2009 Iowa Code
Title 12 - Business Entities
Subtitle 2 - Business and Professional Corporations and Companies
CHAPTER 490 - BUSINESS CORPORATIONS
490.831 - STANDARDS OF LIABILITY FOR DIRECTORS.

        490.831  STANDARDS OF LIABILITY FOR DIRECTORS.
         1.  A director shall not be liable to the corporation or its
      shareholders for any decision as director to take or not to take
      action, or any failure to take any action, unless the party asserting
      liability in a proceeding establishes both of the following:
         a.  That any of the following apply:
         (1)  A provision in the articles of incorporation authorized by
      section 490.202, subsection 2, paragraph "d", or the protection
      afforded by section 490.832 if interposed as a bar to the proceeding
      by the director, does not preclude liability.
         (2)  The protection afforded by section 490.870 does not preclude
      liability.
         b.  That the challenged conduct consisted or was the result of
      one of the following:
         (1)  Action not in good faith.
         (2)  A decision that satisfies one of the following:
         (a)  That the director did not reasonably believe to be in the
      best interests of the corporation.
         (b)  As to which the director was not informed to an extent the
      director reasonably believed appropriate in the circumstances.
         (3)  A lack of objectivity due to the director's familial,
      financial, or business relationship with, or a lack of independence
      due to the director's domination or control by, another person having
      a material interest in the challenged conduct, which also meets both
      of the following criteria:
         (a)  Which relationship or which domination or control could
      reasonably be expected to have affected the director's judgment
      respecting the challenged conduct in a manner adverse to the
      corporation.
         (b)  After a reasonable expectation to such effect has been
      established, the director shall not have established that the
      challenged conduct was reasonably believed by the director to be in
      the best interests of the corporation.
         (4)  A sustained failure of the director to devote attention to
      ongoing oversight of the business and affairs of the corporation, or
      a failure to devote timely attention, by making, or causing to be
      made, appropriate inquiry, when particular facts and circumstances of
      significant concern materialize that would alert a reasonably
      attentive director to the need for such oversight, attention, or
      inquiry.
         (5)  Receipt of a financial benefit to which the director was not
      entitled or any other breach of the director's duties to deal fairly
      with the corporation and its shareholders that is actionable under
      applicable law.
         2. a.  A party seeking to hold the director liable for money
      damages shall also have the burden of establishing both of the
      following:
         (1)  That harm to the corporation or its shareholders has been
      suffered.
         (2)  The harm suffered was proximately caused by the director's
      challenged conduct.
         b.  A party seeking to hold the director liable for other
      money payment under a legal remedy, such as compensation for the
      unauthorized use of corporate assets, shall also have whatever
      persuasion burden may be called for to establish that the payment
      sought is appropriate in the circumstances.
         c.  A party seeking to hold the director liable for other
      money payment under an equitable remedy, such as profit recovery by
      or disgorgement to the corporation, shall also have whatever
      persuasion burden may be called for to establish that the equitable
      remedy sought is appropriate in the circumstances.
         3.  This section shall not do any of the following:
         a.  In any instance where fairness is at issue, such as
      consideration of the fairness of a transaction to the corporation
      under section 490.832, alter the burden of proving the fact or lack
      of fairness otherwise applicable.
         b.  Alter the fact or lack of liability of a director under
      another section of this chapter, such as the provisions governing the
      consequences of an unlawful distribution under section 490.833 or a
      transactional interest under section 490.832.
         c.  Affect any rights to which the corporation or a
      shareholder may be entitled under another statute of this state or
      the United States.  

         89 Acts, ch 288, §90; 2002 Acts, ch 1154, §38, 125; 2003 Acts, ch
      44, §83; 2008 Acts, ch 1015, §2; 2009 Acts, ch 133, §164
         Referred to in § 490.842, 491.16A