Corporations 24-30 Flashcards
How may a Director be removed from the Board of Directors?
By a vote of the majority of shareholders for or without cause (unless stated otherwise in the Articles of Incorporation).
Priority: Medium
When can an Officer be removed from their position in the corporation?
At ANY time, with or without cause, by:
The Board of Directors;
The Officer who appointed such officer; OR
By any other Officer (if authorized).
*Removal does NOT affect their contract rights.
Priority: Medium
What is an Officer’s actual or apparent authority?
Actual authority: to act consistently with their duties as outlined by the bylaws OR as provided by the Board of Directors.
Apparent authority: to bind the corporation when a third-party reasonably believes the officer has authority to act on behalf of the corporation AND that belief is traceable to the corporation’s manifestations.
Priority: Low
What is the implied authorityof the President of a corporation?
He has the implied authority to bind the corporation for matters within its ordinary course of business (normal and necessary for managing the business),
BUT does not have authority to bind the corporation for extraordinary acts.
Priority: Low
What is a Director’s duty of care to the corporation?
They must discharge their duties:
In good faith;
In a manner they reasonably believe to be in the best interest of the corporation; AND
With the care that a person in a like position would reasonably believe appropriate under similar circumstances.
*If duty is breached, they will be liable.
Priority: HIGH
May a Director rely on the advice of advisors?
Yes, when such reliance was reasonable AND the advisor or committee was qualifiedto provide such advice.
*Directors must be reasonably informed on the decisions that they make, and can be held liable for breach of this duty.
Priority: HIGH
What does the Duty of Loyalty require of a Director/Officer?
That in his dealings with the corporation, he must act in the best interests of the corporation AND without personal conflict.
Priority: HIGH
