Corporate Services of Nevada

LEGAL ADVANTAGES; A COMPARISON WITH DELAWARE (continued)
Not intended to be legal advice, for discussion purposes only.

4. Vacancies on the Board of Directors
Vacancies on the board of directors of a Nevada corporation may be filled by vote of a majority of the remaining directors, though less than a quorum, unless the articles of incorporation provide otherwise. Nev. Rev. Stat. § 78.335(5).

Under Delaware law, vacancies on the board of directors are similarly filled by the affirmative vote of a majority of the remaining directors then in office, even if less than a quorum, unless otherwise provided in the certificate of incorporation or bylaws. Del. Code Ann. tit. viii, § 223.

5.   Removal of Directors
Under both Nevada and Delaware law, any director or the entire board of directors may be removed, with or without cause, upon the vote of the shares entitled to vote in the election of directors. See Nev. Rev. Stat. § 78.335; Del. Code Ann. tit. viii, § 141(k).

For Nevada corporations, generally, any director may be removed by the vote of stockholders representing not less than two-thirds of the voting power of the issued and outstanding stock entitled to vote. Nev. Rev. Stat. § 78.335(1).   For corporations that elect directors with cumulative voting, any director or directors who constitute fewer than all of the directors may not be removed except upon the vote of stockholders owning sufficient shares to prevent each director’s election to office at the time of removal. Nev. Rev. Stat. § 78.335(2). Under Delaware law, a majority vote is required to remove a director with or without cause, subject to two exceptions under which a director may be removed only for cause. Del. Code Ann. tit. viii, § 141(k)(1-2).

6. Indemnification of Officers and Directors and Advancement of Expenses
Nevada and Delaware have substantially similar provisions regarding indemnification by a corporation of its officers, directors, employees, and agents, except that Nevada provides broader indemnification in connection with stockholder derivative lawsuits. See Nev. Rev. Stat. §§ 78.7502, 78.751, 78.752; Del. Code Ann. tit. viii, § 145.

Under Nevada law, the articles of incorporation, bylaws, or an agreement made by the corporation may provide that the corporation must pay advancements of expenses in advance of the final disposition of the action, suit, or proceedings upon receipt of an undertaking by or on behalf of the director or officer to repay the amount even if it is ultimately determined that he or she is not entitled to be indemnified by the corporation. Nev. Rev. Stat. § 78.751(2).   Thus, under such circumstances, a Nevada corporation may contractually provide for indemnification without the need for further approval. Delaware law provides that expenses incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding as the corporation deems appropriate may be paid by the corporation in advance of the final disposition of the action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined that he or she is not entitled to be indemnified by the corporation. Del. Code Ann. tit. viii, § 145(a)-(e). Thus, absent an agreement to the contrary, a Delaware corporation has the discretion to decide whether or not to advance expenses.