officers and board

Question 1

officer and corp relationship

Answer 1

agency

Question 2

actual authority for officer

Answer 2

act on behalf of corp

from articles, bylaws, b/d, or delegated from another officer

Question 3

apparent authority for officer

Answer 3

act w/ regard to matters corp has held out officer as possessing

Question 4

typical b/d term

Answer 4

1 year

Question 5

where are b/d selected

Answer 5

annual s/h meeting

Question 6

when can b/d be removed?

Answer 6

w/o cause

Question 7

when is notice required for b/d?

Answer 7

only at special meetings

Question 8

what is required for b/d to vote?

Answer 8

quorum

Question 9

can you make a b/d committee?

Answer 9

yes

b/d may act through committes

Question 10

what are the b/d duties?

Answer 10

duty of care

duty of loyalty

duty to not waste assets

Question 11

what shields a director from liability in making decisions

Answer 11

BJ rule

Question 12

define BJ rule

Answer 12

rebuttable presumption director acting in good faith when making a decision

Question 13

how is the rebuttable presumption overcome?

Answer 13

a violation a duty

Question 14

duty of care

Answer 14

no grossly negligent or reckless conduct

D not liable if breach in good faith

Question 15

what is a defense to potentially breaching the duty of care?

Answer 15

relying on opinions from officers, employees or experts if director believes reliable

Question 16

duty of loyalty

Answer 16

act in best interst of corp

Question 17

examples of breaching duty of loyalty

Answer 17

no competing with corp

no self dealing

no usurping corp opportunity

Question 18

what is self dealing?

Answer 18

engage in conflict of interest transaction

director cannot profit at corp expense

Question 19

when is self dealing OK

Answer 19

disclose material facts and board approves

OR

s/h aware of material facts

OR

transaction FAIR

Question 20

transaction fair?

Answer 20

disinterested b/d would have approved

Question 21

what must you do before you usurp a corp opportunity

Answer 21

offer it to corp

Question 22

mandatory indemnity

Answer 22

C required to indemnify director if he has a successful defense in a suit

Question 23

permissive indemnity

Answer 23

D acted in good faith in believing it was in best interest of corp

Question 24

prohibited indemnification

Answer 24

willful misconduct

knowing break law

Question 25

cap on indemnification

Answer 25

greater of

100k

OR

cash compensation to director last 12 months

Question 26

could a board member recover from another board member if found liable for unlawful distribution?

Answer 26

yes

contribution

Question 27

could a board member recover from shareholders pro rata portion of unlawful distribution if the shareholder accepts it?

Answer 27

yes

recoupment