CHAPTER 24-6
BOARD
24-6-1 Board.
(A) Board to manager. The business and affairs of a corporation shall be managed by or under the direction of a board, subject to the provisions of Section 24-6-1 (B) and Section 24-8-23. The members of the first board may be named in the articles or elected by the incorporators pursuant to Section 24-5-1 or by the shareholders.
(B) Shareholder management. The holders of the shares entitled to vote for directors of the corporation may, by unanimous affirmative vote, take any action that this Code requires or permits the board to take. As to an action taken by the shareholders in that manner:
(1) The directors have no duties, liabilities, or responsibilities as directors under this Code with respect to or arising from the action;
(2) The shareholders collectively and individually have all of the duties, liabilities, and responsibilities of directors under this Code with respect to and arising from the action;
(3) If the action relates to a matter required or permitted by this Code or by any other law to be approved or adopted by the board, either with or without approval or adoption by the shareholders, the action is deemed to have been approved or adopted by the board; and
(4) A requirement that an instrument filed with a governmental agency contain a statement that the action has been approved and adopted by the board is satisfied by a statement that the shareholders have taken the action under this subdivision.
24-6-2 Number.
The board shall consist of one or more directors. The number of directors shall be fixed by or in the manner provided in the articles or bylaws. The number of directors may be increased or, subject to Section 24-6-10, decreased at any time by amendment to or in the manner provided in the articles or bylaws.
24-6-3 Qualifications; Election.
Directors shall be natural persons. The method of election and any additional qualifications for directors may be imposed by or in the manner provided in the articles or bylaws. A director need not be a member of the Nation unless the articles of incorporation or bylaws so prescribe.
24-6-4 Terms.
Unless fixed terms are provided for in the articles or bylaws, a director serves for an indefinite term that expires at the next regular meeting of the shareholders. A fixed term of a director shall not exceed five years. A director holds office for the term for which the director was elected and until a successor is elected and has qualified, or until the earlier death, resignation, removal, or disqualification of the director.
24-6-5 Acts Not Void or Voidable.
The expiration of a director’s term with or without the election of a qualified successor does not make prior or subsequent acts of the officers or the board void or voidable.
24-6-6 Compensation.
Subject to any limitations in the articles or bylaws, the board may fix the compensation of directors.
24-6-7 Classification of Directors.
Directors may be divided into classes as provided in the articles or bylaws.
24-6-8 Cumulative Voting for Directors.
Unless the articles provide that there shall be no cumulative voting, and except as provided in Section 24-6-10 (E), each shareholder entitled to vote for directors has the right to cumulate those votes in the election of directors by giving written notice of intent to cumulate those votes to any officer of the corporation before the meeting, or to the presiding officer at the meeting at which the election is to occur at any time before the election of directors at the meeting, in which case:
(1) The presiding officer at the meeting shall announce, before the election of directors, that shareholders shall cumulate their votes; and
(2) Each shareholder shall cumulate those votes either by casting for one candidate the number of votes equal to the number of directors to be elected multiplied by the number of votes represented by the shares, or by distributing all of those votes on the same principle among any number of candidates.
(A) Modification. No amendment to the articles or bylaws which has the effect of denying, limiting, or modifying the right to cumulative voting for directors provided in this Section shall be adopted if the votes of a proportion of the voting power sufficient to elect a director at an election of the entire board under cumulative voting, are cast against the amendment.
24-6-9 Resignation.
A director may resign at any time by giving written notice to the corporation. The resignation is effective without acceptance when the notice is given to the corporation, unless a later effective time is specified in the notice.
24-6-10 Removal of Directors.
(A) Modification. The provisions of this Section apply unless modified by the articles, the bylaws, or an agreement described in Section 24-8-23.
(B) Removal by directors. A director may be removed at any time, with or without cause if:
(1) The director was named by the board to fill a vacancy;
(2) The shareholders have not elected directors in the interval between the time of the appointment to fill a vacancy and the time of the removal; and
(3) A majority of the remaining directors present affirmatively vote to remove the director.
(C) Removal by shareholders. One or all of the directors may be removed at any time, with or without cause, by the affirmative vote of the holders of the proportion or number of the voting power of the shares of the classes or series the director represents sufficient to elect them, except as provided in Section 24-6-10 (D).
(D) Exception for corporation with cumulative voting. In a corporation having cumulative voting, unless the entire board is removed simultaneously, a director is not removed from the board if there are cast against removal of the director the votes of a proportion of the voting power sufficient to elect the director at an election of the entire board under cumulative voting.
(E) Election of replacements. New directors may be elected at a meeting at which directors are removed. If the corporation allows cumulative voting and a shareholder notifies the presiding officer at any time prior to the election of new directors of intent to cumulate the votes of the shareholder, the presiding officer shall announce before the election that cumulative voting is in effect, and shareholders shall cumulate their votes as provided in Section 24-6-8 (A), paragraph (2).
24-6-11 Vacancies.
Unless different rules for filling vacancies are provided for in the articles or bylaws:
(A) Vacancies on the board resulting from the death, resignation, removal, or disqualification of a director may be filled by the affirmative vote of a majority of the remaining directors, even though less than a quorum; and vacancies on the board resulting from newly created directorships may be filled by the affirmative vote of a majority of directors serving at the time of the increase; and each director elected under this Section to fill a vacancy holds office until a qualified successor is elected by the shareholders at the next regular or special meeting of the shareholders.
24-6-12 Board Meetings.
(A) Time; place. Meetings of the board may be held from time to time as provided in the articles or bylaws at any place within or without the Reservation that the board may select or by any means described in Section 24-6-12 (B). If the board fails to select a place for a meeting, the meeting shall be held at the principal executive office, unless the articles or bylaws provide otherwise.
(B) Electronic communications.
(1) A conference among directors by any means of communication through which the directors may simultaneously hear each other during the conference constitutes a board meeting, if the same notice is given of the conference as would be required by Section 24-6-12 (C) for a meeting, and if the number of directors participating in the conference would be sufficient to constitute a quorum at a meetings participation in a meeting by that means constitutes presence in person at the meeting.
(2) A director may participate in a board meeting not described in paragraph (a) above by any means of communication through which the director, other directors so participating, and all directors physically present at the meeting may simultaneously hear each other during the meeting. Participation in a meeting by that means constitutes presence in person at the meeting.
(C) Call, meetings notice. Unless the articles or bylaws provide for a different time period, a director may call a board meeting by giving ten days notice to all directors of the date, time, and place of the meeting. The notice need not state the purpose of the meeting unless the articles or bylaws require it.
(D) Previously scheduled meetings. If the day or date, time, and place of a board meeting have been provided in the articles or bylaws, or announced at a previous meeting of the board, no notice is required. Notice of adjourned meeting may not be given other than by announcement at the meeting at which adjournment is taken.
(E) Waiver of notice. A director may waive notice of a meeting of the board. A waiver of notice by a director entitled to notice is effective whether given before, at, or after the meeting, and whether given in writing, orally, or by attendance. Attendance by a director at a meeting is a waiver of notice of that meeting, except where the director objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and does not participate thereafter in the meeting.
24-6-13 Absent directors.
If the articles or bylaws so provide, a director may give advance written consent or opposition to a proposal to be acted on a board meeting. If the director is not present at the meeting, consent or opposition to a proposal does not constitute presence for purposes of determining the existence of a quorum, but consent or opposition shall be counted as a vote in favor of or against the proposal and shall be entered in the minutes or other record of action at the meeting, if the proposal acted on at the meeting is substantially the same or has substantially the same effect as the proposal to which the director has consented or objected.
24-6-14 Quorum.
A majority, or a larger or smaller proportion or number provided in the articles or bylaws, of the directors currently holding office is a quorum for the transaction of business. In the absence of a quorum, a majority of the directors present may adjourn a meeting from time to time until a quorum is present. If a quorum is present when a duly called or held meeting is convened, the directors present may continue to transact business until adjournment, even though the withdrawal of a number of directors originally present leaves less than the proportion or number otherwise required for a quorum.
24-6-15 Act of the Board.
The board shall take action by the affirmative vote of a majority of directors present at a duly held meeting, except where this Code or the articles require the affirmative vote of a larger proportion or number. If the articles require a larger proportion or number than is required by this Code for a particular action, the articles shall control.
24-6-16 Action Without Meeting.
(A) Method. An action required or permitted to be taken at a board meeting may be taken by written action signed by all of the directors. If the articles so provide, any action, other than an action requiring shareholder approval, may be taken by written action signed by the number of directors that would be required to take the same action at a meeting of the board at which all directors were present.
(B) Effective time. The written action is effective when signed by the required number of directors, unless a different effective time is provided in the written action.
(C) Notice; liability. When written action is permitted to be taken by less than all directors, all directors shall be notified immediately of its text and effective date. Failure to provide the notice does not invalidate the written action. A director who does not sign or consent to the written action has no liability for the action or actions taken thereby.
24-6-17 Committees.
(A) Generally. A resolution approved by the affirmative vote of a majority of the board may establish committees having the authority of the board in the management of the business of the corporation only to the extent provided in the resolution. Committees may include a special litigation committee consisting of one or more independent directors or other independent persons to consider legal rights or remedies of the corporation and whether those rights and remedies should be pursued. Committees other than special litigation committees are subject at all times to the direction and control of the board.
(B) Membership. Committee members shall be natural persons. Unless the articles or bylaws provide for a different membership or manner of appointment, a committee shall consist of one or more persons, who need not be directors, appointed by affirmative vote of a majority of the directors present.
(C) Procedure. Sections 24-6-12 to 24-6-16 apply to committees and members of committees to the same extent as those sections apply to the board and directors.
(D) Minutes. Minutes, if any, of committee meetings shall be made available upon request to members of the committee and to any director.
(E) Standard of conduct. The establishment of, delegation of authority to, and action by a committee does not alone constitute compliance by a director with the standard of conduct set forth in Section 24-6-18.
(F) Committee members deemed directors. Committee members are deemed to be directors for purposes of Sections 24-6-18, 24-6-19, and 24-9-3.
24-6-18 Standard of Conduct.
(A) Standard; liability. A director shall discharge the duties of the position of director in good faith, in a manner the director reasonably believes to be in the best interests of the corporation, and with the care an ordinarily prudent person in a like position would exercise under similar circumstances. A person who so performs those duties is not liable by reason of being or having been a director of the corporation.
(B) Reliance. A director is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, in each case prepared or presented by:
(1) One or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters presented;
(2) Counsel, public accountants, or other persons as to matters that the director reasonably believes are within the person’s professional or expert competence; or
(3) A committee of the board upon which the director does not serve, duly established in accordance with Section 24-6-9, as to matters within its designated authority, if the director reasonably believes the committee to merit confidence.
(C) Unwarranted Reliance. Section 24-6-18 (B) paragraph (1) does not apply to a director who has knowledge concerning the matter in question that makes the reliance otherwise permitted by paragraph (a) unwarranted.
(D) Presumption of assent; dissent. A director who is present at a meeting of the board when an action is approved by the affirmative vote of a majority of the directors present is presumed to have assented to the action approved, unless the director:
(1) Objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and does not participate thereafter in the meeting, in which case the director shall not be considered to be present at the meeting for any purpose of this Code;
(2) Votes against the action at the meeting; or
(3) Is prohibited by Section 24-6-19 from voting on the action.
(E) Elimination or limitation of liability. A director’s personal liability to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director may be eliminated or limited in the articles. The articles shall not eliminate or limit the liability of a director:
(1) For any breach of the director’s duty of loyalty to the corporation or its shareholders;
(2) For acts or emissions not in good faith or that involve intentional misconduct or a knowing violation of law;
(3) Under Section 24-9-7;
(4) For any transaction from which the director derived an improper personal benefit; or
(5) For any act or omission occurring prior to the date when the provision in the articles eliminating or limiting liability becomes effective.
24-6-19 Director conflicts of interest.
(A) Conflict; procedure when conflict arises. A contract or other transaction between a corporation and one or more of its directors, or between a corporation and an organization in or of which one or more of its directors are directors, officers, or legal representatives or have a material financial interest, is not void or voidable because the director or directors or the other organizations are parties or because the director or directors are present at the meeting of the shareholders or the board or a committee at which the contract or transaction is authorized, approved, or ratified, if:
(1) The contract or transaction was, and the person asserting the validity of the contract or transaction sustains the burden of establishing, that the contract or transaction was, fair and reasonable as to the corporation at the time it was authorized, approved, or ratified;
(2) The material facts as to the contract or transaction and as to the director or directors’ interest are fully disclosed or known to the shareholders and the contract or transaction is approved in good faith by 1) the holders of two-thirds of the voting power of the shares entitled to vote which are owned by persons other than the interested director or directors, or 2) the unanimous affirmative vote of the holders of all outstanding shares, whether or not entitled to vote;
(3) The material facts as to the contract or transaction and as to the director or directors’ interest are fully disclosed or known to the board or a committee, and the board or committee authorizes, approves, or ratifies the contract or transaction in good faith by a majority of the board or committee, but the interested director or directors shall not be counted in determining the presence of a quorum and shall not vote; or
(4) The contract or transaction is a distribution described in Section 24-9-4 (A), or merger or exchange described in Sections 24-10-1 (A), or 24-10-1 (B).
(B) Material financial interest. For purposes of this Section:
(1) A director does not have a material financial interest in a resolution fixing the compensation of the director or fixing, the compensation of another director as a director, officer, employee, or agent of the corporation, even though the first director is also receiving compensation from the corporation; and
(2) A director has a material financial interest in each organization in which the director, or the spouse, parents, children and spouses of children, brothers and sisters and spouses of brothers and sisters of the director, or any combination of them have a material financial interest.
(C) Compensation agreements. During any tender offer or request or invitation for tenders of any class or series of shares of a publicly held corporation, other than an offer, request, or invitation by the publicly held corporation, the publicly held corporation shall not enter into or amend, directly or indirectly, agreements containing provisions, whether or not dependent on the occurrence of any event or contingency, that increase, directly or indirectly, the current or future compensation of any officer or director of the publicly held corporation. This subdivision does not prohibit routine increases in compensation, or other routine compensation agreements, undertaken in the ordinary course of the publicly held corporations business.