A. All corporate powers shall be exercised by or under authority of, and the business and affairs of a corporation shall be managed under the direction of, a board of directors except as may be otherwise provided in the Business Corporation Act or the articles of incorporation. If any such provision is made in the articles of incorporation, the powers and duties conferred or imposed upon the board of directors by the Business Corporation Act shall be exercised or performed to such extent and by such person or persons as provided in the articles of incorporation. Directors need not be residents of this state or shareholders of the corporation unless the articles of incorporation or bylaws so require. The articles of incorporation or bylaws may prescribe other qualifications for directors. The board of directors may fix the compensation of directors unless otherwise provided in the articles of incorporation.
B. A director shall perform his duties as a director, including his duties as a member of any committee of the board upon which the director may serve, in good faith, in a manner the director believes to be in or not opposed to the best interests of the corporation, and with such care as an ordinarily prudent person would use under similar circumstances in a like position. In performing such duties, a director shall be entitled to rely on factual 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 which the director reasonably believes to be within such person's professional or expert competence; or
(3) a committee of the board upon which the director does not serve, duly designated in accordance with a provision of the articles of incorporation or the bylaws, as to matters within its designated authority, which committee the director reasonably believes to merit confidence, but the director shall not be considered to be acting in good faith if the director has knowledge concerning the matter in question that would cause such reliance to be unwarranted. A person who so performs such duties shall have no liability by reason of being or having been a director of the corporation.
C. A director of a corporation who is present at a meeting of its board of directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless the director's dissent shall be entered in the minutes of the meeting or unless the director shall file written dissent to such action with the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.
D. For purposes of Subsection B of this section, a director, in determining what he reasonably believes to be in or not opposed to the best interests of the corporation, shall consider the interests of the corporation's shareholders and, in his discretion, may consider any of the following:
(1) the interests of the corporation's employees, suppliers, creditors and customers;
(2) the economy of the state and nation;
(3) the impact of any action upon the communities in or near which the corporation's facilities or operations are located; and
(4) the long-term interests of the corporation and its shareholders, including the possibility that those interests may be best served by the continued independence of the corporation.
History: 1953 Comp., § 51-24-34, enacted by Laws 1967, ch. 81, § 34; 1975, ch. 64, § 16; 1983, ch. 304, § 37; 1987, ch. 238, § 10.
ANNOTATIONSCompiler's notes. — This section is derived from Section 35 of the ABA Model Business Corporation Act.
The 1987 amendment, effective April 9, 1987, inserted "or not opposed to" in Subsection B, made minor stylistic changes in that subsection, and added Subsection D.
The 1983 amendment, effective June 17, 1983, designated the existing provisions as Subsection A, added "All corporate powers shall be exercised by or under authority of, and" at the beginning of the first sentence of Subsection A, substituted "under the direction of" for "by," and inserted "the Business Corporation Act or" in the first sentence of Subsection A, and added Subsections B and C.
Standard of conduct for corporate governance. — This section defines the basic standard of conduct for corporate governance. Federal Deposit Insurance Corp. v. Dee, 222 F.Supp.3d 972 (D.N.M. 2016).
Common-law business judgment rule does not abrogate this section. — The common-law business judgment rule, which creates a presumption that in making a business decision the directors and officers of a corporation acted on an informed basis, in good faith, and in honest belief that the action taken was in the best interests of the company, compliments rather than abrogates Subsection B of this section, and consequently, directors must comply with Subsection B to obtain the business judgment rule's protections. Conversely, if a director violates Subsection B of this section, then the New Mexico common law business judgment rule does not apply. Federal Deposit Insurance Corp. v. Dee, 222 F.Supp.3d 972 (D.N.M. 2016).
Directors and officers of failed bank were not entitled to the protections of this section or the common law business judgment rule. — Where the federal deposit insurance corporation (FDIC) brought an action in federal district court, as a receiver for a failed bank (first community bank), against bank's officers and directors, alleging claims based on defendant's alleged conduct in ignoring appropriate credit-risk management practices and deviating from first community bank loan policies and procedures, defendant's motion to dismiss was denied because FDIC's amended complaint included sufficient factual allegations that the directors and officers did not act with such care as an ordinarily prudent person would use under similar circumstances in a like position, individually, and in their capacity as first community directors, and that defendants were not entitled to the protections of the business judgment rule. Federal Deposit Insurance Corp. v. Dee, 222 F.Supp.3d 972 (D.N.M. 2016).
Law reviews. — For article, "The New Mexico Professional Corporation," see 9 Nat. Res. J. 591 (1969).
For article, "1975 Amendments to the New Mexico Business Corporation Act," see 6 N.M.L. Rev. 57 (1975).
For article, "1983 Amendments to the New Mexico Business Corporation Act and Related Statutes," see 14 N.M.L. Rev. 371 (1984).
Am. Jur. 2d, A.L.R. and C.J.S. references. — 18B Am. Jur. 2d Corporations §§ 1341 to 1364, 1381, 1395, 1396, 1399, 1483, 1484, 1486.
Duty of director to disclose lien or claim against property on which corporation or association lends money, 3 A.L.R. 1058.
Power of directors to sell, without consent of stockholders, property of corporation, 5 A.L.R. 930, 60 A.L.R. 1210.
Maintenance of designated person in office, contract of director or stockholder for, 12 A.L.R. 1070, 45 A.L.R. 795.
Court's right to interfere with amount of salaries voted to officers of private corporations by directors, 27 A.L.R. 300, 44 A.L.R. 570.
Character or ability as a qualification of membership of board of trustees or directors, 30 A.L.R. 248.
Fixing wages or salaries of working stockholders above those current for similar services, 48 A.L.R. 508.
Right of stockholder, director, officer, or agent to engage in similar or competing business, 64 A.L.R. 782.
Responsibility of corporation for misstatements by officer or employee to induce or influence purchase of stock, 66 A.L.R. 1450.
Power of other officers to fix compensation of officers, 72 A.L.R. 238.
Purchase by officer or director in his own interest at a judicial or other public sale of the corporate property, 76 A.L.R. 439.
Implied or ostensible authority of officer or employee of private corporation to take or negotiate leaseholds for corporation or its subsidiaries, 107 A.L.R. 996.
Eligibility as corporate director of one who was not stockholder in fact, or not stockholder of record, at time of election, but who afterwards became such, 130 A.L.R. 156.
Authority of directors to employ attorney for corporation, 130 A.L.R. 897.
Right of stockholder as individual to complain as against officers, directors, or large stockholders, of their transactions in corporation's outstanding stock involving its control or other purpose, 132 A.L.R. 260.
Validity, construction, and effect of statute or corporate regulation requiring deposit of stock of corporation as condition of qualification of director, 148 A.L.R. 1164.
Attorneys' fees and other expenses incident to controversy respecting internal affairs of corporation as charge against the corporation, 152 A.L.R. 909, 39 A.L.R.2d 580.
Purchase of claims against corporation by officer or director, 13 A.L.R.2d 1172.
Validity of contract between corporations as affected by directors or officers in common, 33 A.L.R.2d 1060.
Authority of corporate officers to mortgage or pledge corporate personal property, 62 A.L.R.2d 712.
Validity of stockholders' agreement allegedly infringing in directors' management powers - modern cases, 15 A.L.R.4th 1078.
Financial inability of corporation to take advantage of business opportunity as affecting determination whether "corporate opportunity" was presented, 16 A.L.R.4th 185.
Purchase of shares of corporation by director or officer as usurpation of "corporate opportunity," 16 A.L.R.4th 784.
Fairness to corporation where "corporate opportunity" is allegedly usurped by officer or director, 17 A.L.R.4th 479.
Duty of corporate directors to exercise "informed" judgment in recommending responses to merger or tender offers, 46 A.L.R.4th 887.
19 C.J.S. Corporations § 434 et seq.