§ 490.862 — Directors’ action

Iowa § 490.862

• Jurisdiction: Iowa
• Title XII: BUSINESS ENTITIES
• Ch. 490: BUSINESS CORPORATIONS

Text

(3) The protection afforded by section 490.870.
b. That the challenged conduct consisted or was the result of any of the following:
(1) Action not in good faith.
(2) A decision that satisfies any of the following:
(a) That which the director did not reasonably believe to be in the best interests of the
corporation.
(b) Astowhichthedirectorwasnotinformedtoanextentthedirectorreasonablybelieved
appropriate in the circumstances.
(3) A lack of objectivity due to the director’s familial, financial, or business relationship
with, oralackofindependenceduetothedirector’sdominationorcontrolby, anotherperson

having a material interest in the challenged conduct, which also meets all of the following
criteria:
(a) Which relationship or which domination or control could reasonably be expected to
have affected the director’s judgment respecting the challenged conduct in a manner adverse
to the corporation.
(b) After a reasonable expectation to such effect has been established, the director shall
not have established that the challenged conduct was reasonably believed by the director to
be in the best interests of the corporation.
(4) A sustained failure of the director 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 director to the need
for such inquiry.
(5) Receipt of a financial benefit to which the director was not entitled or any other
breach of the director’s duties to deal fairly with the corporation and its shareholders that is
actionable under applicable law.
2. a. The party seeking to hold the director liable for money damages shall also have the
burden of establishing all of the following:
(1) That harm to the corporation or its shareholders has been suffered.
(2) The harm suffered was proximately caused by the director’s challenged conduct.
b. A party seeking to hold the director liable for other money payment under a legal
remedy, such as compensation for the unauthorized use of corporate assets, shall also
have whatever persuasion burden may be called for to establish that the payment sought is
appropriate in the circumstances.
c. A party seeking to hold the director liable for other money payment under an equitable
remedy, such as profit recovery by or disgorgement to the corporation, shall also have
whatever persuasion burden may be called for to establish that the equitable remedy sought
is appropriate in the circumstances.
3. This section shall not do any of the following:
a. In any instance where fairness is at issue, such as consideration of the fairness of a
transaction to the corporation under section 490.861, subsection 2, paragraph “c”, alter the
burden of proving the fact or lack of fairness otherwise applicable.
b. Alter the fact or lack of liability of a director under another section of this chapter,
such as the provisions governing the consequences of an unlawful distribution under section
490.832 or a transactional interest under section 490.861.
c. Affect any rights to which the corporation or a shareholder may be entitled under
another statute of this state or the United States.