Senate Bill 95, effective October 1, 2021, amends the Business Associations; Securities; Commodities title regarding service of process on nonresident managers with further amendments to (i) the Private Corporations chapter regarding forum selection clauses, director and officer fiduciary duties, stockholder inspection rights, distributions to stockholders and director liability for unlawful distributions, stockholder meetings and notices, record date of stockholders, voting trusts, and indemnification; (ii) the LLC chapter regarding definitions, management, contributions, distributions, insolvency, receivership, and reorganization; and (iii) the Mergers, Conversions, Exchanges and Domestications chapter regarding definitions, approval of mergers, and stockholder dissenters' rights.
Senate Bill 436, effective October 1, 2019, amends the Business Associations; Securities; Commodities title by authorizing organization of chiropractic professional service entities.
Senate Bill 163, effective October 1, 2019, amends the entity laws regarding the use of blockchain technology in connection with records maintenance and the carrying out of entities’ purposes and powers.
Assembly Bill 432, effective October 1, 2019, amends the Business Associations; Securities; Commodities title by authorizing new or existing business corporations to elect to be governed as a worker cooperative.
Business Judgment Rule
Guzman v. Johnson, 137 Nev. Adv. Rep. 13, decided March 25, 2021. The Nevada Supreme Court held that a shareholder who sues a corporate director individually for breach of fiduciary duty must, under Sec. 78.138(7) of the Nevada corporation law, rebut the business judgment rule and demonstrate that the alleged breach involved intentional misconduct, fraud, or a knowing violation of the law. The court rejected the shareholder’s contention that she rebutted the business judgment rule by alleging in her complaint that the individual directors were interested parties in the transaction, citing the inherent fairness standard adopted by the court in Foster v. Arata, 325 P.2d 759 (1958). Under that standard, the mere allegation that a director was an interested party in the transaction rebuts the business judgment rule as a matter of law and shifts the burden to the director to prove the inherent fairness of the transaction. According to the court Sec. 78.138(7) precludes such a standard.
Cotter ex rel. Reading International Inc. v. Kane, 136 Nev. Adv. Rep. 63, decided October 1, 2020. The Nevada Supreme Court held that a corporation does not have standing to challenge the merits of a shareholder derivative suit filed on its behalf but does have standing to challenge whether the plaintiff shareholder was an adequate representative of the corporation.
Director and Officer Liability
Chur v. Eighth Judicial District Court of Nevada, No. 7801, decided February 27, 2020. The Nevada Supreme Court held that a corporate director or officer may not be held individually liable for breaching his or her fiduciary duty of care through gross negligence. Statutorily a director or officer is not individually liable for harm resulting from official actions unless the director or officer engages in intentional misconduct, fraud or a knowing violation of law.
Oceania Insurance Corp. v. Cogan, No. 74958, decided February 19, 2020. The Nevada Court of Appeals held that where an LLC became the majority shareholder of a corporation by virtue of a court order to help satisfy a $ 5 million default judgment, it would violate public policy to allow the corporation to maintain a malpractice suit against the lawyer the corporation blamed for failing to get the default set aside. As majority shareholder, the LLC controlled the malpractice suit, which would require it to take the position that it should not have prevailed in the underlying action even though that victory is why the LLC is now involved in the malpractice suit.
There are no new notices at this time.