Title 47, CORPORATIONS

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

In discharging board or committee duties, a director, who does not have knowledge that makes reliance unwarranted, is entitled to rely on the performance by any of the persons specified in subdivision (1) or subdivision (3) to whom the board may have delegated, formally or inform…

A director is not liable to the corporation or its shareholders for any decision to take or not to take action, 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 incorporat…

The party seeking to hold the director liable: (1) For money damages, also has the burden of establishing that: (a) Harm to the corporation or its shareholders has been suffered; and (b) The harm suffered was proximately caused by the director's challenged conduct; or (2) For oth…

Nothing contained in §§ 47-1A-831 and 47-1A-831.1 : (1) In any instance where fairness is at issue, such as consideration of the fairness of a transaction to the corporation under subdivision 47-1A-861.1 (3), alters the burden of proving the fact or lack of fairness otherwise app…

A director who votes for or assents to a distribution in excess of what may be authorized and made pursuant to § 47-1A-640 or 47-1A-1409 is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating § 47…

A director held liable under § 47-1A-833 for an unlawful distribution is entitled to: (1) Contribution from every other director who could be held liable under § 47-1A-833 for the unlawful distribution; and (2) Recoupment from each shareholder of the pro-rata portion of the amoun…

A corporation has the officers described in its bylaws or appointed by the board of directors in accordance with the bylaws. 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 authorized by t…

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 of other …

An officer, when performing in such capacity, shall act: (1) In good faith; (2) With the care that a person in a like position would reasonably exercise under similar circumstances; and (3) In a manner the officer reasonably believes to be in the best interests of the corporation…

In discharging those duties, an officer, who does not have knowledge that makes reliance unwarranted, is entitled to rely on: (1) The performance of properly delegated responsibilities by one or more employees of the corporation whom the officer reasonably believes to be reliable…

An officer is not liable to the corporation or its shareholders for any decision to take or not to take action, or any failure to take any action, as an officer, if the duties of the office are performed in compliance with §§ 47-1A-842 and 47-1A-842.1 . Whether an officer who doe…

An officer may resign at any time by delivering notice to the corporation. A resignation is effective when the notice is delivered unless the notice specifies a later effective time. If a resignation is made effective at a later time and the board or the appointing officer accept…

The appointment of an officer does not itself create contract rights. An officer's removal does not affect the officer's contract rights, if any, with the corporation. An officer's resignation does not affect the corporation's contract rights, if any, with the officer. Source: SL…

Terms used in §§ 47-1A-850 to 47-1A-859 , inclusive, mean: (1) "Corporation," includes any domestic or foreign predecessor entity of a corporation in a merger; (2) "Director" or "officer," an individual who is or was a director or officer, respectively, of a corporation or who, w…

Except as otherwise provided in § 47-1A-851.1 , a corporation may indemnify a director who is a party to a proceeding by reason of being a director, against liability incurred in the proceeding if the director: (1) Acted in good faith; and (2) Reasonably believed: (a) In the case…

Unless ordered by a court under subdivision 47-1A-854(3), a corporation may not indemnify a director: (1) In connection with a proceeding by or in the right of the corporation, except for reasonable expenses incurred in connection with the proceeding if it is determined that the …

A corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the director was a party by reason of being a director of the corporation, against reasonable expenses incurred in connection with the proceed…

A corporation may, before final disposition of a proceeding, advance funds to pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding by reasons of being a director if the director delivers to the corporation: (1) A written affirmation o…

Authorizations under § 47-1A-853 shall be made: (1) By the board of directors: (a) If there are two or more disinterested directors, by a majority vote of all the disinterested directors, a majority of whom shall for such purpose constitute a quorum, or by a majority of the membe…

A director who is a party to a proceeding by reason of being a director may apply for indemnification or an advance for expenses to the court conducting the proceeding or to another court of competent jurisdiction. After receipt of an application and after giving any notice it co…

A corporation may not indemnify a director under §§ 47-1A-851 and 47-1A-851.1 unless authorized for a specific proceeding after a determination has been made that indemnification of the director is permissible because the director has met the relevant standard of conduct set fort…

A corporation may indemnify and advance expenses under §§ 47-1A-850 to 47-1A-859 , inclusive, to an officer of the corporation who is a party to a proceeding by reason of being an officer of the corporation: (1) To the same extent as a director; and (2) If the officer is not also…

A corporation may purchase and maintain insurance on behalf of an individual who is a director or officer of the corporation, or who, while a director or officer of the corporation, serves at the corporation's request as a director, officer, partner, trustee, employee, or agent o…

A corporation may, by a provision in its articles of incorporation or bylaws or in a resolution adopted or a contract approved by its board of directors or shareholders, obligate itself in advance of the act or omission giving rise to a proceeding to provide indemnification in ac…

A corporation may provide indemnification or advance expenses to a director or an officer only as permitted by §§ 47-1A-850 to 47-1A-859 , inclusive. Source: SL 2005, ch 239 , § 182.

Terms used in §§ 47-1A-860 to 47-1A-863.3 , inclusive, mean: (1) "Conflicting interest," with respect to a corporation, 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 corpor…

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 ri…

A director's conflicting interest transaction may not be enjoined, set aside, or give rise to an award of damages or other sanctions, in a proceeding by a shareholder or by or in the right of the corporation, because the director, or any person with whom or which the director has…

Directors' action respecting a transaction is effective for purposes of subdivision 47-1A-861.1 (1) if the transaction received the affirmative vote of a majority, but no fewer than one, of those qualified directors on the board of directors or on a duly empowered committee of th…

If a director has a conflicting interest respecting a transaction, but neither the director nor a related person of the director specified in subsection 47-1A-860(3)(i) is a party to the transaction, and if the director has a duty under law or professional canon, or a duty of con…

A majority, but no fewer than one, of all the qualified directors on the board of directors, or on the committee, constitutes a quorum for purposes of action that complies with §§ 47-1A-862 and 47-1A-862.1 . Directors' action that otherwise complies with §§ 47-1A-862 and 47-1A-86…

For purposes of §§ 47-1A-862 and 47-1A-862.1 , the term, qualified director means, with respect to a director's conflicting interest transaction, any director who does not have either a conflicting interest respecting the transaction, or a familial, financial, professional, or em…

Shareholders' action respecting a transaction is effective for purposes of subdivision 47-1A-861.1 (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 dire…

A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of action that complies with § 47-1A-863 . Subject to the provisions of §§ 47-1A-863.2 and 47-1A-863.3 , shareholders' action that otherwise complies with § 47-1A-…

For purposes of compliance with § 47-1A-863 , a director who has a conflicting interest respecting the transaction shall, before the shareholders' vote, inform the secretary, or other office or agent of the corporation authorized to tabulate votes, of the number, and the identity…

If a shareholders' vote does not comply with § 47-1A-863 solely because of a failure of a director to comply with § 47-1A-863.2 , and if the director establishes that the director's failure did not determine and was not intended by the director to influence the outcome of the vot…

The provisions of §§ 47-1A-901 to 47-1A-956 , inclusive, may not be used to effect a transaction that converts an insurance company organized on the mutual principle to one organized on a stock-share basis. Source: SL 2005, ch 239 , § 194.

If a domestic or foreign business corporation or eligible entity is also governed by specific statutes such as insurance, banking, public utilities, and savings and loan provisions, the corporation or eligible entity cannot be a party to a transaction under §§ 47-1A-901 to 47-1A-…

A foreign business corporation may become a domestic business corporation only if the domestication is permitted by the organic law of the foreign corporation. Source: SL 2005, ch 239 , § 196.

A domestic business corporation may become a foreign business corporation if the domestication is permitted by the laws of the foreign jurisdiction. Regardless of whether the laws of the foreign jurisdiction require the adoption of a plan of domestication, the domestication shall…

The plan of domestication shall include: (1) A statement of the jurisdiction in which the corporation is to be domesticated; (2) The terms and conditions of the domestication; (3) The manner and basis of reclassifying the shares of the corporation following its domestication into…

The plan of domestication may also include a provision that the plan may be amended prior to filing the document required by the laws of this state or the other jurisdiction to consummate the domestication. However, subsequent to approval of the plan by the shareholders, the plan…

Terms of a plan of domestication may be made dependent upon facts objectively ascertainable outside the plan in accordance with §§ 47-1A-120.1 to 47-1A-120.3 , inclusive. Source: SL 2005, ch 239 , § 200.

If any debt security, note or similar evidence of indebtedness for money borrowed, whether secured or unsecured, or a contract of any kind, issued, incurred, or executed by a domestic business corporation before July 1, 2005, contains a provision applying to a merger of the corpo…

In the case of a domestication of a domestic business corporation in a foreign jurisdiction: (1) The plan of domestication must be adopted by the board of directors; (2) After adopting the plan of domestication the board of directors shall submit the plan to the shareholders for …