OFFICERS Flashcards
(3 cards)
Officers
Same rules and duties as DIRECTOR. Officers duties are determined by the bylaws or BOD. Officers are AGENTS of the corp and can bind the Corporation based on their authority, which can be actual or apparent. Unauthorized actions may become binding on the corporation because of ratification, adoption, or estoppel. Corporation is liable for actions of officers within the scope of their authority. Officer has authority to manage the daily business of the corp. Only the BOD can appoint and remove officers.
Officers - Standard of Conduct
{BJR}(same as directors) Officers must carry out their duties in good faith, with the care of an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner they reasonably believe to be in the best interests of corp.
Indemnification of Directors/Officers
Where a director is entitled to indemnification depends largely on the outcome of the litigation.
a. OF RIGHT (mandatory). The corporation MUST indemnify a D/O who has been wholly successful OR to the extent of his success in defending suit arising from his role as D/O for reasonable expenses, including attorneys’ fees.
b. PERMISSIVE (discretionary). Corporation MAY indemnify the director for reasonable expenses incurred in unsuccessfully defending a suit brought against the director on account of D’s position if: (1) acted in good faith AND (2) reasonably believed conduct was in corporation’s best interest OR conduct was not unlawful (crim proceedings).. Ex: Settlement amount, expenses and atty fees – NOT judgment)
c. PROHIBITED. A corporation MUST NOT indemnify a D/O where the D/O is found liable to the corporation in a direct or Derivative suit OR received an improper personal benefit.
d. Advances. Corp may advance expenses to a director defending an action as long as the director furnishes the corp a statement that the director believes he met the appropriate standard of conduct and that he will repay the advance if he is later found to have not.
