Iowa Code 504.834 – Loans to or guarantees for directors and officers
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1. A corporation shall not lend money to or guarantee the obligation of a director or officer of the corporation.
Terms Used In Iowa Code 504.834
- Corporation: means a public benefit, mutual benefit, or religious corporation. See Iowa Code 504.141
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
2. This section does not apply to the situation where the director or officer is a full-time employee of the corporation and involves any of the following:
a. An advance to pay reimbursable expenses reasonably expected to be incurred by a director or officer.
b. An advance to pay premiums on a policy of life insurance if the advance is secured by the policy’s death benefit proceeds or cash surrender value, or both.
c. Advances pursuant to part 5 of this subchapter.
d. Loans or advances pursuant to employee benefit plans.
e. A loan secured by the principal residence of an officer.
f. A loan to pay relocation expenses of an officer.
3. The fact that a loan or guarantee is made in violation of this section does not affect the borrower’s liability on the loan.