V.S.A. tit. 11B, ch. 8, subch. 3 — Standard of Conduct | Vermont Statutes Annotated (through the 2026 session) — Vermont

11B V.S.A. § 8.30 General standards for directors

8.30. General standards for directors (a) A director shall discharge his or her duties as a director, including the director’s duties as a member of a committee: (1) in good faith; (2) with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and (3) in a manner the director reasonably believes to be in the best interests of the corporation. (b) In discharging his or her duties, a director is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by: (1) one or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters presented; (2) legal counsel, public accountants, or other persons as to matters the director reasonably believes are within the person’s professional or expert competence; or (3) a committee of the board of directors of which the director is not a member, as to matters within its jurisdiction, if the director reasonably believes the committee merits confidence. (c) A director is not acting in good faith if the director has knowledge or a substantial reason to believe concerning the matter in question that makes reliance otherwise permitted by subsection (b) of this section unwarranted. (d) A director is not liable for the performance of the duties of his or her office if the director acted in compliance with this section. (e) A director shall not be deemed to be a trustee with respect to the corporation or with respect to any property held or administered by the corporation, including without limit, property that may be subject to restrictions imposed by the donor or transferor of such property. Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

11B V.S.A. § 8.31 Director conflict of interest

8.31. Director conflict of interest (a) A conflict of interest transaction is a transaction with the corporation in which a director of the corporation has a direct or indirect interest. A conflict of interest transaction is not voidable or the basis for imposing liability on the director if the transaction was fair at the time it was entered into or is approved as provided in subsection (b) or (c) of this section. (b) A transaction in which a director of a public benefit corporation has a conflict of interest may be approved: (1) in advance by the vote of the board of directors or a committee of the board if: (A) the material facts of the transaction and the director’s interest are disclosed or known to the board or committee of the board; and (B) the directors approving the transaction in good faith reasonably believe that the transaction is fair to the corporation; or (2) before or after it is consummated by obtaining approval of the: (A) Attorney General; or (B) Superior Court in an action in which the Attorney General is joined as party. (c) A transaction in which a director of a mutual benefit corporation has a conflict of interest may be approved if: (1) the material facts of the transaction and the director’s interest were disclosed or known to the board of directors or a committee of the board and the board or committee of the board authorized, approved, or ratified the transaction; or (2) the material facts of the transaction and the director’s interest were disclosed or known to the members and they authorized, approved, or ratified the transaction. (d) For the purposes of this section, a director of the corporation has an indirect interest in a transaction if: (1) another entity in which the director has a material interest or in which the director is a general partner is a party to the transaction; or (2) another entity of which the director is a director, officer, or trustee is a party to the transaction. (e) For purposes of subsections (b) and (c) of this section, a conflict of interest transaction is authorized, approved, or ratified if it receives the affirmative vote of a majority of the directors on the board or on the committee who have no direct or indirect interest in the transaction, but a transaction may not be authorized, approved, or ratified under this section by a single director. If a majority of the directors on the board who have no direct or indirect interest in the transaction vote to authorize, approve, or ratify the transaction, a quorum is present for the purpose of taking action under this section. The presence of, or a vote cast by, a director with a direct or indirect interest in the transaction does not affect the validity of any action taken under subdivision (b)(1) or (c)(1) of this section if the transaction is otherwise approved as provided in subsection (b) or (c) of this section. (f) For purposes of subdivision (c)(2) of this section, a conflict of interest transaction is authorized, approved, or ratified by the members if it receives a majority of the votes entitled to be counted under this subsection. Votes cast by or voted under the control of a director who has a direct or indirect interest in the transaction, and votes cast by or voted under the control of an entity described in subdivision (d)(1) of this section, may not be counted in a vote of members to determine whether to authorize, approve, or ratify a conflict of interest transaction under subdivision (c)(2) of this section. The vote of these members, however, is counted in determining whether the transaction is approved under other sections of this title. A majority of the voting power, whether or not present, that is entitled to be counted in a vote on the transaction under this subsection constitutes a quorum for the purpose of taking action under this section. (g) The articles of incorporation, bylaws, or a resolution of the board may impose additional requirements on conflict of interest transactions. Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

11B V.S.A. § 8.32 Loans to or guarantees for directors and officers

8.32. Loans to or guarantees for directors and officers (a) A corporation may not lend money to or guarantee the obligation of a director or officer of the corporation. (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. Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

11B V.S.A. § 8.33 Liability for unlawful distributions; statute of limitations

8.33. Liability for unlawful distributions; statute of limitations (a) A director who votes for or assents to a distribution made in violation of this title is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating this title if it is established that the director did not perform his or her duties in compliance with section 8.30 of this title. (b) A director held liable for an unlawful distribution under subsection (a) of this section is entitled to contribution: (1) from every other director who voted for or assented to the distribution without complying with the applicable standards of conduct described in section 8.30 of this title; and (2) from each person who received an unlawful distribution for the amount of the distribution whether or not the person receiving the distribution knew it was made in violation of this title. (c) A proceeding under this section is barred unless it is commenced within six years after the date on which the effect of the distribution was measured under this title. Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.