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DIRECTORS

Iowa Code tit. XII, ch. 490, subch. VIII, pt. 3
in effect

Iowa Code § 490.830 Standards of conduct for directors.

490.830. Standards of conduct for directors. 1. Each member of the board of directors, when discharging the duties of a director, shall act in conformity with all of the following: a. In good faith. b. In a manner the director reasonably believes to be in the best interests of the corporation. 2. The members of the board of directors or a board committee, when becoming informed in connection with their decision-making function or devoting attention to their oversight function, shall discharge their duties with the care that a person in a like position would reasonably believe appropriate under similar circumstances. 3. In discharging board or board committee duties, a director shall disclose, or cause to be disclosed, to the other board or committee members information which the director knows is not already known by them but known by the director to be material to the discharge of their decision-making or oversight functions, except that disclosure is not required to the extent that the director reasonably believes that doing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule. 4. In discharging board or board committee duties, a director who does not have knowledge that makes reliance unwarranted is entitled to rely on the performance by any of the persons specified in subsection 6, paragraph “a” or “c”, to whom the board may have delegated, formally or informally by course of conduct, the authority or duty to perform one or more of the board’s functions that are delegable under applicable law. 5. In discharging board or board committee duties, a director who does not have knowledge that makes reliance unwarranted is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, prepared or presented by any of the persons specified in subsection 6. 6. A director is entitled to rely, in accordance with subsection 4 or 5, on any of the following: a. One or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the functions performed or the information, opinions, reports, or statements provided. b. Legal counsel, public accountants, or other persons retained by the corporation as to matters involving skills or expertise the director 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. c. A board committee of which the director is not a member if the director reasonably believes the committee merits confidence. 89 Acts, ch 288, §89; 2002 Acts, ch 1154, §37, 125; 2013 Acts, ch 31, §28, 82; 2021 Acts, ch 165, §103, 230

Iowa Code § 490.831 Standards of liability for directors.

490.831. Standards of liability for directors. 1. A director 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 a director, unless the party asserting liability in a proceeding establishes all of the following: a. No defense interposed by the director based on any of the following precludes liability: (1) A provision in the articles of incorporation authorized by section 490.202, subsection 2, paragraph “d” or “f”. (2) The protection afforded by section 490.861 for action taken in compliance with section 490.862 or section 490.863. (3) The protection afforded by section 490.870. b. That the challenged conduct consisted or was the result of any of the following: (1) Action not in good faith. (2) A decision that satisfies any of the following: (a) That which the director did not reasonably believe to be in the best interests of the corporation. (b) As to which the director was not informed to an extent the director reasonably believed appropriate in the circumstances. (3) A lack of objectivity due to the director’s familial, financial, or business relationship with, or a lack of independence due to the director’s domination or control by, another person having a material interest in the challenged conduct, which also meets all of the following criteria: (a) Which relationship or which domination or control could reasonably be expected to have affected the director’s judgment respecting the challenged conduct in a manner adverse to the corporation. (b) After a reasonable expectation to such effect has been established, the director shall not have established that the challenged conduct was reasonably believed by the director to be in the best interests of the corporation. (4) A sustained failure of the director to devote attention to ongoing oversight of the business and affairs of the corporation, or a failure to devote timely attention, by making, or causing to be made, appropriate inquiry, when particular facts and circumstances of significant concern materialize that would alert a reasonably attentive director to the need for such inquiry. (5) Receipt of a financial benefit to which the director was not entitled or any other breach of the director’s duties to deal fairly with the corporation and its shareholders that is actionable under applicable law. 2. a. The party seeking to hold the director liable for money damages shall also have the burden of establishing all of the following: (1) That harm to the corporation or its shareholders has been suffered. (2) The harm suffered was proximately caused by the director’s challenged conduct. b. A party seeking to hold the director liable for other money payment under a legal remedy, such as compensation for the unauthorized use of corporate assets, shall also have whatever persuasion burden may be called for to establish that the payment sought is appropriate in the circumstances. c. A party seeking to hold the director liable for other money payment under an equitable remedy, such as profit recovery by or disgorgement to the corporation, shall also have whatever persuasion burden may be called for to establish that the equitable remedy sought is appropriate in the circumstances. 3. This section shall not do any of the following: a. In any instance where fairness is at issue, such as consideration of the fairness of a transaction to the corporation under section 490.861, subsection 2, paragraph “c”, alter the burden of proving the fact or lack of fairness otherwise applicable. b. Alter the fact or lack of liability of a director under another section of this chapter, such as the provisions governing the consequences of an unlawful distribution under section 490.832 or a transactional interest under section 490.861. c. Affect any rights to which the corporation or a shareholder may be entitled under another statute of this state or the United States. 89 Acts, ch 288, §90; 2002 Acts, ch 1154, §38, 125; 2003 Acts, ch 44, §83; 2008 Acts, ch 1015, §2; 2009 Acts, ch 133, §164; 2013 Acts, ch 31, §29, 30, 82; 2021 Acts, ch 165, §104, 230

Iowa Code § 490.832 Directors’ liability for unlawful distributions.

490.832. Directors’ liability for unlawful distributions. 1. A director who votes for or assents to a distribution in excess of what may be authorized and made pursuant to section 490.640, subsection 1, or section 490.1409, subsection 1, is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating section 490.640, subsection 1, or section 490.1409, subsection 1, if the party asserting liability establishes that when taking the action the director did not comply with section 490.830. 2. A director held liable under subsection 1 for an unlawful distribution is entitled to all of the following: a. Contribution from every other director who could be held liable under subsection 1 for the unlawful distribution. b. Recoupment from each shareholder of the pro rata portion of the amount of the unlawful distribution the shareholder accepted, knowing the distribution was made in violation of section 490.640, subsection 1, or section 490.1409, subsection 1. 3. a. A proceeding to enforce the liability of a director under subsection 1 is barred unless it is commenced within two years after any of the following: (1) The date on which the effect of the distribution was measured under section 490.640, subsection 5 or 8. (2) The date as of which the violation of section 490.640, subsection 1, occurred as the consequence of disregard of a restriction in the articles of incorporation. (3) The date on which the distribution of assets to shareholders under section 490.1409, subsection 1, was made. b. A proceeding to enforce contribution or recoupment under subsection 2 is barred unless it is commenced within one year after the liability of the claimant has been finally adjudicated under subsection 1. 89 Acts, ch 288, §92 CS89, §490.833 2002 Acts, ch 1154, §40, 125; 2021 Acts, ch 165, §105, 216, 230 C2022, §490.832
Source: Iowa Legislature (legis.iowa.gov)URL: https://www.legis.iowa.gov/law/iowaCode/sections?codeChapter=490&year=2026Fetched: 10/20/2026

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