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Can you summarize NCGS 55-8-32?
Standards of Conduct. > Loans to directors.
Short Summary
This provision, found in the North Carolina Business Corporation Act, governs loans to directors of corporations. Generally, a corporation is prohibited from directly or indirectly lending money to or guaranteeing the obligation of a director, unless certain conditions are met. These conditions include obtaining approval from a majority of the votes represented by outstanding voting shares, or the approval of the corporation’s board of directors based on a determination that the loan or guarantee benefits the corporation. However, loans and guarantees authorized by statute regulating any special class of corporations are exempt from this provision. It is important to note that making a loan or guarantee in violation of this provision does not affect the borrower’s liability on the loan. No specific penalties are mentioned in this provision.
Whom does it apply to?
Corporations and directors
What does it govern?
Loans to directors
What are exemptions?
Loans and guarantees authorized by statute regulating any special class of corporations
What are the Penalties?
No specific penalties mentioned
Jurisdiction
North Carolina