Title 18, Business Structure and Function

(a) Unless otherwise provided in the articles of incorporation, directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. (b) Shareholders do not have a right to cumulate their votes for direct…

(a) One or more shareholders may create a voting trust, conferring on a trustee the right to vote or otherwise act for them, by signing an agreement setting out the provisions of the trust (which may include anything consistent with its purpose) and transferring their shares to t…

(a) Two or more shareholders may provide for the manner in which they will vote their shares by signing an agreement for that purpose. A voting agreement created under this section is not subject to the provisions of § 28717. (b) A voting agreement created under this section is s…

(a) An agreement among the shareholders of a corporation that complies with this section is effective among the shareholders and the corporation even though it is inconsistent with one or more other provisions of this Act in that it: (1) eliminates the board of directors or restr…

In this subarticle: (a) Derivative proceeding means a civil suit in the right of a domestic corporation. (b) Shareholder includes a beneficial owner whose shares are held in a voting trust or held by a nominee on the beneficial owner’s behalf.

A shareholder may not commence or maintain a derivative proceeding COL372014 unless the shareholder: (a) was a shareholder of the corporation at the time of the act or omission complained of or became a shareholder through transfer by operation of law from one who was a sharehold…

No shareholder may commence a derivative proceeding until: (a) a written demand has been made upon the corporation to take suitable action; and (b) 90 days have expired from the date the demand was made unless the shareholder has earlier been notified that the demand has been rej…

If the corporation commences an inquiry into the allegations made in the demand or complaint, the court may stay any derivative proceeding for such period as the court deems appropriate.

(a) A derivative proceeding shall be dismissed by the court on motion by the corporation if one of the groups specified in subsections (b) or (f) has determined in good faith after conducting a reasonable inquiry upon which its conclusions are based that the maintenance of the de…

A derivative proceeding may not be discontinued or settled without the court’s approval. If the court determines that a proposed discontinuance or settlement will substantially affect the interests of the corporation’s shareholders or a class of shareholders, the court shall dire…

On termination of the derivative proceeding the court may: (a) order the corporation to pay the plaintiff’s reasonable expenses (including counsel fees) incurred in the proceeding if it finds that the proceeding has resulted in a substantial benefit to the corporation; (b) order …

(a) Except as provided in § 28719, each corporation must have a board of directors. (b) All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed by or under the direction of, its board of directors, subject to a…

The articles of incorporation or bylaws may prescribe qualifications for directors. A director need not be a resident of Guam or a shareholder of the corporation unless the articles of incorporation or bylaws so prescribe.

(a) A board of directors must consist of one or more individuals, with the number specified in the articles of incorporation or bylaws. (b) Directors are elected at the first annual shareholders’ meeting and at each annual meeting thereafter unless their terms are staggered under…

If the articles of incorporation authorize dividing the shares into classes, the articles may also authorize the election of all or a specified number of directors by the holders of one or more authorized classes of shares. A class COL372014 (or classes) of shares entitled to ele…

(a) The terms of the initial directors of a corporation expire at the first shareholders’ meeting at which directors are elected. (b) The terms of all other directors expire at the next annual shareholders’ meeting following their election unless their terms are staggered under §…

The articles of incorporation may provide for staggering the terms of directors by dividing the total number of directors into two or three groups, with each group containing one-half or one-third of the total, as near as may be. In that event, the terms of directors in the first…

(a) A director may resign at any time by delivering written notice to the board of directors, its chairman, or to the corporation. (b) A resignation is effective when the notice is delivered.

(a) The shareholders may remove one or more directors with or without cause unless the articles of incorporation provide that directors may be COL372014 removed only for cause. (b) If a director is elected by a voting group of shareholders, only the shareholders of that voting gr…

(a) Unless the articles of incorporation provide otherwise, if a vacancy occurs on a board of directors, including a vacancy resulting from an increase in the number of directors: (1) the shareholders may fill the vacancy; (2) the board of directors may fill the vacancy; or (b) I…

Unless the articles of incorporation or bylaws provide otherwise, the board of directors may fix the compensation of directors.

(a) The board of directors may hold regular or special meetings in or out of Guam. (b) Unless the articles of incorporation or bylaws provide otherwise, the board of directors may permit any or all directors to participate in a regular or special meeting by, or conduct the meetin…

(a) Unless the articles of incorporation or bylaws provide otherwise, action required or permitted by this Act to be taken at a board of directors’ meeting may be taken without a meeting if the action is taken by all members of the board. The action must be evidenced by one or mo…

(a) Unless the articles of incorporation or bylaws provide otherwise, regular meetings of the board of directors may be held with notice of the date, time, place, or purpose of the meeting. (b) Unless the articles of incorporation or bylaws provide for a longer or shorter period,…

(a) A director may waive any notice required by this Act, the articles of incorporation, or bylaws before or after the date and time stated in the notice. (b) A director’s attendance at or participation in a meeting waives any required notice to him of the meeting unless the dire…

(a) Unless the articles of incorporation or bylaws require a greater number or unless otherwise specifically provided in this Act, a quorum of a board of directors consists of a majority of the number of directors specified in the articles of incorporation or bylaws. (b) If a quo…

(a) Unless the articles of incorporation or bylaws provide otherwise, a board of directors may create one or more committees and appoint members of the board of directors to serve on them. Each committee must have two or more members, who serve at the pleasure of the board of dir…

(a) Each member of the board of directors, when discharging the duties of a director, shall act (1) in good faith; and (2) in a manner the director reasonably believes to be in the best interests of the corporation. (b) The members of the board of directors or a committee of the …

(a) A director shall not be liable to the corporation or its shareholders for any decision to take or not to take actions, or any failure to take any action, as a director, unless the party asserting liability in a proceeding establishes that: (1) any provision in the Articles of…

(a) A director who votes for or assents to a distribution in excess of what may be authorized and made pursuant to §§ 28616 (a) or 281409 (a) is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating…

(a) A corporation has the offices described in its bylaws or designated by the board of directors in accordance with the bylaws. (b) The board of directors may elect individuals to fill one or more offices of the corporation. An officer may appoint one or more officers if authori…

COL372014 Each officer has the authority and shall perform the duties set forth in the bylaws or, to the extent consistent with the bylaws, the duties prescribed by the board of directors or by direction of an officer authorized by the board of directors to prescribe the duties o…

(a) An officer with discretionary authority shall discharge the officer’s duties under that authority: (1) In good faith; (2) With the care an ordinarily prudent person in a like position would exercise under similar circumstances; and (3) In a manner the officer reasonably belie…

Insurance. (a) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or…

For this Subarticle the following definitions apply: (a) Conflicting interest with respect to a corporation, means the interest a director of the corporation has respecting a transaction effected or proposed to be effected by the corporation (or by a subsidiary of the corporation…

(a) A transaction effected or proposed to be effected by a corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) that is not a director’s conflicting interest transaction may not be enjoined, set aside, or give…

(a) Directors’ action respecting a transaction is effective for purposes of § 28861(b)(1) if the transaction received the affirmative vote of a majority but no fewer than two (2) of those qualified directors on the board of directors or on a duly empowered committee of the board …

(a) Shareholders’ action respecting a transaction is effective for purposes of § 28861(b)(2) if a majority of the votes entitled to be cast by the holders of all qualified shares were cast in favor of the transaction after (1) notice to shareholders describing the director’s conf…

Indemnity is a contract by one engages to save another from a legal consequence of the conduct of one of the parties, or of some other person. SOURCE: CC § 2772.

COL120106 An agreement to indemnify a person against an act thereafter to be done, is void, if the act be known by such person at the time of doing it to be unlawful. SOURCE: CC § 2773.

An agreement to indemnify a person against an act already done, is valid, even though the act was known to be wrongful, unless it was a felony. SOURCE: CC § 2774.

An agreement to indemnify against the acts of a certain person, applies not only to his acts, but also to those of his agents. SOURCE: CC § 2775.

An agreement to indemnify several persons applies to each, unless a contrary intention appears. SOURCE: CC § 2776.

One who indemnifies another against an act to be done by the latter is liable jointly with the person indemnified, and separately, to every person injured by such act. SOURCE: CC § 2777.

In the interpretation of a contract of indemnity, the following rules are to be applied, unless a contrary intention appears: 1. Upon an indemnity against liability, expressly, or in other equivalent terms, the person indemnified is entitled to recover upon becoming liable; 2. Up…

Where one, at the request of another, engages to answer in damages, whether liquidated or unliquidated, for any violation of duty on the part of the latter, he is entitled to be reimbursed in the same manner as a surety, for whatever he may pay. SOURCE: CC § 2779.