Corporations

Front 1

BOD - General Powers

Back 1

Ds are responsible for the management of the business and affairs of the corp.

Front 2

BOD - Qualifications

Back 2

The Ds need not be SHs in the corp or resident of any particular state.

Front 3

BOD - Removal of a Director

Back 3

Ds may be removed by the SHs for cause or without cause.

Front 4

BOD - Meetings

Back 4

They basically are required to have meeting according to the bylaws.

Front 5

BOD - Quorum

Back 5

A majority of the BODs constitutes a quorum for the meeting unless a higher or lower number is required by the article or bylaws, but a quorum can be no fewer than one-third of the board members. Unlike SHs, a D can break quorum by withdrawing from the meeting.

Front 6

BOD - Approval of Action

Back 6

If a quorum is present, resolutions will be deemed approved by a majority of directors present.

A D cannot bind the corp without actual authority. Actual authority generally can arise only if: (i) proper notice was given for the Ds meeting, a quorum was present, and a majority of the Ds approved the action, or (ii) there was unanimous written consent of the directors.

Front 7

BOD - Delegation of Authority

Back 7

May create subcommittees to act on behalf of the BOD but the Ds remain responsible for the supervision of the committees.

Front 8

BOD - Right to Inspect

Back 8

Ds have a right to inspect corporate books.

Front 9

Directors Duties and Liabilities

Back 9

1. Personal liability may be limited;
2. Duty of Care;
3. Duty to Disclose;
4. Duty of Loyalty (conflicting interest transactions, corporate opportunity doctrine, competing business, common law insider trading).

Front 10

BOD - Personal Liability of Ds May be Limited

Back 10

The article may limit liability. Article CANNOT limit or eliminate liability for (i) financial benefits received by the D to which she is not entitled, (ii) an intentionally inflicted harm on the corp or its SHs, (iii) unlawful corporate distributions, or (iv) an intentional violation of criminal law.

Front 11

BOD - Duty of Care

Back 11

Ds have a duty to manage to the best of their ability. They must discharge their duties: (i) in good faith; (ii) with the care that an ordinarily prudent person in a like position would exercise under similar circumstances; and (iii) in a manner the Ds reasonably believe to be in the best interests of the corporation.

Front 12

BOD - Duty to Disclose

Back 12

The Ds have a duty to disclose material corporate information to other members of the board.

Front 13

BOD - Duty of Loyalty

Interested Director Transactions

Back 13

If a D will benefit from a transactions her corporation is about to enter into, the D must disclose this information to the BOD (or to the SHs). Disinterested directors (or the SHs) must then approve the transaction. If there is no disclosure, the transaction can be set aside unless it is fair to the corporation. Alternatively, the corporation can recover damages equal to the director's profit.

Front 14

BOD - Duty of Loyalty

Corporate Opportunity Doctrine

Back 14

The D's fiduciary duties prohibit them from diverting a business opportunity from their corporation to themselves without first giving their corporation an opportunity to act.

Front 15

BOD - Duty of Loyalty

Competing Business

Back 15

Directors may engage in unrelated businesses, but engaging in a competing business probably creates a conflict of interest.