Directors and officers: Duties, presumptions and powers when confronted with change or potential change in control of corporation.

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1. If directors or officers take action to resist a change or potential change in control of a corporation, which action impedes the exercise of the right of stockholders to vote for or remove directors:

(a) The directors must have reasonable grounds to believe that a threat to corporate policy and effectiveness exists; and

(b) The action taken which impedes the exercise of the stockholders’ rights must be reasonable in relation to that threat.

If those facts are found, the directors and officers have the benefit of the presumption established by subsection 3 of NRS 78.138.

2. The provisions of subsection 1 do not apply to:

(a) Actions that only affect the time of the exercise of stockholders’ voting rights; or

(b) The adoption or signing of plans, arrangements or instruments that deny rights, privileges, power or authority to a holder of a specified number or fraction of shares or fraction of voting power.

3. The provisions of subsections 1 and 2 do not permit directors or officers to abrogate any right conferred by the laws of this State or the articles of incorporation.

4. Without limiting the provisions of NRS 78.138, a director may resist a change or potential change in control of the corporation if the board of directors determines that the change or potential change is opposed to or not in the best interest of the corporation upon consideration of any relevant facts, circumstances, contingencies or constituencies pursuant to subsection 4 of NRS 78.138, including, without limitation, the amount or nature of the indebtedness and other obligations to which the corporation or any successor to the property of either may become subject, in connection with the change or potential change, provides reasonable grounds to believe that, within a reasonable time:

(a) The assets of the corporation or any successor would be or become less than its liabilities;

(b) The corporation or any successor would be or become insolvent; or

(c) Any voluntary or involuntary proceeding concerning the corporation or any successor would be commenced by any person pursuant to the federal bankruptcy laws.

(Added to NRS by 1999, 1575; A 2009, 1674; 2013, 1269; 2017, 3999)


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