmland or ranchland for the preservation of
unique historical, archaeological, or environmental land before January 1, 1983, may
continue ownership of that land without interruption after January 1, 1983. An
organization that is holding land for scenic preservation shall either prohibit all hunting,
or if any parcel of the land is open to hunting, it must be open to hunting by the general
public.
10-06.1-10. Acquisition of certain farmland or ranchland by certain nonprofit
organizations.
A nonprofit organization may acquire farmland or ranchland only in accordance with the
following:
1. Unless it is permitted to own farmland or ranchland under section 10-06.1-09, the
nonprofit organization must have been either incorporated in this state or issued a
certificate of authority to do business in this state before January 1, 1985, or, before
January 1, 1987, have been incorporated in this state if the nonprofit organization was
created or authorized under Public Law No. 99-294 [100 Stat. 418]. A nonprofit
organization created or authorized under Public Law No. 99-294 [100 Stat. 418] may
acquire no more than twelve thousand acres [4856.228 hectares] of land from interest
derived from state, federal, and private sources held in its trust fund.
2. The land may be acquired only for the purpose of conserving natural areas and
habitats for biota, and, after acquisition:
a. The land must be maintained and managed for the purpose of conserving natural
area and habitat for biota.
b. Any agricultural use of the land is in accordance with the management of the land
for conservation and agricultural use, and is by a sole proprietorship or
partnership, or a corporation or limited liability company allowed to engage in
farming or ranching under section 10-06.1-12.
c. If any parcel of the land is open to hunting, it must be open to hunting by the
general public.
d. The nonprofit organization must fully comply with all state laws relating to the
control of noxious and other weeds and insects.
e. The nonprofit organization must make payments in lieu of property taxes on the
property, calculated in the same manner as if the property was subject to full
assessment and levy of property taxes.
f. All property subject to valuation must be assessed for the purpose of making the
payments under subdivision e in the same manner as other real property in this
state is assessed for tax purposes. Before June thirtieth of each year, the county
auditor of any county in which property subject to valuation is located shall give
written notice to the nonprofit organization and the tax commissioner of the value
placed by the county board of equalization upon each parcel of property subject
to valuation in the county.
3. Before farmland or ranchland may be purchased by a nonprofit organization for the
purpose of conserving natural areas and habitats for biota, the governor must approve
the proposed acquisition. A nonprofit organization that desires to purchase farmland or
ranchland for the purpose of conserving natural areas and habitats for biota shall first
submit a proposed acquisition plan to the agriculture commissioner who shall convene
an advisory committee consisting of the director of the parks and recreation
department, the agriculture commissioner, the state forester, the director of the game
and fish department, the president of the North Dakota farmers union, the president of
the North Dakota farm bureau, the president of the North Dakota stockmen's
association, and the chairman of the county commission of any county affected by the
acquisition, or their designees. The advisory committee shall hold a public hearing with
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the board of county commissioners concerning the proposed acquisition plan and shall
make recommendations to the governor within forty-five days after receipt of the
proposed acquisition plan. The governor shall approve or disapprove any proposed
acquisition plan, or any part thereof, within thirty days after receipt of the
recommendations from the advisory committee.
Land acquired in accordance with this section may not be conveyed to the United
States or any agency or instrumentality of the United States.
On failure to qualify to continue ownership under subsection 2, the land must be
disposed of within five years of that failure to qualify.
10-06.1-11. Required divestiture of agricultural land.
In addition to the divestiture requirements of sections 10-06.1-10 and 10-06.1-24, a
nonprofit corporation that acquires land by gift or devise after December 31, 1984, the
ownership of which is not permitted under this chapter, shall divest itself of the land within ten
years after the acquisition. For purposes of this section, "ownership" means holding either fee or
equitable title, unless fee title is held solely as security for payment of the purchase price, or
unless fee title does not carry with it the right to immediate possession of the property. If the
corporation fails to divest itself of the land within the required time, the attorney general shall
take action under section 10-06.1-24.
10-06.1-12. Corporation or limited liability company allowed to engage in the
business of farming or ranching - Requirements.
This chapter does not prohibit a domestic corporation or a domestic limited liability company
from owning real estate and engaging in the business of farming or ranching, if the corporation
meets all the requirements of chapter 10-19.1 or the limited liability company meets all the
requirements of chapter 10-32 which are not inconsistent with this chapter. The following
requirements also apply:
1. If a corporation, the corporation must not have more than fifteen shareholders. If a
limited liability company, the limited liability company must not have more than fifteen
members.
2. Each shareholder or member must be related to each of the other shareholders or
members within one of the following degrees of kinship or affinity: parent, son,
daughter, stepson, stepdaughter, grandparent, grandson, granddaughter, brother,
sister, uncle, aunt, nephew, niece, great-grandparent, great-grandchild, first cousin, or
the spouse of a person so related.
3. Each shareholder or member must be an individual or one of the following:
a. A trust for the benefit of an individual or a class of individuals who are related to
every shareholder of the corporation or member of the limited liability company
within the degrees of kinship or affinity specified in this section.
b. An estate of a decedent who was related to every shareholder of the corporation
or member of the limited liability company within the degrees of kinship or affinity
specified in this section.
4. A trust or an estate may not be a shareholder or member if the beneficiaries of the
trust or the estate together with the other shareholders or members are more than
fifteen in number.
5. Each individual who is a shareholder or member must be a citizen of the United States
or a permanent resident alien of the United States.
6. If a corporation, the officers and directors of the corporation must be shareholders who
are actively engaged in operating the farm or ranch and at least one of the
corporation's shareholders must be an individual residing on or operating the farm or
ranch. If a limited liability company, the governors and managers of the limited liability
company must be members who are actively engaged in operating the farm or ranch
and at least one of its members must be an individual residing on or operating the farm
or ranch.
7. An annual average of at least sixty-five percent of the gross income of the corporation
or limited liability company over the previous five years, or for each year of its
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existence, if less than five years, must have been derived from farming or ranching
operations.
The income of the corporation or limited liability company from nonfarm rent, nonfarm
royalties, dividends, interest, and annuities cannot exceed twenty percent of the gross
income of the corporation or limited liability company.
10-06.1-13. Applicability of North Dakota Business Corporation Act.
Chapter 10-19.1 is applicable to farming or ranching corporations, which have the powers
and privileges and are subject to the duties, restrictions, and liabilities of other business
corporations except when inconsistent with the intent of this chapter. This chapter takes
precedence in the event of any conflict with the provisions of chapter 10-19.1.
10-06.1-14. Applicability of North Dakota limited liability company laws.
Chapter 10-32, except those sections which pertain to foreign limited liability companies, is
applicable to farming or ranching limited liability companies, which have the powers and
privileges and are subject to the duties, restrictions, and liabilities of other business limited
liability companies, except when inconsistent with the intent of this chapter. This chapter takes
precedence in the event of any conflict with the provisions of chapter 10-32.
10-06.1-15. Initial report - Shareholder and member requirements.
1. Every farming or ranching corporation or limited liability company shall file an initial
report with its articles of incorporation. The report must be signed by the incorporators
or organizers and must contain the following:
a. The name of the corporation or limited liability company.
b.
With respect to each shareholder or member:
(1) The name and address of each, including the names and addresses and
relationships of trusts and estates that own shares or membership interests;
(2) The number of shares or membership interests or percentage of shares or
membership interests owned by each;
(3) The relationship of each;
(4) A statement of whether each is a citizen or permanent resident alien of the
United States; and
(5) A statement of whether each is actively engaged in operating the farm or
ranch, whether each resides on the farm or ranch, and whether each
depends principally on farming or ranching for a livelihood.
c. With respect to management:
(1) If a corporation, then the names and addresses of the officers and members
of the board of directors; or
(2) If a limited liability company, then the names and addresses of the
managers and members of the board of governors.
d. A statement listing the acreage [hectarage] and location listed by section,
township, range, and county of all land in the state owned or leased by the
corporation or limited liability company and used for farming or ranching.
2. A corporation or a limited liability company may not commence farming or ranching in
this state until the secretary of state has received and filed the articles of incorporation
or articles of organization and the initial report required by this section. The corporation
or limited liability company shall furnish to the official county newspaper of each county
or counties in which any land is owned or leased by the corporation or limited liability
company a legal notice reporting the following:
a. The name of the corporation or limited liability company and its shareholders or
members as listed in the initial report.
b. A statement to the effect that the corporation or limited liability company has
reported that it owns or leases land used for farming or ranching in the county
and that a description of that land is available for inspection at the secretary of
state's office.
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10-06.1-16. Share and membership interest transfer records.
Every corporation owning or leasing land used for farming or ranching or engaged in
farming or ranching after June 30, 1981, shall keep a record of transfers of shares or transfers
of interests in the corporation. Every limited liability company owning or leasing land used for
farming or ranching or engaged in farming or ranching shall keep a record of transfers of
membership interests in the limited liability company. If a corporation, the corporation's secretary
shall cause to be recorded in the record all transfers of shares or transfers of interests among
and between the corporation and its respective shareholders or holders of interest. If a limited
liability company, the limited liability company's secretary shall cause to be recorded in the
record all transfers of membership interests among and between the limited liability company
and its respective members. The record must contain at least the following: the names of the
transferor and transferee, their relationship, the date of the transfer and, if a corporation, the
number of shares or the percentage of interests transferred or, if a limited liability company, the
number or percentage of membership interests transferred.
10-06.1-17. Annual report - Contents - Filing requirements.
Before April sixteenth of each year, every corporation engaged in farming or ranching after
June 30, 1981, and every limited liability company engaged in farming or ranching shall file with
the secretary of state an annual report signed as provided in subsection 54 of section
10-19.1-01 if a corporation and subsection 58 of section 10-32-02 if a limited liability company. If
the corporation or limited liability company is in the hands of a receiver or trustee, it must be
signed on behalf of the corporation or limited liability company by the receiver or trustee. An
annual report in a sealed envelope postmarked by the United States postal service before the
date provided in this section or an annual report in a sealed packet with a verified shipment date
by any other carrier service before the date provided in this section meets the filing date
requirement. An annual report must include the following information with respect to the
preceding calendar year:
1. The name of the corporation or limited liability company.
2. The name of the registered agent of the corporation or limited liability company as
provided in chapter 10-01.1 and, if a noncommercial registered agent, the address of
the registered office of the corporation or limited liability company in this state.
3. With respect to each corporation:
a. A statement of the aggregate number of shares the corporation has authority to
issue, itemized by classes, par value of shares, shares without par value, and
series, if any, within a class.
b. A statement of the aggregate number of issued shares, itemized by classes, par
value of shares, shares without par value, and series, if any, within a class.
4. With respect to each shareholder or member:
a. The name and address of each, including the names and addresses and
relationships of beneficiaries of trusts and estates which own shares or
membership interests;
b. The number of shares or membership interests or percentage of shares or
membership interests owned by each;
c. The relationship of each;
d. A statement of whether each is a citizen or permanent resident alien of the United
States; and
e. A statement of whether at least one is an individual residing on or operating the
farm or ranch.
5. With respect to management:
a. If a corporation, then the names and addresses of the officers and members of
the board of directors; or
b. If a limited liability company, then the names and addresses of the managers and
members of the board of governors.
6. A statement listing the acreage [hectarage] and location listed by section, township,
range, and county of all land in the state owned or leased by the corporation or limited
liability company and used for farming or ranching. The statement must also designate
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which, if any, of the acreage [hectarage] is leased from or jointly owned with any
shareholder or member and list the name of the shareholder or member with that
acreage [hectarage].
A statement of the percentage of the annual average gross income of the corporation
or limited liability company which has been derived from farming or ranching
operations over the previous five years or for each year of existence if less than five
years.
A statement of the percentage of gross income of the corporation or limited liability
company derived from nonfarm rent, nonfarm royalties, dividends, interest, and
annuities during the period covered by the report.
A corporation engaged in farming which fails to file an annual report is subject to the
penalties provided in section 10-19.1-147 except that the penalties must be calculated
from the date of the report required by this section.
A limited liability company engaged in farming which fails to file an annual report is
subject to the penalties provided in subsections 5 and 6 of section 10-32-149 except
that the penalties must be calculated from the date of the report required by this
section.
10-06.1-18. Reports of corporations and limited liability companies not engaged in
farming or ranching.
Any business or nonprofit corporation and any limited liability company not engaged in the
business of farming or ranching which owns or leases a tract of land used for farming or
ranching which is larger than twenty acres [8.09 hectares] in size shall file with the attorney
general, within twelve months of any transaction involving the purchase, sale, or surface leasing
of such farmland or ranchland by that corporation or limited liability company, a report containing
all of the following information:
1. The name of the corporation or limited liability company and its place of incorporation
or organization and, if a nonprofit corporation, a copy of its section 501(c)(3)
exemption letter from the internal revenue service.
2. The name of the registered agent of the corporation or limited liability company as
provided in chapter 10-01.1 and, if a noncommercial registered agent, then the
address of the noncommercial registered agent in this state.
3. The acreage [hectarage] and location listed by section, township, range, and county of
all such land in the state owned or leased by the corporation or limited liability
company and used for farming or ranching.
4. The date and method of acquisition or disposal of such farmland or ranchland.
10-06.1-19. Exemption from certain disclosure and other requirements for certain
organizations.
Sections 10-06.1-12, 10-06.1-15, 10-06.1-17, and 10-06.1-18 do not apply to nonprofit
organizations or to corporations or limited liability companies such as banks, trust companies, or
foundations serving in a fiduciary capacity as the personal representative or trustee of an estate
or trust for an individual described in subsection 2 of section 10-06.1-12.
10-06.1-20. Failure to file report - Penalty.
Every corporation or limited liability company which fails to file any report required under
this chapter or willfully files false information on any report required under this chapter is guilty
of a class A misdemeanor.
10-06.1-21. Secretary of state to transmit information of noncompliance.
If the secretary of state finds from the annual report that the corporation or limited liability
company is not in compliance with the requirements of section 10-06.1-12, the secretary of state
shall transmit such information to the attorney general and the governor.
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10-06.1-22. Tax commissioner to compare returns and reports.
Each year the tax commissioner shall select at random at least five percent of the income
tax returns filed by corporations or limited liability companies which report on income from
farming or ranching operations and shall compare such returns with the annual report required
to be filed with the secretary of state by section 10-06.1-17 and shall forward any apparent
violations to the attorney general and the governor.
10-06.1-23. Attorney general to conduct random compliance program.
Each year the attorney general shall select at random at least five percent of the total
number of corporations and limited liability companies authorized by this chapter for requests for
information to determine compliance with this chapter. For such purpose, the attorney general
may request affidavits, share transfer records, certified copies of marriage licenses, birth
certificates, deeds, leases, and such other records and documents necessary to determine
compliance.
10-06.1-24. Enforcement - Penalty.
1. The recorder shall mail or deliver a copy of every instrument filed or recorded, within
thirty days after the instrument is recorded, to the attorney general if the instrument
documents evidence of a lease agreement or purchase agreement pursuant to
subsection 6 or 7 or if the instrument conveys the title to farmland or ranchland to a
corporation or limited liability company. The attorney general shall commence an
action in the district court of the county in which the substantial portion of farmland or
ranchland used in violation of this chapter is situated if the attorney general has reason
to believe that any person is violating this chapter. The attorney general shall file for
record with the recorder of each county in which any portion of the land is located a
notice of the pendency of the action. If the court finds that the land in question is being
held in violation of this chapter, or that a corporation or limited liability company is
conducting the business of farming or ranching in violation of this chapter, the court
shall enter an order so declaring. The attorney general shall file any such order for
record with the recorder of each county in which any portion of the land is located.
Thereafter, the corporation or limited liability company shall, within the time set by the
court not to exceed one year from the date of the court's final order, divest itself of any
farming or ranching land owned or leased by it in violation of this chapter, and cease
all farming or ranching operations. Except as otherwise provided in subsection 10, any
corporation or limited liability company that fails to comply with the court's order is
subject to a civil penalty not to exceed twenty-five thousand dollars and may be
dissolved or terminated by the secretary of state.
2. The divestment period is deemed to be a covenant running with the title to the land
against any corporate or limited liability company grantee, corporate or limited liability
company successor, or corporation or limited liability company assignee of the
corporation or limited liability company not authorized to do business under this
chapter.
3. Any land not divested within the divestment period prescribed must be sold at public
sale in the manner prescribed by law for the foreclosure of real estate mortgage by
action. In addition, any prospective or threatened violation may be enjoined by an
action brought by the attorney general in the manner provided by law, including
enjoining the corporation or limited liability company from completing performance on
the remainder of any leasehold which is in violation of this chapter.
4. Subject to the divestiture requirements of subsections 5, 6, and 7, a domestic or
foreign corporation or limited liability company may acquire farmland or ranchland as
security for indebtedness, by process of law in the collection of debts, or by any
procedure for the enforcement of a lien or claim thereon, whether created by mortgage
or otherwise.
5. Unless retention of the farmland or ranchland is permitted under subsection 6 or 7, all
farmland or ranchland acquired as security for indebtedness, in the collection of debts,
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or by the enforcement of a lien or claim shall be disposed of within three years after
acquiring ownership, if the acquisition would otherwise violate this chapter.
The disposition requirement does not apply to a corporation or limited liability company
that has acquired title to the land through the process of foreclosure of a mortgage, or
a deed from a mortgagor instead of a foreclosure, if, by the expiration of one month
after what is or what would have been the redemption period of the mortgage if the
mortgage had been foreclosed, that corporation or limited liability company leases to
the prior mortgagor from whom it was acquired, with an option to purchase, and if
documents evidencing the lease agreement have been filed with the recorder of each
county in which the land is located. A copy of a notice of lease is sufficient evidence.
The exemption in this subsection applies for only five years and then only if the
property has been appraised in accordance with subsection 8. The annual lease
payments required of the tenant may not exceed seven percent of the appraised
value.
The disposition requirement does not apply to a corporation or limited liability company
that has acquired title to the land through the process of foreclosure of a mortgage, or
a deed from the mortgagor instead of foreclosure, if, by the expiration of one month
after what is or what would have been the redemption period of the mortgage if the
mortgage had been foreclosed, that corporation or limited liability company contracts
for the sale of the land to the prior mortgagor from whom it was acquired, and if
documents evidencing the purchase agreement have been filed with the recorder of
each county in which the land is located. A copy of a notice of the contract for deed is
sufficient evidence. An exemption under this subsection is valid only if an appraisal has
been made in accordance with subsection 8, and if it is valid, the exemption is
unlimited in duration. The sale price may not exceed the price determined by the
appraisers.
If an appraisal is required, the appraisal must be made by three independent
appraisers, one selected by the corporation or limited liability company, one selected
by the prior mortgagor, and the third selected by the first two appraisers.
If a corporation or limited liability company holds land pending divestiture, and the
holding is not otherwise governed by this section, the land must be leased to persons
actually engaged in farming or ranching and a disposal may not be to a corporation or
limited liability company unless ownership by that corporation or limited liability
company is authorized under this chapter.
The civil penalty for a violation of section 10-06.1-10 may not exceed one hundred
thousand dollars.
Except as provided in subsection 10, any corporation or limited liability company
continuing to violate this chapter is subject to a civil penalty not to exceed twenty-five
thousand dollars and may be dissolved or terminated by the attorney general in
accordance with the laws of this state.
10-06.1-25. Private enforcement.
This chapter may be enforced in the same manner as provided in section 10-06.1-24 by any
corporation or limited liability company authorized to engage in farming or ranching by this
chapter or any resident of legal age of a county in which the land owned or leased by a
corporation or limited liability company in violation of this chapter is located. If such action is
successful, all costs of the action must be assessed against the defendant and a reasonable
attorney's fee must be allowed the plaintiff. If judgment is rendered for the defendant, such costs
and a reasonable attorney's fee for the defendant must be paid by the plaintiff.
10-06.1-26. Protection of minority shareholders.
If a shareholder owns less than fifty percent of the shares of a farming or ranching
corporation doing business under this chapter, and if the terms and conditions for the
repurchase of those shares by the corporation or by the other shareholders are not set forth in
the bylaws or the instrument which transferred the shares to the shareholder, or are not the
subject of a shareholders' agreement or an agreement between that shareholder and the
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corporation, then the disposition of such shares must be determined by this section upon the
withdrawal of the shareholder. Any shareholder who desires to withdraw from the corporation
shall first offer the shares for sale to the remaining shareholders in proportion to the shares
owned by them. If not all of the shareholders wish to purchase the shares, any one shareholder
may purchase all of the shares of the withdrawing shareholder. If no shareholder desires to
purchase the shares of a withdrawing shareholder, then the corporation may purchase the
shares. If the corporation chooses not to purchase the shares of the withdrawing shareholder,
then the withdrawing shareholder may sell the shares to any other person eligible to be a
shareholder. If the withdrawing shareholder is unable to sell the shares to any other person
eligible to become a shareholder, then the withdrawing shareholder may bring an action in
district court to dissolve the corporation. Upon a finding that the withdrawing shareholder cannot
sell the shares at a fair price, the court shall enter an order directing that the corporation itself or
any or all of the remaining shareholders pro rata or otherwise shall have twelve months from the
date of the court's order to purchase the shares of the withdrawing shareholder at a fair price as
determined by the court and that if the shares of the withdrawing shareholder are not completely
purchased at said price, the corporation shall be dissolved and the assets of the corporation
shall be first used to pay all the liabilities of the corporation with the remaining net assets to be
distributed pro rata to the shareholders in proportion to their ownership of shares. For the
purpose of this section, a fair price for the shares of the withdrawing shareholder must be
determined as though the shares were being valued for federal gift tax purposes under the
Internal Revenue Code.
10-06.1-27. Protection of minority members.
If a member owns less than fifty percent of the membership interest of a farming or ranching
limited liability company doing business under this chapter and if the terms and conditions for
the repurchase of that membership interest by the limited liability company or by the other
members are not set forth in the bylaws, the instrument that transferred the membership interest
to the member, or are not the subject of a member-control agreement or other agreement
between that member and the limited liability company, the disposition of the membership
interest must be determined by this section upon the withdrawal of the member. Any member
who desires to withdraw from the limited liability company shall first offer the membership
interest for sale to the remaining members in proportion to the membership interests owned by
the remaining members. If not all of the members wish to purchase the membership interest,
any one member can purchase all of the membership interest of the withdrawing member. If no
member desires to purchase the membership interest of the withdrawing member, the limited
liability company may purchase the membership interest. If the limited liability company chooses
not to purchase the membership interest of the withdrawing member, the withdrawing member
may sell the membership interest to any other person eligible to be a member. If the withdrawing
member is unable to sell the membership interest to any other person eligible to become a
member, the withdrawing member may bring an action in district court to terminate the limited
liability company. Upon a finding that the withdrawing member cannot sell the membership
interest at a fair price, the court shall enter an order directing that the limited liability company or
any of the remaining members pro rata or otherwise, have twelve months from the date of the
court's order to purchase the membership interest of the withdrawing member at a fair price as
determined by the court and that if the membership interest of the withdrawing member is not
completely purchased at the fair price, the limited liability company must be dissolved and the
assets of the limited liability company must be first used to pay all liabilities of the limited liability
company with the remaining net assets to be distributed pro rata to the members in proportion
to the member's membership interest ownership. For the purpose of this section, a fair price for
the membership interest of the withdrawing member must be determined as though the
membership interest was being valued for federal gift tax purposes under the Internal Revenue
Code.
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