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TITLE 12. CORPORATIONS AND ASSOCIATIONS

PART IX. LIABILITY OF DIRECTORS, OFFICERS, SHAREHOLDERS AND SUBSCRIBERS

12:91. Relation of directors and officers to corporation and shareholders

Officers and directors shall be deemed to stand in a fiduciary relation to the corporation and its shareholders, and shall discharge the duties of their respective positions in good faith, and with that diligence, care, judgment and skill which ordinarily prudent men would exercise under similar circumstances in like positions. Nothing herein contained shall derogate from any indemnification authorized by R.S. 12:83.

12:92. Liability of directors and officers

A. If a corporation has transacted any business in violation of R.S. 12:26, the officers who participated therein and the directors shall be liable jointly and severally with the corporation and each other for the debts or liabilities of the corporation arising therefrom.

B. Any officers or directors who knowingly, or without the exercise of reasonable care and inquiry, consent to the issuance of shares in violation of the provisions of this Chapter or of prior statutes, shall be liable jointly and severally to the corporation and any person who suffers any loss or damage as a result thereof.

C. If property or services taken in payment for shares are grossly overvalued contrary to the provisions of this Chapter, the officers or directors who knowingly, or without the exercise of reasonable care and inquiry, consented thereto, or voted in favor thereof, shall be liable jointly and severally to the corporation for the benefit of creditors or shareholders, as their respective and relative interests may appear, for any loss or damage arising therefrom.

D. If any dividend shall be paid in violation of this Chapter, or if any other unlawful distribution, payment or return of assets be made to the shareholders, or if the corporation purchase or redeem any of its own shares in violation of this Chapter, the directors who knowingly, or without the exercise of reasonable care and inquiry, voted in favor thereof shall be liable jointly and severally to the corporation, or to creditors of the corporation, or to both, in an amount equal to the amount of the unlawful distribution. An action to enforce such liability must be brought within two years from the date on which the distribution was made, and this time limit shall not be subject to suspension on any ground, nor to interruption except by timely suit.

E. A director shall, in the performance of his duties, be fully protected in relying in good faith upon the records of the corporation and upon such information, opinions, reports, or statements presented to the corporation, the board of directors, or any committee thereof by any of the corporation's officers or employees, or by any committee of the board of directors, or by any counsel, appraiser, engineer, including a petroleum reservoir engineer, or independent or certified public accountant selected with reasonable care by the board of directors or any committee thereof or any officer having the authority to make such selection, or by any other person as to matters the director reasonable believes are within such other person's professional or expert competence and which person is selected with reasonable care by the board of directors or any committee thereof or any officer having the authority to make such selection.

F. If a corporation has failed to make employer contributions as prescribed in R.S. 23:1536, or has failed to properly file reports required by R.S. 23:1538, those officers or directors having control of filing such reports and remitting such contributions shall be personally liable for the total amount of such contributions not collected, accounted for, or not remitted, together with any interest, penalties, and fees accruing thereon. Collection of the total amount due may be made from any one or any combination of such officers or directors by use of any of the alternative remedies for the collection of said funds. No employee who is not an officer or director shall be found personally liable for failure to make employer contributions as required by law.

G. The board of directors, when evaluating a tender offer or an offer to make a tender or exchange offer or to effect a merger or consolidation may, in exercising its judgment in determining what is in the best interest of the corporation and its shareholders, consider the following factors and any other factors which it deems relevant:

(1) Not only the consideration being offered in the proposed transaction in relation to the then current market price for the outstanding capital stock of the corporation, but also the market price for the capital stock of the corporation over a period of years, the estimated price that might be achieved in a negotiated sale of the corporation as a whole or in part or through orderly liquidation, the premiums over market price for the securities of other corporations in similar transactions, current political, economic, and other factors bearing on securities prices and the corporation's financial condition and future prospects.

(2) The social and economic effects of such transaction on the corporation, its subsidiaries, or their employees, customers, creditors, and the communities in which the corporation and its subsidiaries do business.

(3) The business and financial conditions and earnings prospects of the acquiring party or parties, including, but not limited to, debt service and other existing or likely financial obligations of the acquiring party or parties, and the possible effect of such conditions upon the corporation and its subsidiaries and the communities in which the corporation and its subsidiaries do business.

(4) The competence, experience, and integrity of the acquiring party or parties and its or their management.

12:93. Liability of subscribers and shareholders

A. Except as provided in the following subsections of this Section, a subscriber to, or holder of, shares of a corporation organized after January 1, 1929, shall be under no liability to the corporation or its creditors with respect to such shares, other than the obligation of complying with the terms of the subscription therefor. This obligation shall continue whether or not his rights or shares have been assigned or transferred, but the assignee or transferee of shares in good faith and without knowledge or notice that the shares have not been fully paid for, shall not be liable to the corporation or its creditors with respect to payment for such shares.

B. A shareholder of a corporation organized after January 1, 1929, shall not be liable personally for any debt or liability of the corporation.

C. If property or services taken in payment for shares are grossly overvalued contrary to the provisions of this Chapter, the shareholders who knowingly, or without the exercise of reasonable care and inquiry, consented thereto or voted in favor thereof shall be liable jointly and severally to the corporation for the benefit of creditors or shareholders, as their respective and relative interests may appear, for any loss or damage arising therefrom.

D. Every shareholder who receives any unlawful dividend or other unlawful distribution of assets shall be liable to the corporation, or to creditors of the corporation, or to both, in an amount not exceeding the amount so received by him. An action to enforce this liability must be brought within two years from the date on which the unlawful distribution was received, and this time limit shall not be subject to suspension on any ground, nor to interruption except by timely suit.

E. When the directors are held liable solely because of having negligently consented to or participated in any unlawful dividend, distribution, payment or return of assets, the directors shall have, to the extent of the payments made by them, a cause and right of action for indemnity against each of the shareholders for the proportionate amount of the unlawful distribution received by such shareholder. This action must be brought within two years from the date of payment by the directors on account of the liability imposed by R.S. 12:92D, and this time limit shall not be subject to suspension on any ground, nor to interruption except by timely suit.

12:94. Directors or shareholders not participating in unlawful act

A director or shareholder shall not be liable for the commission of a prohibited act if he was absent from the meeting of directors or shareholders, as the case may be, at which the action was authorized, or if he was present or represented at such meeting and his dissent therefrom was either noted in the minutes of the meeting or filed promptly thereafter in the registered office of the corporation.

12:95. Actions for fraud

Nothing in this Chapter shall be construed as in derogation of any rights which any person may be law have against a promoter, subscriber, shareholder, director or officer, or the corporation, because of any fraud practiced upon him by any of such persons or the corporation, or in derogation of any right which the corporation may have because of any fraud practiced upon it by any of these persons.

12:96. Actions against directors and officers

A. No action for damages against any director or officer for breach of his duty as a director or officer, including, without limitation, an action for gross negligence, but excluding any action covered by the provisions of Subsection B of this Section, shall be brought unless filed in a court of competent jurisdiction and proper venue within one year from the date of the alleged act, omission, or neglect, or within one year from the date that the alleged act, omission, or neglect is discovered or should have been discovered.

B. No action for damages against any director or officer for intentional tortious misconduct, or for an intentional breach of the director's or officer's duty of loyalty, or for acts or omissions in bad faith, or involving fraud, or a knowing and intentional violation of law, shall be brought unless filed in a court of competent jurisdiction and proper venue within two years from the date of the alleged act or omission, or within two years from the date the alleged act or omission is discovered or should have been discovered.

C. With respect to claims for which suit has not been filed, this Section shall be applied both retrospectively and prospectively; however, with respect to any alleged act, omission, or neglect for which the time period for bringing an action would otherwise be shortened by Subsection A of this Section, such action shall, in all events, be filed in a court of competent jurisdiction and proper venue on or before the earlier of the end of the time period for bringing such action prior to the enactment of this Section or September 1, 2000, and with respect to any alleged act, omission, or neglect for which the time period for bringing an action would otherwise be shortened by Subsection B of this Section, such action shall, in all events, be filed in a court of competent jurisdiction and proper venue on or before the earlier of the end of the time period for bringing such action prior to the enactment of this Section or September 1, 2001, in any case without regard to the date of discovery of the alleged act, omission, or neglect.