RS 12:91 Relation of directors and officers to corporation and shareholders - Louisiana Statutes

PART IX.  LIABILITY OF DIRECTORS, OFFICERS,

SHAREHOLDERS AND SUBSCRIBERS

§91.  Relation of directors and officers to corporation and shareholders

A.  Officers and directors shall be deemed to stand in a fiduciary relation to the corporation and its shareholders, and shall discharge the duties of their respective positions in good faith, and with that diligence, care, judgment, and skill which ordinary prudent men would exercise under similar circumstances in like positions; however, a director or officer shall not be held personally liable to the corporation or the shareholders thereof for monetary damages unless the director or officer acted in a grossly negligent manner as defined in Subsection B of this Section, or engaged in conduct which demonstrates a greater disregard of the duty of care than gross negligence, including but not limited to intentional tortious conduct or intentional breach of his duty of loyalty.  Nothing herein contained shall derogate from any indemnification authorized by R.S. 12:83.

B.  As used in this Section, "gross negligence" shall be defined as a reckless disregard of or a carelessness amounting to indifference to the best interests of the corporation or the shareholders thereof.

C.  A director or officer who makes a business judgment in good faith fulfills the duty of diligence, care, judgment, and skill under Subsection A of this Section if the director or officer:

(1)  Does not have a conflict of interest with respect to the subject of the business judgment.

(2)  Is informed with respect to the subject of the business judgment to the extent the director or officer reasonably believes to be appropriate under the circumstances.

(3)  Rationally believes that the business judgment is in the best interests of the corporation and its shareholders.

D.  In fulfilling his duties under this Section, a director or officer is entitled to rely upon records and other materials and persons as specified in R.S. 12:92(E).

E.  A person alleging a breach of the duty of diligence, care, judgment, and skill owed by an officer or director under Subsection A shall have the burden of proving the alleged breach of duty, including the inapplicability of the provisions as to the fulfillment of the duty under Subsections C and D and, in a damage action, the burden of proving that the breach was the legal cause of damage suffered by the corporation.

F.  The provisions of this Section shall apply to all business organizations, whether incorporated or unincorporated, formed under Louisiana law.

Acts 1968, No. 105, §1; Acts 1999, No. 1253, §1, eff. July 12, 1999.