|
|
Corporate Management
A director is liable to the corporation for damages
resulting from breach of the duty owed to the corporation. These duties
include the director's duty to exercise care in the management of corporate
affairs, the duty to act fairly in transactions between the director and the
corporation, the duty not to seize for personal gain a corporate opportunity,
and the director's duty to exercise fairness in transactions between
corporations with interlocking directorates. These duties arise from the
nature of a director's relationship with the corporation, which has been
generally characterized as similar to that of a fiduciary. Claims against
directors for breaches of their fiduciary obligations to the corporation may
generally be advanced only in a shareholder's derivative suit.
Directors may also be liable to third parties in
certain instances and to shareholders in cases where shareholders have a
direct action.
Some measure of protection may be afforded to directors against liability for
breach of their duties through indemnification or liability insurance.
Corporate officers and agents likewise owe fiduciary
obligations to the corporation; however, the standard to which these persons
are held may vary from the stringent obligations of a managing officer, who
may have the same fiduciary obligations as a director, to those based simply
on the principles of agency in the case of a subordinate officer or agent.
Corporate agents are individually liable for fraudulent or tortious acts
committed while in the service of their corporations. However, a corporate
officer's acts on the corporation's behalf are considered acts of the
corporation itself. Therefore, an officer or director is not generally liable
for inducing the corporation to violate a contractual obligation as long as
he or she acts in good faith on the corporation's behalf. Even mixed motives
on the part of the officer or director are insufficient to establish personal
liability
Shareholders may be subject to the same duties and liabilities as directors
when they participate in the management of a corporation that has elected the
status of a close corporation under the Texas Close Corporation Law.
Shareholders in a close corporation may regulate the business affairs and
management of the corporation through adoption of a shareholder agreement.
The shareholders may share management duties with a board of directors, or
eliminate the board altogether. The shareholders of a close corporation who
serve, in whole or in part, as managers of the corporation, are subject to
the liabilities imposed on directors for any managerial acts or omissions,
relating to any aspect of the business and affairs of the close corporation.
In 1997, the Texas Legislation amended the Business Corporation Act to
provide for the management of general business corporations by use of
shareholder agreements. An agreement among the shareholders of a corporation
that complies with statutory requirements is effective among the shareholders
and the corporation even though it is inconsistent with one or more
provisions of the Act. A shareholder agreement may restrict the discretion or
powers of the board of directors. It may even eliminate the board of
directors and permit management of the business and affairs of the corporation
by its shareholders, or in whole or in part by one or more of its
shareholders, or by one or more persons who are not shareholders. It may
provide for the exercise of corporate powers, the management of the business
and affairs of the corporation, or the relationship among the shareholders,
the directors, and the corporation, as if the corporation were a partnership
or in a manner that would otherwise be appropriate only among partners,
provided that public policy is not violated. A shareholder agreement may
address a variety of other matters otherwise governed by statute.
A valid shareholder agreement that limits the discretion or powers of the
board of directors or supplants the board of directors relieves the directors
of certain liability, while imposing the liability for acts and omissions
governed by the Business Corporation Act on the persons actually doing the
managing. However, the existence or performance of a shareholder agreement
does not provide grounds for imposing personal liability on any shareholder
for the acts or obligations of the corporation on a theory of disregard of
the corporate entity, even if the agreement or its performance:
1. Treats the corporation as if it were a partnership, or in a manner that
otherwise is appropriate only among partners;
2. Results in the corporation being considered a partnership for purposes of
taxation; or
3. Results in failure to observe the corporate formalities otherwise
applicable to the matters governed by the agreement.
Persons who purchase shares without knowledge of the existence of the
shareholder agreement have rescission rights. However, if the existence of
the agreement is properly noted on share certifications or information
statements issued in connection with uncertificated shares, a purchaser is
deemed to have knowledge of the agreement. Shareholder agreements become
ineffective when the corporate shares are listed on a national securities
exchange, quoted on an interdealer quotation system of a national securities
association, or regularly traded in a market maintained by one or more
members of a national or affiliated securities association. When an agreement
ceases to be effective for this or any reason, if the corporation does not
have a board of directors, governance by a board must be instituted or
reinstated in the manner provided by Article 12.23(c) of the Business
Corporation Act.
In every corporation, the shareholders are the equitable owners of the
corporation although they possess no legal title to the assets of the corporation.
As the equitable owners, the shareholders can bind the corporation by a
contract in which all the shareholders join.
|
|
