directors and officers Flashcards
statutory requirements for directors
corporations must have a board with at least one member. shareholders elect directors. shareholders can remove director before her term expires w/ or without cause.
director meetings
unless all directors consent in writing to act w/o a meeting, meeting is required. notice of meetings can be set in bylaws must have majority of all directors to do business (unless different percentage is required in bylaws but never fewer than 1/3). proxies are not allowed, no voting agreements. to pass a resolution, all that is required is majority of those present
business judgment rule
BJR is presumption that directors manage the corporation in good faith and in the best interests of the corporation and its shareholders. as such, directors will not be liable for innocent mistakes of business judgment.
duty of care
director owes corporation a duty of care - must act w/ care that a prudent person would use withe regard to her own business, unless articles have limited director liability for a breach of the duty of care
duty of loyalty
director owes corp a duty of loyalty - may not receive unfair benefit to the detriment of the corp or its shareholders unless there is material disclosure and independent ratification
- self-dealing
- usurping corporate opportunities
- ratification
corporation may never indemnify a director if
they are held liable to the corporation
corp must always indemnify if
director wins a suit against any party
corp may indemnify if
liability to third parties or settlement with corporation
director or officer shows she acted in good faith and w/ reasonable belief that her conduct was in corporation’s best interest
who may determine whether to grant permissive indemnity
majority vote of independent directors
majority vote of committee of at least 2 independent directors
majority vote of shares held by independent shareholders
special legal counsel’s opinion
