La. R.S. § 12:1-831 Standards of Liability For Directors

• Library: Louisiana Statutes
• Edition: 2023
• Currency: Current with changes from the 2023 Legislative Session
• Year: 2023
• Citation: La. R.S. § 12:1-831

A. A director shall not be 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 a director, unless the party asserting liability in a proceeding establishes both of the following:

(1) No defense interposed by the director based on R.S. 12:1-832, a provision in the articles of incorporation authorized by R.S. 12:1-202(B)(6), the protection afforded by R.S. 12:1-861 for action taken in compliance with R.S. 12:1-862 or R.S. 12:1-863, or the protection afforded by R.S. 12:1-870, precludes liability.

(2) The challenged conduct consisted or was the result of one of the following:

(a) Action not in good faith.

(b) A decision that the director did not reasonably believe to be in the best interests of the corporation, or as to which the director was not informed to an extent the director reasonably believed appropriate in the circumstances.

(c) A lack of objectivity due to the director's familial, financial, or business relationship with, or a lack of independence due to the director's domination or control by, another person having a material interest in the challenged conduct, 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, and 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.

(d) 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 therefore.