490.842 Standards of conduct for officers.
436 words·~2 min read·
/ia/chapter-490-business-corporations/490-842·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
1. An officer, when performing in such capacity, has the duty to act in conformity with all of the following:
a. In good faith.
b. With the care that a person in a like position would reasonably exercise under similar circumstances.
c. In a manner the officer reasonably believes to be in the best interests of the corporation.
2. The duty of an officer includes the obligation to do all of the following:
a. Inform the superior officer to whom, or the board of directors or the board committee to which, the officer reports of information about the affairs of the corporation known to the officer, within the scope of the officer’s functions, and known to the officer to be material to such superior officer, board, or committee.
b. Inform the officer’s superior officer, or another appropriate person within the corporation, or the board of directors, or a board committee, of any actual or probable material violation of law involving the corporation or material breach of duty to the corporation by an officer, employee, or agent of the corporation, that the officer believes has occurred or is likely to occur.
3. In discharging the officer’s duties, an officer who does not have knowledge that makes reliance unwarranted is entitled to rely on any of the following:
a. The performance of properly delegated responsibilities by one or more employees of the corporation whom the officer reasonably believes to be reliable and competent in performing the responsibilities delegated.
b. Information, opinions, reports, or statements, including financial statements and other financial data, prepared or presented by one or more employees of the corporation whom the officer reasonably believes to be reliable and competent in the matters presented or by legal counsel, public accountants, or other persons retained by the corporation as to matters involving skills or expertise the officer reasonably believes are any of the following:
(1)Matters within the particular person’s professional or expert competence.
(2)Matters as to which the particular person merits confidence.
4. An officer 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 an officer, if the duties of the office are performed in compliance with this section. Whether an officer who does not comply with this section shall have liability will depend in such instance on applicable law, including those principles of section 490.831 that have relevance.
89 Acts, ch 288, §95; 2002 Acts, ch 1154, §42, 125; 2013 Acts, ch 31, §32, 82; 2021 Acts, ch 165, §107, 230
Referred to in §491.16A