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Iowa Code § 490.870

Business opportunities

Redline — January 1, 2012 → current.View current text →
Current — January 1, 2023
As of January 1, 2012
1. A director’s taking advantage, directly or indirectly, of a business opportunity may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against the director, in a proceeding by or in the right of the corporation on the ground that such opportunity should have first been offered to the corporation, if before becoming legally obligated respecting the opportunity the director brings it to the attention of the corporation and any of the following apply:
1. If a director or officer pursues or takes advantage of a business opportunity directly, or indirectly through or on behalf of another person, that action shall not be the subject of equitable relief, or give rise to an award of damages or other sanctions against the director, officer, or other person, in a proceeding by or in the right of the corporation on the ground that the opportunity should have first been offered to the corporation, if any of the following apply:
a. Before the director, officer, or other person becomes legally obligated respecting the opportunity, the director or officer brings it to the attention of the corporation and any of the following apply:
a. Action by qualified directors disclaiming the corporation’s interest in the opportunity is taken in compliance with the procedures set forth in section 490.832, as if the decision being made concerned a director’s conflicting interest transaction.
(1) Action by qualified directors disclaiming the corporation’s interest in the opportunity is taken in compliance with the same procedures as are set forth in section 490.862.
b. Shareholders’ action disclaiming the corporation’s interest in the opportunity is taken in compliance with the procedure set forth in section 490.832, as if the decision being made concerned a director’s conflicting interest transaction; except that, rather than making the disclosure as required in section 490.832, in each case the director shall have made prior disclosure to those acting on behalf of the corporation of all material facts concerning the business opportunity that are then known to the director.
(2) Shareholders’ action disclaiming the corporation’s interest in the opportunity is taken in compliance with the procedures set forth in section 490.863, in either case as if the decision being made concerned a director’s conflicting interest transaction; except that, rather than making required disclosure as defined in section 490.860, the director or officer shall have made prior disclosure to those acting on behalf of the corporation of all material facts concerning the business opportunity known to the director or officer.
b. The duty to offer the corporation the business opportunity has been limited or eliminated pursuant to a provision of the articles of incorporation adopted, and where required, made effective by action of qualified directors, in accordance with section 490.202, subsection 2, paragraph “f”.
2. In any proceeding seeking equitable relief or other remedy based upon an alleged improper taking advantage of a business opportunity by a director, the fact that the director did not employ the procedure described in subsection 1 before taking advantage of the opportunity shall not create an inference that the opportunity should have been first presented to the corporation or alter the burden of proof otherwise applicable to establish that the director breached a duty to the corporation in the circumstances.
2. In any proceeding seeking equitable relief or other remedies based upon an alleged improper pursuit or taking advantage of a business opportunity by a director or officer, directly, or indirectly through or on behalf of another person, the fact that the director or officer did not employ the procedure described in subsection 1, paragraph “a”, subparagraph (1) or (2), before pursuing or taking advantage of the opportunity shall not create an implication that the opportunity should have been first presented to the corporation or alter the burden of proof otherwise applicable to establish that the director or officer breached a duty to the corporation in the circumstances.
Referred to in

Official source: Iowa Legislature. Reproduced from public-domain Iowa statutes; confirm against the official source for the current text. Not legal advice.