CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS Business Corporations: Require Demand in All Shareholder Derivative Actions; Raise the Standard of Care Required for Indemnification of Corporate Directors; Provide that a Director Must be Wholly Successful in an Action in Order to be Entitled to Mandatory Indemnification; Provide that Only Disinterested Directors may Authorize Indemnification; Authorize Contracts to Indemnify or to Advance Funds; Provide that Officers are Held to the Same Standards as Directors Regarding Indemnification; Modify Procedures for Approving Advances for Expenses; Permit Corporations to Merge with Limited Liability Companies and Nonprofit Corporations; Provide for the Survival of Remedies and Rights of Dissolved Corporation

Authors

Georgia State University Law Review

Document Type

Peach Sheet

Abstract

The Act requires demand on the corporation for a shareholder derivative action. The standard of care required for indemnification of a director is changed from a subjective standard to an objective reasonableness standard. In order to be entitled to mandatory indemnification, a director must be wholly successful in his or her defense of the action. Only disinterested directors may vote to authorize indemnification. A corporation may enter into contracts to indemnify or to advance funds. The Act provides that corporate officers are subject to the same standards as directors regarding indemnification issues. Advances for expenses may be authorized by a majority vote of disinterested directors or, if none are available, by a vote of all the directors or of the disinterested shareholders. The Act permits corporations to merge with limited liability companies and nonprofit corporations, as well as joint-stock associations or limited partnerships; either of the merging entities may be the surviving corporation. The Act also provides for the survival of remedies and rights of a dissolved corporation for the a period of two years after dissolution. hmtl

Recommended Citation

Georgia State University Law Review, CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS Business Corporations: Require Demand in All Shareholder Derivative Actions; Raise the Standard of Care Required for Indemnification of Corporate Directors; Provide that a Director Must be Wholly Successful in an Action in Order to be Entitled to Mandatory Indemnification; Provide that Only Disinterested Directors may Authorize Indemnification; Authorize Contracts to Indemnify or to Advance Funds; Provide that Officers are Held to the Same Standards as Directors Regarding Indemnification; Modify Procedures for Approving Advances for Expenses; Permit Corporations to Merge with Limited Liability Companies and Nonprofit Corporations; Provide for the Survival of Remedies and Rights of Dissolved Corporation, 13 Ga. St. U. L. Rev. (2012).
Available at: https://readingroom.law.gsu.edu/gsulr/vol13/iss1/24