1985 Amendments to the Colorado Corporation Code
| Publication year | 1985 |
| Pages | 2173 |
| Citation | Vol. 14 No. 9 Pg. 2173 |
1985, December, Pg. 2173. 1985 Amendments to the Colorado Corporation Code
On May 3, 1985, Governor Lamm signed into law House Bill 1200, amending the Colorado Corporation Code ("Code") in several substantive and minor areas. These amendments are effective January 1, 1986. The major proposed changes to the Code were detailed in this column in the January 1985 issue of The Colorado Lawyer.(fn1) Since the bill was enacted substantially as introduced, this article highlights the most significant amendments. The Colorado Corporation Code Revision Committee of the Colorado Bar Association Section on Corporation. Banking and Business Law, with the assistance of the CBA lobbyist, was responsible for presenting the bill to the Colorado legislature.
The most significant changes to the Code are in the indemnification section. The amendments to these provisions are so broad and comprehensive that new § 7-3-101.5 has been added to the Code.
There is now an entire "definitions" provision at CRS § 7-3-101.5(1), which, among other words, defines "corporation" (including predecessors), "director" (including a director acting in other capacities). "liability" and "official capacity."
New Code § 7-3-101.5(2)(a) establishes a two-tiered standard of conduct, one for directors acting in their official capacity and one for directors not acting in their official capacity. The amendment continues the former Code provisions entitling a director acting in an official capacity to indemnification only if the director acted in good faith and reasonably believed that the conduct was "in the corporation's best interests." The amendments change the former Code by allowing a director who is not acting in an official capacity to be indemnified if the director acted in good faith and reasonably believed that the conduct was "at least not opposed to" the best interests of the corporation. Acting as trustee of a pension plan is one example of an action that would not fall within the official capacity of a director.
Code § 7-3-101.5(2)(d) adds an important restriction by providing that a director, whether or not acting in an official capacity, may not be indemnified if the director received improper personal benefit, even if the corporation is not damaged. Old Code...
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