Kentucky Statutes 271B.8-320 – Loans to directors
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(1) Except as provided by subsection (3) of this section, a corporation may not lend money to or guarantee the obligation of a director of the corporation unless:
(a) The particular loan or guarantee is approved by a majority of the votes represented by the outstanding voting shares of all classes, voting as a single voting group, except the votes of shares owned by or voted under the control of the benefited director; or
(b) The corporation’s board of directors determines that the loan or guarantee benefits the corporation and either approves the specific loan or guarantee or a general plan authorizing loans and guarantees.
(2) The fact that a loan or guarantee is made in violation of this section shall not affect the borrower’s liability on the loan or the corporation’s liability on the guarantee.
(3) This section shall not apply to loans and guarantees authorized by statute regulating any special class of corporations.
Effective: January 1, 1989
History: Created 1988 Ky. Acts ch. 23, sec. 87, effective January 1, 1989.
(a) The particular loan or guarantee is approved by a majority of the votes represented by the outstanding voting shares of all classes, voting as a single voting group, except the votes of shares owned by or voted under the control of the benefited director; or
Terms Used In Kentucky Statutes 271B.8-320
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Corporation: may extend and be applied to any corporation, company, partnership, joint stock company, or association. See Kentucky Statutes 446.010
- Directors: when applied to corporations, includes managers or trustees. See Kentucky Statutes 446.010
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Statute: A law passed by a legislature.
- Voting group: means all shares of one (1) or more classes or series that under the articles of incorporation or this chapter are entitled to vote and be counted together collectively on a matter at a meeting of shareholders. See Kentucky Statutes 271B.1-400
(b) The corporation’s board of directors determines that the loan or guarantee benefits the corporation and either approves the specific loan or guarantee or a general plan authorizing loans and guarantees.
(2) The fact that a loan or guarantee is made in violation of this section shall not affect the borrower’s liability on the loan or the corporation’s liability on the guarantee.
(3) This section shall not apply to loans and guarantees authorized by statute regulating any special class of corporations.
Effective: January 1, 1989
History: Created 1988 Ky. Acts ch. 23, sec. 87, effective January 1, 1989.