Duties and Liabilities of Directors and Officers

Question 1

When can officers be removed?

Answer 1

With or without cause by the board of directors

Question 2

Director who votes for an improper dividend/distribution

Answer 2

Jointly and severally liable to the company for either

• the amount of the dividend, or
• the amount that exceeds what would have been a proper dividend

Question 3

Standard of care for directors, officers, and incorporators

Answer 3

Must perform duties in good faith

AND

ina mannter reasonably believed to be in the best interest of the corporation

AND

with usch care as an ordinary prudent person in a like position would use under similar circumstances

Question 4

Business Judgment Rule

Answer 4

Creates a rebuttalbe presumption that directors are:

• honest;
• well-meaning;
• acting through decisions that are informed and rationally undertaken in good faith

Question 5

Fiduciary duties to the corporation by directors

Answer 5

1. Care
2. Loyalty
3. Supervision
   
   1. Director or officer can me liable for negligently selecting or supervising subordinates

Question 6

Conflict of Interest

Answer 6

• Is inherent whenever a director or officer contracts
• with the corporation
• to buy or sell goods or services
• or has a personal interest in a transaction

Question 8

Corporate Opportunity Doctrine

Answer 8

Fiduciary must disclose the opporutnity in a timely and meaningful way to the board of directors

Question 9

Indemnification

Answer 9

Permissive –

• corp has legal power to agree to indemnify any director, officer, or employee who is sued for any expense where they acted in good faith