Directors Flashcards
Directors at meetings
Must attend in person or through zoom if all participating directors can simultaneously hear each other.
No notice requirement except for special meetings.
Quorum must be present when vote is taken.
Business judgment rule
Generally protects directors from personal liability to corporation/shareholder
(1) director must act in good faith;
(2) with the care that a person in a like position would exercise; and
(3) in a manner reasonably believes to be in the best interests of the corporation
Articles may further limit or eliminate director personal liability to corporation or shareholders except:
(1) to the extent director received improper benefit;
(2) for liability for unlawful distributions; or
(3) for intentionally inflicted harms or criminal violations of law
Director reasonable reliance defense
Director may defend suits with a claim if reasonable reliance on opinions, reports, etc. prepared by experts or reliable employees
Directors duty of loyalty
No self dealing without disclosure and approval
A transaction between a corporation and director will not be set aside for self dealing if:
(1) director disclosed all material facts and transaction was approved by disinterested directors or shareholders; or
(2) transaction was fair to corporation
Corporate opportunity doctrine
(1) Director may not divert to himself a business opportunity within the corporation’s line of business without first giving corporation opportunity to earn the business
(2) Corporation May recover director’s profits or force director to convey the opportunity to the corporation
Director’s successful indemnification defense
If director is sued as a director and successfully defends, corporation must indemnify for expenses
Director unsuccessful indemnification defense
Corporation has discretion to indemnify if the director complied with BJR, but n/a if director found liable to corporation or received improper benefit
