BOD duties, lliabillty

Question 1

BOD duties

Answer 1

duty of care

duty of loyalty

Question 2

BOF

Answer 2

BOF on person challenging directors actions

Question 3

nonfeasance

Answer 3

breach of the duty of care and a director who doesnt do anything basically a lazy director

and the lack of action causes harm to corp

Question 4

misfeasance

Answer 4

board makes a decision which hurts the business unless action meets BJR

Question 5

BJR

Answer 5

a presumption that when board took the act, it did so in good faith, informed, had rational basis

so a ct will NOT second guess a business decision if it was made with the above

Question 6

BJR does not apply in

Answer 6

duty of loyalty cases

Question 7

breach of duty of care

Answer 7

1. self-dealing unless approved by majority of disinterested directors, SH or deal was fair to corp
2. competing ventures - can pursue unrelated ventures as long as do not directly conflict
3. corporate opportunity doctrine
4. CL insider trading

Question 8

corporate opportunity doctrine

Answer 8

COD prohibits directors from diverting a business opportunity from the corp to themselves without first giving corp the opportunity to act

corp can sue to recover under a constructive trust

Question 9

If a director needs to dissent, they need to do so

Answer 9

in writing:

1. which appears in the minutes
2. delivered in writing to presiding officer at meeting - OR -
3. written dissent to corp immediately after the meeting

Question 10

CL insider trading

Answer 10

at CL director has no duty to disclose all facts relevant to securities transaction but must disclose when director knows of a special circumstance (ie upcoming planned merger)

Question 11

what are officers

Answer 11

agents of the corp

duty of care + loyalty

Question 12

who selects and removes officers

Answer 12

BOD and can also remove with or without cause

Question 13

no indemnification (compensation for harm or loss)

Answer 13

corp cant indemnify a director who

1. is held liable to the corp OR
2. held to have received an improper benefit

Question 14

mandatory indemnification

Answer 14

corp must compensate a director who was successful in defending a proceeding

Question 15

permissive indemnification

Answer 15

may compensate director for reasonable expenses in defending an unsuccessful suit if

1. director acted in good faith
2. director believed her conduct was in corps best interest