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North Dakota Century Code Title 10. Corporations § 10-33-82. Loans--Guarantees--Suretyship

Current as of January 01, 2024 | Updated by Findlaw Staff

1. Except as provided in subsection 2, a corporation may lend money to, guarantee or pledge its assets as security for an obligation of, become a surety for, or otherwise financially assist a person, if the transaction, or a class of transactions to which the transaction belongs, is approved by the board and:

a. Is in the usual and regular course of activities of the corporation;

b. Is with, or for the benefit of:

(1) A related organization;

(2) An organization in which the corporation has a financial interest;

(3) A person or organization with whom the corporation has a relationship in the usual and regular course of its activities; or

(4) An organization to which the corporation has the power to make donations; or

c. Has been approved by:

(1) Two-thirds of the members with voting rights; or

(2) If there is no member with voting rights, by two-thirds of the board.

2. A corporation may not lend money to or guarantee the obligation of a director or officer of the corporation or a related organization, or of the spouse, parents, children and spouses of children, brothers and sisters or spouses of brothers and sisters of the director or officer.

a. If a loan or guarantee is made in violation of this section, the borrower's liability on the loan is not affected.

b. The directors of a corporation who vote for or assent to the making of a loan to a director or officer of the corporation, or who vote for or assent to the guarantee of the obligation of a director or officer of the corporation, and any officer participating in the making of such loan or guarantee shall be jointly and severally liable to the corporation for the amount of the loan until its repayment.

c. This subsection does not prohibit an advance of money for expenses authorized by section 10-33-83.

3. A loan, guarantee, surety contract, or other financial assistance under subsection 1 or 2 may be with or without interest and may be unsecured or secured.

4. This section does not grant authority to act as a bank or to carry on the business of banking.

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Cite this article: FindLaw.com - North Dakota Century Code Title 10. Corporations § 10-33-82. Loans--Guarantees--Suretyship - last updated January 01, 2024 | https://codes.findlaw.com/nd/title-10-corporations/nd-cent-code-sect-10-33-82/

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