Directors and Officers

C.R.S. tit. 7, art. 108
in effect

C.R.S. § 7-108-101 Requirement for board of directors

7-108-101. Requirement for board of directors. (1) Except as otherwise provided in its articles of incorporation, each corporation shall have a board of directors. (2) Subject to any provision stated in the articles of incorporation, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, the board of directors or such other persons as the articles of incorporation provide shall have the authority and perform the duties of a board of directors.

C.R.S. § 7-108-102 Qualifications of directors

7-108-102. Qualifications of directors. A director shall be an individual who is eighteen years of age or older. The bylaws may prescribe other qualifications for directors. A director need not be a resident of this state or a shareholder unless the bylaws so prescribe.

C.R.S. § 7-108-103 Number and election of directors

7-108-103. Number and election of directors. (1) A board of directors shall consist of one or more members, with the number stated in or fixed in accordance with the bylaws. (2) The bylaws may establish a range for the size of the board of directors by fixing a minimum and maximum number of directors. If a range is established, the number of directors may be fixed or changed from time to time within the range by the shareholders or the board of directors. (3) Directors are elected at each annual meeting of the shareholders except as provided in section 7-108-106.

C.R.S. § 7-108-104 Election of directors by certain classes of shareholders

7-108-104. Election of directors by certain classes of shareholders. If the articles of incorporation authorize dividing the shares of the corporation into classes or series, the articles of incorporation may authorize the election of all or a stated number or portion of directors by the holders of one or more authorized classes or series of shares. A class or series of shares entitled to elect one or more directors is a separate voting group for purposes of the election of directors.

C.R.S. § 7-108-105 Terms of directors generally

7-108-105. Terms of directors generally. (1) Except as provided in section 7-108-106, the terms of the initial directors of a corporation expire at the first shareholders' meeting at which directors are elected. (2) Except as provided in section 7-108-106, the terms of all other directors expire at the next annual shareholders' meeting following their election. (3) A decrease in the number of directors does not shorten an incumbent director's term. (4) The term of a director elected to fill a vacancy pursuant to section 7-108-110 (1)(b) or 7-108-110 (1)(c) expires at the next annual shareholders' meeting at which directors are elected. The term of a director elected to fill a vacancy pursuant to section 7-108-110 (1)(a) shall be the unexpired term of the director's predecessor in office; except that, if the director's predecessor had been elected to fill a vacancy pursuant to section 7-108-110 (1)(b) or 7-108-110 (1)(c), the term of a director elected pursuant to section 7-108-110 (1)(a) shall be the unexpired term of the last predecessor elected by the shareholders. (5) Despite the expiration of the director's term, a director continues to serve until the director's successor is elected and qualifies. (6) (Deleted by amendment, L. 2004, p. 1497, § 252, effective July 1, 2004.)

C.R.S. § 7-108-106 Staggered terms for directors

7-108-106. Staggered terms for directors. The articles of incorporation may provide for staggering the terms of directors by dividing the total number of directors into two or three groups, with each group containing one-half or one-third of the total, as near as may be. In that event, the terms of directors in the first group expire at the first annual shareholders' meeting after their election, the terms of directors in the second group expire at the second annual shareholders' meeting after their election, and the terms of directors in the third group, if any, expire at the third annual shareholders' meeting after their election. Upon the expiration of the initial staggered terms, directors shall be elected for terms of two years or three years, as the case may be, to succeed those whose terms expire.

C.R.S. § 7-108-107 Resignation of directors

7-108-107. Resignation of directors. (1) A director may resign at any time by giving notice of resignation to the corporation. (2) A resignation of a director is effective when the notice is received by the corporation unless the notice states a later effective date. (3) Repealed.

C.R.S. § 7-108-108 Removal of directors by shareholders

7-108-108. Removal of directors by shareholders. (1) The shareholders may remove one or more directors with or without cause unless the articles of incorporation provide that directors may be removed only for cause. (2) If a director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove that director. (3) A director may be removed only if the number of votes cast in favor of removal exceeds the number of votes cast against removal; except that, if cumulative voting is in effect, a director may not be removed if the number of votes sufficient to elect the director under cumulative voting is voted against such removal. (4) A director may be removed by the shareholders only at a meeting called for the purpose of removing the director, and the meeting notice shall state that the purpose, or one of the purposes, of the meeting is removal of the director. (5) (Deleted by amendment, L. 2004, p. 1498, § 254, effective July 1, 2004.)

C.R.S. § 7-108-109 Removal of directors by judicial proceeding

7-108-109. Removal of directors by judicial proceeding. (1) A director may be removed by the district court for the county in this state in which the street address of the corporation's principal office is located or, if the corporation has no principal office in this state, by the district court for the county in which the street address of its registered agent is located or, if the corporation has no registered agent, by the district court for the city and county of Denver, in a proceeding commenced either by the corporation or by shareholders holding at least ten percent of the outstanding shares of any class, if the court finds that the director engaged in fraudulent or dishonest conduct or gross abuse of authority or discretion with respect to the corporation and that removal is in the best interests of the corporation. (2) The court that removes a director may bar the director from reelection for a period prescribed by the court. (3) If shareholders commence a proceeding under subsection (1) of this section, they shall make the corporation a party defendant. (4) Repealed.

C.R.S. § 7-108-110 Vacancy on board

7-108-110. Vacancy on board. (1) Unless otherwise provided in the articles of incorporation, if a vacancy occurs on a board of directors, including a vacancy resulting from an increase in the number of directors: (a) The shareholders may fill the vacancy; (b) The board of directors may fill the vacancy; or (c) If the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office. (2) Notwithstanding subsection (1) of this section, unless otherwise provided in the articles of incorporation, if the vacant office was held by a director elected by a voting group of shareholders: (a) If one or more of the remaining directors were elected by the same voting group, only such directors are entitled to vote to fill the vacancy if it is filled by directors, and they may do so by the affirmative vote of a majority of such directors remaining in office; and (b) Only the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the shareholders. (3) A vacancy that will occur at a specific later date, by reason of a resignation effective at a later date under section 7-108-107 (2) or otherwise, may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs.

C.R.S. § 7-108-111 Compensation of directors

7-108-111. Compensation of directors. Unless otherwise provided in the bylaws, the board of directors may fix the compensation of directors.

C.R.S. § 7-108-201 Meetings

7-108-201. Meetings. (1) The board of directors may hold regular or special meetings in or out of this state and may hold the meetings by means of remote communication without designating a place. (2) Unless otherwise provided in the bylaws, the board of directors may permit any director to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.

C.R.S. § 7-108-202 Action without meeting

7-108-202. Action without meeting. (1) Unless the bylaws require that the action be taken at a meeting, any action required or permitted by articles 101 to 117 of this title to be taken at a board of directors' meeting may be taken without a meeting if all members of the board consent to such action in writing. (2) Action is taken under this section at the time the last director signs a writing describing the action taken, unless, before such time, any director has revoked the director's consent by a writing signed by the director and received by the secretary or any other person authorized by the bylaws or the board of directors to receive such a revocation. (3) Action under this section is effective at the time it is taken as provided by subsection (2) of this section, unless the directors establish a different effective date. (4) Action taken pursuant to this section has the same effect as action taken at a meeting of directors and may be described as such in any document.

C.R.S. § 7-108-203 Notice of meeting

7-108-203. Notice of meeting. (1) Unless otherwise provided in the bylaws, regular meetings of the board of directors may be held without notice of the date, time, place, if any place is designated, or purpose of the meeting. (2) Unless the bylaws provide for a longer or shorter period, special meetings of the board of directors must be preceded by at least two days' notice of the date, time, and place, if any, or access by remote communication of the meeting. The notice need not describe the purpose of the special meeting unless required by the bylaws.

C.R.S. § 7-108-204 Waiver of notice

7-108-204. Waiver of notice. (1) A director may waive any notice of a meeting before or after the time and date of the meeting stated in the notice. Except as provided by subsection (2) of this section, the waiver shall be in writing and signed by the director entitled to the notice. Such waiver shall be delivered to the corporation for filing with the corporate records, but such delivery and filing shall not be conditions of the effectiveness of the waiver. (2) A director's attendance at or participation in a meeting waives any required notice to the director of the meeting unless: (a) At the beginning of the meeting or promptly upon the director's later arrival, the director objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice and does not thereafter vote for or assent to action taken at the meeting; or (b) If special notice was required of a particular purpose pursuant to section 7-108-203 (2), the director objects to transacting business with respect to the purpose for which such special notice was required and does not thereafter vote for or assent to action taken at the meeting with respect to such purpose.

C.R.S. § 7-108-205 Quorum and voting

7-108-205. Quorum and voting. (1) Unless a greater number is required by the bylaws, a quorum of a board of directors consists of: (a) A majority of the number of directors fixed if the corporation has a fixed board size; or (b) A majority of the number of directors fixed or, if no number is fixed, of the number in office immediately before the meeting begins, if a range for the size of the board is established pursuant to section 7-108-103 (2). (2) The bylaws may authorize a quorum of a board of directors to consist of: (a) No fewer than a majority of the number of directors fixed if the corporation has a fixed board size; or (b) No fewer than a majority of the number of directors fixed or, if no number is fixed, of the number in office immediately before the meeting begins, if a range for the size of the board is established pursuant to section 7-108-103 (2). (3) If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the board of directors unless the vote of a greater number of directors is required by articles 101 to 117 of this title or the bylaws. (4) A director who is present at a meeting of the board of directors when corporate action is taken is deemed to have assented to all action taken at the meeting unless: (a) The director objects at the beginning of the meeting, or promptly upon the director's arrival, to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to any action taken at the meeting; (b) The director contemporaneously requests that the director's dissent or abstention as to any specific action taken be entered in the minutes of the meeting; or (c) The director causes notice of the director's dissent or abstention as to any specific action to be received by the presiding officer of the meeting before adjournment of the meeting or by the corporation promptly after adjournment of the meeting. (5) The right of dissent or abstention pursuant to subsection (4) of this section as to a specific action is not available to a director who votes in favor of the action taken.

C.R.S. § 7-108-206 Committees

7-108-206. Committees. (1) Except as otherwise provided in the bylaws and subject to the provisions of section 7-109-106, the board of directors may create one or more committees and appoint one or more members of the board of directors to serve on them. (2) The creation of a committee and appointment of members to it shall be approved by the greater of a majority of all the directors in office when the action is taken or the number of directors required by the bylaws to take action under section 7-108-205. (3) Sections 7-108-201 to 7-108-205, which govern meetings, action without meeting, notice, waiver of notice, and quorum and voting requirements of the board of directors, apply to committees and their members as well. (4) To the extent stated in the bylaws or by the board of directors, each committee shall have the authority of the board of directors under section 7-108-101; except that a committee shall not: (a) Authorize distributions; (b) Approve or propose to shareholders action that articles 101 to 117 of this title require to be approved by shareholders; (c) Fill vacancies on the board of directors or on any of its committees; (d) Amend articles of incorporation pursuant to section 7-110-102; (e) Adopt, amend, or repeal bylaws; (f) Approve a plan of conversion or plan of merger not requiring shareholder approval; (g) Authorize or approve reacquisition of shares, except according to a formula or method prescribed by the board of directors; or (h) Authorize or approve the issuance or sale of shares, or a contract for the sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares; except that the board of directors may authorize a committee or an officer to do so within limits specifically prescribed by the board of directors. (5) The creation of, delegation of authority to, or action by a committee does not alone constitute compliance by a director with the standards of conduct described in section 7-108-401.

C.R.S. § 7-108-301 Officers

7-108-301. Officers. (1) A corporation shall have the officers designated in its bylaws or by the board of directors. An officer shall be an individual who is eighteen years of age or older. (2) Officers may be appointed by the board of directors or in such other manner as the board of directors or bylaws may provide. A duly appointed officer may appoint one or more officers or assistant officers if authorized by the bylaws or the board of directors. (3) The bylaws or the board of directors shall delegate to one or more of the officers responsibility for the preparation and maintenance of minutes of the directors' and shareholders' meetings and other records and information required to be kept by the corporation under section 7-116-101 and for authenticating records of the corporation. (4) The same individual may simultaneously hold more than one office in the corporation.

C.R.S. § 7-108-302 Duties of officers

7-108-302. Duties of officers. Each officer shall have the authority and shall perform the duties stated with respect to the officer's office in the bylaws or, to the extent not inconsistent with the bylaws, prescribed with respect to that office by the board of directors or by an officer authorized by the board of directors.

C.R.S. § 7-108-303 Resignation and removal of officers

7-108-303. Resignation and removal of officers. (1) An officer may resign at any time by giving notice of resignation to the corporation. (2) A resignation of an officer is effective when the notice is received by the corporation unless the notice states a later effective date. (3) If a resignation is made effective at a later date, the board of directors may permit the officer to remain in office until the effective date and may fill the pending vacancy before the effective date if the board of directors provides that the successor does not take office until the effective date, or the board of directors may remove the officer at any time before the effective date and may fill the resulting vacancy. (4) Unless otherwise provided in the bylaws, the board of directors may remove any officer at any time with or without cause. The bylaws or the board of directors may make provision for the removal of officers by other officers or by the shareholders. (5) Repealed.

C.R.S. § 7-108-304 Contract rights with respect to officers

7-108-304. Contract rights with respect to officers. (1) The appointment of an officer does not itself create contract rights. (2) An officer's removal does not affect the officer's contract rights, if any, with the corporation. An officer's resignation does not affect the corporation's contract rights, if any, with the officer.

C.R.S. § 7-108-401 Standards of conduct for directors and officers

7-108-401. Standards of conduct for directors and officers. (1) Each director shall discharge the director's duties as a director, including the director's duties as a member of a committee, and each officer with discretionary authority shall discharge the officer's duties under that authority: (a) In good faith; (b) With care; and (c) In a manner the director or officer reasonably believes to be in the best interests of the corporation. (2) In discharging duties under this section, a director or officer is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by: (a) One or more officers or employees of the corporation whom the director or officer reasonably believes to be reliable and competent with respect to the information, opinions, reports, or statements; (b) One or more legal counsel, accountants, or other persons retained by the corporation as to matters involving expertise or skills the director or officer reasonably believes are within the person's professional or expert competence; (c) In the case of a director, a committee of the board of directors of which the director is not a member if the director reasonably believes the committee merits confidence; or (d) In the case of an officer, the board of directors or any committee of the board of directors. (3) A director or officer may not rely on information, opinion, reports, or statements as permitted by subsection (2) of this section if the director or officer has knowledge concerning the matter in question that makes the reliance unwarranted. (4) A director or officer of a corporation, in the performance of duties in that capacity, does not have any fiduciary duty to any creditor of the corporation arising only from the status as a creditor, whether the corporation is solvent or insolvent.

C.R.S. § 7-108-402 Standards of liabilities for directors

7-108-402. Standards of liabilities for directors. (1) A director is liable, as a director, to the corporation or to its shareholders for money damages or other money payment for any act, omission to act, or decision only if the party asserting liability establishes in a proceeding that the challenged act, omission, or decision: (a) Was not in good faith; (b) Was one that the director did not rationally believe to be in the best interests of the corporation; (c) Was one as to which the director was at least grossly negligent, unless the articles of incorporation change the standard of liability to knowing misconduct, knowing violation of law, or negligence; (d) Was one as to which the director failed to make or cause to be made appropriate inquiry, when particular facts or circumstances of significant concern came to the attention of the director that would have alerted a reasonably attentive director to the need for inquiry; (e) Consisted of or resulted from a sustained or systematic failure by the director to exercise oversight of the business and affairs of the corporation; (f) Subject to section 7-108-501, was a breach of the director's duty of loyalty to the corporation, including by directly or indirectly receiving an improper personal benefit; or (g) Consisted of or resulted from a vote or assent specified in section 7-108-405. (2) In addition to the requirements of subsection (1) of this section, the party seeking to hold the director liable has: (a) With respect to money damages, the burden of establishing that the money damages were: (I) Suffered by the corporation or its shareholders; and (II) Caused by the director's challenged conduct; (b) With respect to other money payment under a legal remedy, such as compensation for the unauthorized use of corporate assets, whatever persuasion burden may be called for to establish that the money payment sought is appropriate in the circumstances; or (c) With respect to other money payment under an equitable remedy, such as profit recovery by or disgorgement to the corporation, whatever persuasion burden may be called for to establish that the equitable remedy sought is appropriate in the circumstances. (3) A director liable under this section for money damages or for other money payment may offset against the liability any gain to the corporation that the director establishes arose out of the same transaction, unless the offset is against public policy.

C.R.S. § 7-108-403 Limitation of certain liabilities of directors and officers

7-108-403. Limitation of certain liabilities of directors and officers. A director or officer is not personally liable for any injury to person or property arising out of a tort committed by an employee unless the director or officer was personally involved in the situation giving rise to the litigation or unless the director or officer committed a criminal offense in connection with the situation. The protection afforded in this section does not restrict other common-law protections and rights that a director or officer may have.

C.R.S. § 7-108-404 Limitation of certain remedies - definition

7-108-404. Limitation of certain remedies - definition. (1) An action by the corporation or by the board of directors is not void or voidable, and shall not be enjoined or set aside in a proceeding by a shareholder or by or in the right of the corporation, because one or more precluded directors was present at or participated in the meeting of the board of directors at which the action was authorized, approved, or ratified, or executed a consent for the action in the manner provided in section 7-108-202, if the action was authorized, approved, or ratified: (a) At a meeting, by the affirmative vote of the number of directors present at the meeting that would be sufficient to take action at the meeting under articles 101 to 117 of this title 7 or the bylaws; except that, in determining how many votes would be sufficient, the vote of a precluded director is not counted for purposes of authorizing the action but the director is considered present for purposes of determining a quorum; or (b) Without a meeting by written consent pursuant to section 7-108-202 and executed by all of the directors, if the number of directors, not including any precluded director, constitutes not less than a majority of all of the directors or such greater number of directors as is required by articles 101 to 117 of this title 7 or the bylaws. (2) In this section, "precluded director" means a director who violated one or more of the standards of liability set forth in section 7-108-402 (1) with respect to an action described in subsection (1) of this section.

C.R.S. § 7-108-405 Liability of directors for unlawful distributions

7-108-405. Liability of directors for unlawful distributions. (1) A director who votes for or assents to a distribution made in violation of section 7-106-401 or the articles of incorporation is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating section 7-106-401 or the articles of incorporation if it is established that the director did not perform the director's duties in compliance with section 7-108-401. In any proceeding commenced under this section, a director has all of the defenses ordinarily available to a director. (2) A director held liable under subsection (1) of this section for an unlawful distribution is entitled to contribution: (a) From every other director who could be held liable under subsection (1) of this section for the unlawful distribution; and (b) From each shareholder who accepted the distribution knowing the distribution was made in violation of section 7-106-401 or the articles of incorporation, the amount of the contribution from the shareholder being the amount of the distribution to that shareholder that exceeds what could have been distributed to that shareholder without violating section 7-106-401 or the articles of incorporation.

C.R.S. § 7-108-501 Conflicting interest transaction - definition

7-108-501. Conflicting interest transaction - definition. (1) (a) As used in this section, "conflicting interest transaction" means, with respect to a director of the corporation, any of the following: (I) A loan or other assistance by a corporation to a director of the corporation or to an entity in which the director is a director or officer or has a financial interest that is known to, and material to, the director; (II) A guaranty by a corporation of an obligation of the director or of an obligation of an entity in which the director is a director or officer or has a financial interest that is known to, and material to, the director; (III) A contract or transaction between the corporation and the director or between the corporation and an entity in which the director is a director or officer or has a financial interest that is known to, and material to, the director; or (IV) The director's taking a corporate opportunity, except to the extent permitted pursuant to a provision of the articles of incorporation adopted under section 7-102-102 (2)(e). (b) "Conflicting interest transaction" does not include any transaction between: (I) A corporation and another entity if the other entity owns, directly or indirectly, all of the outstanding shares of the corporation; or (II) The corporation and another entity if the corporation owns, directly or indirectly, all of the outstanding shares or other equity interests of the other entity. (2) A conflicting interest transaction is not void or voidable, shall not be enjoined or set aside, and does not give rise to an award of damages or other sanctions in a proceeding by a shareholder or by or in the right of the corporation, solely because it is a conflicting interest transaction or because the director is present at or participates in the meeting of the corporation's board of directors or of the committee of the board of directors that authorizes, approves, or ratifies the conflicting interest transaction or because the director's vote is counted for that purpose if: (a) The material facts as to the director's relationship or interest and as to the conflicting interest transaction are disclosed or are known to the board of directors or the committee, and the board of directors or committee in good faith authorizes, approves, or ratifies the conflicting interest transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or (b) The material facts as to the director's relationship or interest and as to the conflicting interest transaction are disclosed or are known to the shareholders entitled to vote on the conflicting interest transaction, and: (I) The conflicting interest transaction is specifically authorized, approved, or ratified by a vote of the disinterested shareholders in which the votes cast in favor of authorizing, approving, or ratifying the conflicting interest transaction exceed the votes cast in opposition; or (II) If the articles of incorporation provide for voting on the matter by the disinterested shareholders in two or more voting groups, the conflicting interest transaction is specifically authorized, approved, or ratified by a vote of each voting group in which the votes cast within the voting group in favor of authorizing, approving, or ratifying the conflicting interest transaction exceed the votes cast within the voting group in opposition; or (c) The conflicting interest transaction is fair as to the corporation. (3) A director's taking advantage, directly or indirectly, of a corporate opportunity shall not be enjoined or set aside and does not give rise to an award of damages or other sanctions in a proceeding by a shareholder or by or in the right of the corporation, because the director took such advantage, if: p in opposition; or (c) The conflicting interest transaction is fair as to the corporation. (3) A director's taking advantage, directly or indirectly, of a corporate opportunity shall not be enjoined or set aside and does not give rise to an award of damages or other sanctions in a proceeding by a shareholder or by or in the right of the corporation, because the director took such advantage, if: (a) The material facts as to the director's relationship or interest and as to the corporate opportunity are disclosed to or are known to the board of directors or the committee, and the board of directors or committee authorizes, approves, or ratifies the taking of the corporate opportunity by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or (b) The material facts as to the director's relationship or interest and as to the corporate opportunity are disclosed to or are known to the shareholders entitled to vote on the corporate opportunity, and either: (I) The taking of the corporate opportunity is specifically authorized, approved, or ratified by a vote of the disinterested shareholders in which the votes cast in favor of authorizing, approving, or ratifying the taking of the corporate opportunity exceed the votes cast in opposition; or (II) If the articles of incorporation provide for voting on the matter by the disinterested shareholders in two or more voting groups, the taking of the corporate opportunity is specifically authorized, approved, or ratified by a vote of each such voting group in which the votes cast within the voting group in favor of authorizing, approving, or ratifying the taking of the corporate opportunity exceed the votes cast within the voting group in opposition. (4) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee that authorizes, approves, or ratifies a conflicting interest transaction or the taking of a corporate opportunity. (5) Unless otherwise provided in the articles of incorporation, a majority of the votes of disinterested shareholders entitled to be cast on the matter of authorizing, approving, or ratifying a conflicting interest transaction pursuant to subsection (2)(b) of this section or a taking of a corporate opportunity pursuant to subsection (3)(b) of this section constitutes a quorum of that voting group for action on that matter, but a quorum must not consist of fewer than one-third of the votes of disinterested shareholders entitled to be cast on the matter by the voting group.
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