West Virginia Code 31D-8-842a – Standards of liability for officers
(a) An officer is not liable to the corporation or its shareholders for any decision to take or not to take action, or any failure to take any action, as an officer, unless the party asserting liability in a proceeding establishes that:
Terms Used In West Virginia Code 31D-8-842a
- Articles of incorporation: includes , but is not limited to, amended and restated articles of incorporation and articles of merger. See West Virginia Code 31D-1-150
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- 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.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Distribution: means a direct or indirect transfer of money or other property or incurrence of indebtedness by a corporation to or for the benefit of its shareholders in respect of any of its shares: Provided, That "distribution" does not include a direct or indirect transfer of a corporation'. See West Virginia Code 31D-1-150
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Judgment: includes decrees and orders for the payment of money, or the conveyance or delivery of land or personal property, or some interest therein, or any undertaking, bond or recognizance which has the legal effect of a judgment. See West Virginia Code 2-2-10
- Oversight: Committee review of the activities of a Federal agency or program.
- Person: includes , but is not limited to, an individual and an entity. See West Virginia Code 31D-1-150
- Shareholder: means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation. See West Virginia Code 31D-1-150
- United States: includes , but is not limited to, districts, authorities, bureaus, commissions, departments and any other agency of the United States. See West Virginia Code 31D-1-150
(1) Any provision in the articles of incorporation authorized by subdivision (4), subsection (b), section two hundred two, article two of this chapter or the protections afforded by section eight hundred sixty of this article or article seven-c, chapter fifty-five of this code interposed as a bar to the proceeding by the officer, does not preclude liability; and
(2) The challenged conduct consisted or was the result of:
(A) Action not in good faith; or
(B) A decision: (i) Which the officer did not reasonably believe to be in the best interests of the corporation; or (ii) as to which the officer was not informed to an extent the officer reasonably believed appropriate in the circumstances; or
(C) A lack of objectivity due to the officer’s familial, financial or business relationship with, or a lack of independence due to the officer’s domination or control by, another person having a material interest in the challenged conduct: (i) Which relationship or which domination or control could reasonably be expected to have affected the officer’s judgment respecting the challenged conduct in a manner adverse to the corporation; and (ii) after a reasonable expectation has been established, the officer does not establish that the challenged conduct was reasonably believed by the officer to be in the best interests of the corporation; or
(D) A sustained failure of the officer to devote attention to ongoing oversight of the business and affairs of the corporation, or a failure to devote timely attention, by making or causing to be made appropriate inquiry when particular facts and circumstances of significant concern materialize that would alert a reasonably attentive officer to the need for inquiry;
(E) Receipt of a financial benefit to which the officer was not entitled or any other breach of the officer’s duties to deal fairly with the corporation and its shareholders that is actionable under applicable law.
(b) The party seeking to hold the officer liable:
(1) For money damages, has the burden of establishing that:
(A) Harm to the corporation or its shareholders has been suffered; and
(B) The harm suffered was proximately caused by the officer’s challenged conduct; or
(2) For other money payment under a legal remedy, including compensation for the unauthorized use of corporate assets, has whatever persuasion burden may be called for to establish that the payment sought is appropriate in the circumstances; or
(3) For other money payment under an equitable remedy, including profit recovery by or disgorgement to the corporation, has whatever persuasion burden may be called for to establish that the equitable remedy sought is appropriate in the circumstances.
(c) Nothing contained in this section may: (1) In any instance where fairness is at issue, including consideration of the fairness of a transaction to the corporation under section eight hundred sixty of this article, alter the burden of proving the fact or lack of fairness otherwise applicable; (2) alter the fact or lack of liability of an officer under another section of this chapter, including the provisions governing the consequences of an unlawful distribution under section eight hundred thirty-three of this article or a transactional interest under section eight hundred sixty of this article; or (3) affect any rights to which the corporation or a shareholder may be entitled under another provision of this code or the United States Code.