Chapter 21 - § 21.2 • CORPORATE DIRECTORS

• Jurisdiction: Colorado

§ 21.2 • CORPORATE DIRECTORS

§ 21.2.1—Role and Responsibilities

The role of directors of a Colorado corporation is to manage its business and affairs. Unless provided otherwise in a corporation's articles of incorporation, all corporate powers must be exercised by, or under the authority of, the directors. C.R.S. § 7-108-101(2).

The board may create one or more committees to exercise the powers and authority of the entire board. C.R.S. § 7-108-206(1). Under Colorado law, a committee may not on its own:

1) Approve or propose to shareholders action required by the CBCA to be approved by shareholders (e.g., a merger or a sale of all or substantially all of the assets of the corporation);
2) Fill board or committee vacancies;
3) Amend the articles of incorporation;
4) Adopt, amend, or repeal bylaws;
5) Approve a plan of merger that does not require shareholder approval under the CBCA;
6) Authorize or approve the reacquisition of shares, except according to a formula or method prescribed by the entire board; or
7) Authorize or approve the issuance or sale of shares, or an agreement to effect the same, or determine the designations and relative rights, preferences, and limitations of a class or series of shares, except within limits prescribed by the entire board. C.R.S. § 7-108-206(4).

§ 21.2.2—Liability for Directors and Limitations on Liability

Generally, directors can be held personally liable for breaches of their fiduciary duties as directors. However, the CBCA allows corporations to eliminate or limit such liability so long as the limitations are laid out in the corporation's articles of incorporation.

Monetary Damages

A corporation may adopt a provision in its articles of incorporation that eliminates or limits the personal liability of a director to the corporation or to its shareholders for monetary damages for breach of the director's fiduciary duty, provided that such breach does not stem from (1) a breach of the director's duty of loyalty; (2) acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; (3) acts specified in C.R.S. § 7-108-403 involving unlawful distributions; or (4) any transaction from which the director directly or indirectly derived an improper personal benefit. Any such limitation on a director's liability cannot be retrospective. C.R.S. § 7-108-402(1).

Torts

The CBCA also shields a director from personal liability for any injury to person or property arising out of a tort committed...