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New York Business Corporation - Article 7 - § 714 Loans to Directors

Legal Research Home > New York Laws > New York Business Corporation (BSC) > New York Business Corporation - Article 7 - § 714 Loans to Directors

Business Corporation 
 
  § 714. Loans to directors.
    (a) A corporation may not lend money to or guarantee the obligation of
  a director of the corporation unless:
    (1)  the particular loan or guarantee is approved by the shareholders,
  with the holders of a majority of the votes of the  shares  entitled  to
  vote  thereon  constituting  a  quorum,  but  shares  held  of record or
  beneficially by directors who are benefitted by such loan  or  guarantee
  shall  not be entitled to vote or to be included in the determination of
  a quorum; or
    (2) with respect to any corporation in existence on the effective date
  of this subparagraph (2)  the  certificate  of  incorporation  of  which
  expressly provides such and with respect to any corporation incorporated
  after  the effective date of this subparagraph (2), the board 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.
    (b) The fact that a loan or guarantee is made  in  violation  of  this
  section does not affect the borrower's liability on the loan.

Last modified: March 4, 2013