NRS 78.240 Shares of stock are personal property; transfers; rights and fiduciary duties of stockholder; presumption of compliance with fiduciary duty; liability of stockholder.

781 words·~4 min read·/nv/chapter-78-private-corporations/78-240·

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

1. The shares of stock in every corporation shall be personal property and shall be transferable on the books of the corporation, in such manner and under such regulations as may be provided in the articles of incorporation or bylaws, and as provided in this title and chapters 104 to 104C , inclusive, of NRS.

2. Except to the extent set forth in subsection 3:

(a)The holder of any share of stock in a corporation, regardless of the holder’s relative beneficial ownership of shares or relative voting power, may, and shall be entitled to, exercise or withhold the voting power of such share in the holder’s personal interest and without regard to any other person or interest; and

(b)No stockholder of a corporation, in such person’s capacity as a stockholder and regardless of the stockholder’s relative beneficial ownership of share or relative voting power, shall have any fiduciary duty to the corporation or any other stockholder.

3. The only fiduciary duty of a controlling stockholder of a corporation, in such person’s capacity as a stockholder, is to refrain from exerting undue influence over any director or officer of the corporation with the purpose and proximate effect of inducing a breach of fiduciary duty by such director or officer:

(a)For which breach the director or officer is liable pursuant to NRS 78.138 ; and

(b)Which breach:

(1)Directly relates to the initiation, evaluation, negotiation, authorization or approval by the board of directors, or a committee thereof, of a contract or transaction to which the controlling stockholder or any of its affiliates or associates is a party or in which the controlling stockholder or any of its affiliates or associates has a material and nonspeculative financial interest; and

(2)Results in material, nonspeculative and nonratable financial benefit to the controlling stockholder, which benefit excludes, and results in a material and nonspeculative detriment to the other stockholders generally.

Ê The exercise or withholding of voting power by a controlling stockholder, or the indication or implication by a controlling stockholder as to whether or to what extent such voting power may be exercised or withheld, does not, by itself, constitute or indicate a breach of the fiduciary duty imposed by this subsection.

4. A controlling stockholder is presumed to have not breached the fiduciary duty imposed by subsection 3 with respect to a contract or other transaction if such contract or transaction has been authorized or approved by:

(a)A committee of the board of directors consisting of only disinterested directors; or

(b)The board of directors in reliance on the recommendation of a committee of the board of directors consisting of only disinterested directors.

5. A stockholder of a corporation is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in such person’s capacity as a stockholder unless:

(a)The stockholder is a controlling stockholder;

(b)The presumption established by subsection 4 has been rebutted; and

(c)It is proven that the stockholder’s act or failure to act constituted a breach of the stockholder’s fiduciary duty imposed by subsection 3.

6. As used in this section:

(a)“Affiliate” has the meaning ascribed to it in NRS 78.412 .

(b)“Associate” has the meaning ascribed to it in NRS 78.413 .

(c)“Beneficial ownership” means being the beneficial owner of shares. As used in this paragraph, “beneficial owner” has the meaning ascribed to it in NRS 78.414 .

(d)“Controlling stockholder” means a stockholder of a corporation having the voting power, by virtue of such stockholder’s relative beneficial ownership of shares or otherwise pursuant to the articles of incorporation, to elect at least a majority of the corporation’s directors.

(e)“Disinterested director,” when used with respect to a contract or transaction, includes, without limitation, a director of a corporation who:

(1)Individually, or with or through any of the director’s affiliates or associates other than the corporation, neither has a material and nonspeculative financial interest in, nor is a party to, the contract or transaction; and

(2)Would satisfy the independence standards, without regard to any financial literacy of financial expert qualifications, required to serve on an audit committee of a board of directors of a non-investment company issuer pursuant to section 10A(m) of the Securities Exchange Act, 15 U.S.C. § 78j-1(m) and Rule 10A-3 thereunder, 17 C.F.R. § 240.10A-3 and the rules of the national securities exchange, if any, on which any shares of the corporation’s stock are listed for trading.