Legislation
SECTION 720
Action against directors and officers for misconduct
Business Corporation (BSC) CHAPTER 4, ARTICLE 7
§ 720. Action against directors and officers for misconduct.
(a) An action may be brought against one or more directors or officers
of a corporation to procure a judgment for the following relief:
(1) Subject to any provision of the certificate of incorporation
authorized pursuant to paragraph (b) of section 402, to compel the
defendant to account for his official conduct in the following cases:
(A) The neglect of, or failure to perform, or other violation of his
duties in the management and disposition of corporate assets committed
to his charge.
(B) The acquisition by himself, transfer to others, loss or waste of
corporate assets due to any neglect of, or failure to perform, or other
violation of his duties.
(C) In the case of directors or officers of a benefit corporation
organized under article seventeen of this chapter: (i) the failure to
pursue the general public benefit purpose of a benefit corporation or
any specific public benefit set forth in its certificate of
incorporation; (ii) the failure by a benefit corporation to deliver or
post an annual report as required by section seventeen hundred eight of
article seventeen of this chapter; or (iii) the neglect of, or failure
to perform, or other violation of his or her duties or standard of
conduct under article seventeen of this chapter.
(2) To set aside an unlawful conveyance, assignment or transfer of
corporate assets, where the transferee knew of its unlawfulness.
(3) To enjoin a proposed unlawful conveyance, assignment or transfer
of corporate assets, where there is sufficient evidence that it will be
made.
(b) An action may be brought for the relief provided in this section,
and in paragraph (a) of section 719 (Liability of directors in certain
cases) by a corporation, or a receiver, trustee in bankruptcy, officer,
director or judgment creditor thereof, or, under section 626
(Shareholders' derivative action brought in the right of the corporation
to procure a judgment in its favor), by a shareholder, voting trust
certificate holder, or the owner of a beneficial interest in shares
thereof.
(c) This section shall not affect any liability otherwise imposed by
law upon any director or officer.
(a) An action may be brought against one or more directors or officers
of a corporation to procure a judgment for the following relief:
(1) Subject to any provision of the certificate of incorporation
authorized pursuant to paragraph (b) of section 402, to compel the
defendant to account for his official conduct in the following cases:
(A) The neglect of, or failure to perform, or other violation of his
duties in the management and disposition of corporate assets committed
to his charge.
(B) The acquisition by himself, transfer to others, loss or waste of
corporate assets due to any neglect of, or failure to perform, or other
violation of his duties.
(C) In the case of directors or officers of a benefit corporation
organized under article seventeen of this chapter: (i) the failure to
pursue the general public benefit purpose of a benefit corporation or
any specific public benefit set forth in its certificate of
incorporation; (ii) the failure by a benefit corporation to deliver or
post an annual report as required by section seventeen hundred eight of
article seventeen of this chapter; or (iii) the neglect of, or failure
to perform, or other violation of his or her duties or standard of
conduct under article seventeen of this chapter.
(2) To set aside an unlawful conveyance, assignment or transfer of
corporate assets, where the transferee knew of its unlawfulness.
(3) To enjoin a proposed unlawful conveyance, assignment or transfer
of corporate assets, where there is sufficient evidence that it will be
made.
(b) An action may be brought for the relief provided in this section,
and in paragraph (a) of section 719 (Liability of directors in certain
cases) by a corporation, or a receiver, trustee in bankruptcy, officer,
director or judgment creditor thereof, or, under section 626
(Shareholders' derivative action brought in the right of the corporation
to procure a judgment in its favor), by a shareholder, voting trust
certificate holder, or the owner of a beneficial interest in shares
thereof.
(c) This section shall not affect any liability otherwise imposed by
law upon any director or officer.