Directors and Officers

Question 1

What powers do Directors have?

Answer 1

Individually- none (unless otherwise provides in Articles or Bylaws)

Collectively as the board- power to act for the corp.

Question 2

What is required for board action to occur?

Answer 2

Quorum- A majority of directors constitutes a quorum (unless otherwise provided in Articles or bylaws)

I.e., Board action occurs upon the affirmative vote of a majority of the directors present at the meeting

Question 3

Can the board act without a meeting?

Answer 3

Yes, the Board can act without calling a meeting if every director gives signed, written consent

Question 4

Notice required for REGULAR Board Meetings?

Answer 4

No notice (unless otherwise provided)

Question 5

Notice required for SPECIAL Board Meetings?

Answer 5

At least two days’ notice of the date, time, and place of the special meeting
(unless otherwise provided in Articles or bylaws)

**Need not give notice of the purpose of the meeting except for meetings at which the removal of a director is to be considered

Question 6

Can a director waive notice?

Answer 6

Yes, can waive that right

(1) in a signed writing, (2) attending the meeting and not objecting to the meeting or (3) objecting to the meeting but voting/ assenting to the action taken at the meeting

Question 7

Rights of Officers

Answer 7

Officers are agents of the corp. thus they may enter into any transaction that is expressly or implicitly authorized

Officers have the implied authority to enter contracts that are reasonably related to performing their duties

Question 8

What are the judiciary duties of Directors and Officers?

Answer 8

Duty of Care
Duty of Loyalty

Question 9

What does the Duty of Care mean?

Answer 9

Must act in good faith;

with the care of an ordinary prudent person in a similar position would exercise under the circumstances; and

with an honest belief that the decision is in the corp.’s best interest

Question 10

What is the Business Judgment Rule?

Answer 10

It creates a rebuttable presumption that directors and officers acted: in good faith, on an informed basis, and with an honest belied that the decision was in the corp.’s best interest

Question 11

What is the Duty of Loyalty?

Answer 11

Directors, officers, and employees must act loyal to the corp. and not promote
their own interest in a way that harms the corp.

(no self-dealing, no taking corporate opportunity, and no competing)

Question 12

Director and Officer liability in breach of fiduciary duty or unauthorized actions

Answer 12

Liable to the corp. for damages arising from violations