Nevada Revised Statutes 78.139 – Directors and officers: Duties, presumptions and powers when confronted with change or potential change in control of corporation
1. If directors or officers take action to resist a change or potential change in control of a corporation, which action impedes the exercise of the right of stockholders to vote for or remove directors:
Terms Used In Nevada Revised Statutes 78.139
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- 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.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- person: means a natural person, any form of business or social organization and any other nongovernmental legal entity including, but not limited to, a corporation, partnership, association, trust or unincorporated organization. See Nevada Revised Statutes 0.039
(a) The directors must have reasonable grounds to believe that a threat to corporate policy and effectiveness exists; and
(b) The action taken which impedes the exercise of the stockholders’ rights must be reasonable in relation to that threat. If those facts are found, the directors and officers have the benefit of the presumption established by subsection 3 of NRS 78.138.
2. The provisions of subsection 1 do not apply to:
(a) Actions that only affect the time of the exercise of stockholders’ voting rights; or
(b) The adoption or signing of plans, arrangements or instruments that deny rights, privileges, power or authority to a holder of a specified number or fraction of shares or fraction of voting power.
3. The provisions of subsections 1 and 2 do not permit directors or officers to abrogate any right conferred by the laws of this State or the articles of incorporation.
4. Without limiting the provisions of NRS 78.138, a director may resist a change or potential change in control of the corporation if the board of directors determines that the change or potential change is opposed to or not in the best interest of the corporation upon consideration of any relevant facts, circumstances, contingencies or constituencies pursuant to subsection 4 of NRS 78.138, including, without limitation, the amount or nature of the indebtedness and other obligations to which the corporation or any successor to the property of either may become subject, in connection with the change or potential change, provides reasonable grounds to believe that, within a reasonable time:
(a) The assets of the corporation or any successor would be or become less than its liabilities;
(b) The corporation or any successor would be or become insolvent; or
(c) Any voluntary or involuntary proceeding concerning the corporation or any successor would be commenced by any person pursuant to the federal bankruptcy laws.