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(a) A corporation may not lend money to or guarantee the obligation of a director of the corporation unless:
(1) the particular loan or guarantee is approved by the shareholders, with the holders of a majority of the votes of the shares entitled to vote thereon constituting a quorum, but shares held of record or beneficially by directors who are benefitted by such loan or guarantee shall not be entitled to vote or to be included in the determination of a quorum; or
(2) with respect to any corporation in existence on the effective date of this subparagraph (2) the certificate of incorporation of which expressly provides such and with respect to any corporation incorporated after the effective date of this subparagraph (2), the board determines that the loan or guarantee benefits the corporation and either approves the specific loan or guarantee or a general plan authorizing loans and guarantees.
(b) The fact that a loan or guarantee is made in violation of this section does not affect the borrower's liability on the loan.
Cite this article: FindLaw.com - New York Consolidated Laws, Business Corporation Law - BSC § 714. Loans to directors - last updated January 01, 2021 | https://codes.findlaw.com/ny/business-corporation-law/bsc-sect-714.html
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