§ 717 — Duty of directors

New York § 717

• Jurisdiction: New York
• Law BSC: Business Corporation
• Art. 7: Directors and Officers

Text

§ 717. Duty of directors.\n (a) A director shall perform his duties as a director, including his\nduties as a member of any committee of the board upon which he may\nserve, in good faith and with that degree of care which an ordinarily\nprudent person in a like position would use under similar circumstances.\nIn performing his duties, a director shall be entitled to rely on\ninformation, opinions, reports or statements including financial\nstatements and other financial data, in each case prepared or presented\nby:\n (1) one or more officers or employees of the corporation or of any\nother corporation of which at least fifty percentum of the outstanding\nshares of stock entitling the holders thereof to vote for the election\nof directors is owned directly or indirectly by the corporation, whom\nthe director believes to be reliable and competent in the matters\npresented,\n (2) counsel, public accountants or other persons as to matters which\nthe director believes to be within such person's professional or expert\ncompetence, or\n (3) a committee of the board upon which he does not serve, duly\ndesignated in accordance with a provision of the certificate of\nincorporation or the by-laws, as to matters within its designated\nauthority, which committee the director believes to merit confidence,\nso long as in so relying he shall be acting in good faith and with such\ndegree of care, but he shall not be considered to be acting in good\nfaith if he has knowledge concerning the matter in question that would\ncause such reliance to be unwarranted. A person who so performs his\nduties shall have no liability by reason of being or having been a\ndirector of the corporation.\n (b) In taking action, including, without limitation, action which may\ninvolve or relate to a change or potential change in the control of the\ncorporation, a director shall be entitled to consider, without\nlimitation, (1) both the long-term and the short-term interests of the\ncorporation and its shareholders and (2) the effects that the\ncorporation's actions may have in the short-term or in the long-term\nupon any of the following:\n (i) the prospects for potential growth, development, productivity and\nprofitability of the corporation;\n (ii) the corporation's current employees;\n (iii) the corporation's retired employees and other beneficiaries\nreceiving or entitled to receive retirement, welfare or similar benefits\nfrom or pursuant to any plan sponsored, or agreement entered into, by\nthe corporation;\n (iv) the corporation's customers and creditors; and\n (v) the ability of the corporation to provide, as a going concern,\ngoods, services, employment opportunities and employment benefits and\notherwise to contribute to the communities in which it does business.\n Nothing in this paragraph shall create any duties owed by any director\nto any person or entity to consider or afford any particular weight to\nany of the foregoing or abrogate any duty of the directors, either\nstatutory or recognized by common law or court decisions.\n For purposes of this paragraph, "control" shall mean the possession,\ndirectly or indirectly, of the power to direct or cause the direction of\nthe management and policies of the corporation, whether through the\nownership of voting stock, by contract, or otherwise.\n