Officers and Other Employees

Question 1

Who are officers selected by?

Answer 1

Selected by the BD

Question 2

What are the three forms of authority O has?

Answer 2

Actual
-> as defined by the corporate bylaws or BD

Implied
-> to perform those tasks necessary to carry out O’s duties by virtue of her status or position, so long as the matter is within the scope of ordinary business (i.e., not “extraordinary” transaction)

Apparent
-> if C holds O out as as having the authority to bind C to third parties

Question 3

What are the duties of O?

What unique duty does the CEO and CFO have?

Answer 3

Same as D’s duties
-> duty of loyalty
-> duty of care

The CEO and CFO of a publicly traded C are subject to the Sarbanes-Oxley Act, and must certify the accuracy of C’s financial reports to the SEC.

Question 4

When is O liable to a third party?

Answer 4

O is liable to a third party if O has
-> acted in O’s personal capacity or has engaged in purposeful tortious behavior
-> O IS NOT liable merely for the performance of O’s duties to C

Question 5

Is O allowed to be indemnified or insured?

Answer 5

Yes, same as Ds

Question 6

When can O be removed?

Answer 6

At any time with or without case.

Question 7

How are other employees dealt with?

Answer 7

An employee can act on behalf of C to the extent of the employee’s authority AND is usually protected as an agent from liability for actions undertaken in accordance with that authority.