Rhode Island Corporations Distinctions

Question 1

RI Distinction on Fiduciary Duty

Answer 1

In RI, articles of incorporation may limit liability for directors’ duty of care, but not the duty of loyalty.

Question 2

RI Distinction on Chartable Donations

Answer 2

RI corporations are allowed to make charitable donations.

Question 3

RI Distinction on Loans to Employees

Answer 3

RI permits corporations to lend money and use its credit to assist employees.

Question 4

RI Distinction on “de facto” corporation doctrine

Answer 4

RI has abolished the de facto corporation doctrine.

Question 5

RI Distinction on stock subscriptions

Answer 5

Share certificates cannot be issued until fully paid for.

Question 6

RI Distinction on proxies

Answer 6

In RI, proxies are valid for 3 years unless otherwise provided in the proxy agreement.

Question 7

RI Distinction on Shareholder Action without a Meeting

Answer 7

In RI, shareholders may act without a meeting, but it the act involves fundamental changes then unanimous written consent is required. For non-fundamental matters, the articles of incorporation may authorize action by written consent of less than all shareholders.

Question 8

RI Distinction on shareholder inspection rights

Answer 8

A shareholder has the burden of proving a proper inspection purpose.

Question 9

RI Distinction on indemnification of officers and directors

Answer 9

Any indemnification or advance of expenses arising out of a proceeding in which the corporation is a party must be reported in writing to the shareholders with or before notice of the next shareholders’ meeting.

Question 10

RI Distinction on votes needed to pass fundmental changes

Answer 10

Rhode Island follows the approach of the RMBCA, which now only requires a simple majority vote of shareholders to pass fundamental changes.