Chapter 180

180.0831 180.0831 Director conflict of interest.

180.0831(1) (1) In this section, “conflict of interest transaction” means a transaction with the corporation in which a director of the corporation has a direct or indirect interest.

180.0831(2) (2) A conflict of interest transaction is not voidable by the corporation solely because of the director’s interest in the transaction if any of the following is true:

180.0831(2)(a) (a) The material facts of the transaction and the director’s interest were disclosed or known to the board of directors or a committee of the board of directors and the board of directors or committee authorized, approved or specifically ratified the transaction under sub. (4).

180.0831(2)(b) (b) The material facts of the transaction and the director’s interest were disclosed or known to the shareholders entitled to vote and they authorized, approved or specifically ratified the transaction under sub. (5).

180.0831(2)(c) (c) The transaction was fair to the corporation.

180.0831(3) (3) For purposes of this section, the circumstances in which a director of the corporation has an indirect interest in a transaction include but are not limited to a transaction under any of the following circumstances:

180.0831(3)(a) (a) Another entity in which the director has a material financial interest or in which the director is a general partner is a party to the transaction.

180.0831(3)(b) (b) Another entity of which the director is a director, officer or trustee is a party to the transaction and the transaction is or, because of its significance to the corporation, should be considered by the board of directors of the corporation.

180.0831(4) (4) For purposes of sub. (2) (a), a conflict of interest transaction is authorized, approved or specifically ratified if it receives the affirmative vote of a majority of the directors on the board of directors or on the committee acting on the transaction, who have no direct or indirect interest in the transaction. If a majority of the directors who have no direct or indirect interest in the transaction vote to authorize, approve or ratify the transaction, a quorum is present for the purpose of taking action under this section. The presence of, or a vote cast by, a director with a direct or indirect interest in the transaction does not affect the validity of any action taken under sub. (2) (a) if the transaction is otherwise authorized, approved or ratified as provided in this section.

180.0831(5) (5) For purposes of sub. (2) (b), a conflict of interest transaction is authorized, approved or specifically ratified if it receives the vote of a majority of the shares entitled to be counted under this subsection. Shares owned by or voted under the control of a director who has a direct or indirect interest in the transaction, and shares owned by or voted under the control of an entity described in sub. (3) (a), may not be counted in a vote of shareholders to determine whether to authorize, approve or ratify a conflict of interest transaction under sub. (2) (b). The vote of those shares shall be counted in determining whether the transaction is approved under other sections of this chapter. A majority of the shares, whether or not present, that are entitled to be counted in a vote on the transaction under this subsection constitutes a quorum for the purpose of taking action under this section.

180.0831 History History: 1989 a. 303.

180.0832 180.0832 Loans to directors.

180.0832(1) (1) Except as provided in sub. (3), a corporation may not lend money to or guarantee the obligation of a director of the corporation unless any of the following occurs:

180.0832(1)(a) (a) The particular loan or guarantee is approved by a majority of the votes represented by the outstanding voting shares of all classes, voting as a single voting group, except the votes of shares owned by or voted under the control of the benefited director.

180.0832(1)(b) (b) The corporation’s board of directors 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.

180.0832(2) (2) The fact that a loan or guarantee is made in violation of this section does not affect the borrower’s liability on the loan.

180.0832(3) (3) This section does not apply to an advance to a director that is permitted by s. 180.0853 or 180.0858 or that is made to defray expenses incurred by the director in the ordinary course of the corporation’s business.

180.0832 History History: 1989 a. 303.

180.0833 180.0833 Liability for unlawful distributions.

180.0833(1) (1) Except as provided in sub. (3), a director who votes for or assents to a distribution made in violation of s. 180.0640 or the articles of incorporation is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating s. 180.0640 or the articles of incorporation, if it is established that the director’s vote or assent constitutes conduct described by s. 180.0828 (1) (a), (b), (c) or (d). In any proceeding brought under this section, a director has all of the defenses ordinarily available to a director.

180.0833(2) (2) A director who is liable under sub. (1) for an unlawful distribution is entitled to contribution from all of the following persons:

180.0833(2)(a) (a) Every other director who could be held liable under sub. (1) for the unlawful distribution.

180.0833(2)(b) (b) Each shareholder for the amount that the shareholder accepted knowing that the distribution was made in violation of s. 180.0640 or the articles of incorporation.

180.0833(3) (3) A proceeding under this section is barred unless it is brought within 2 years after the date on which the effect of the distribution was measured under s. 180.0640 (5).

180.0833 History History: 1989 a. 303.

180.0840 180.0840 Officers.

180.0840(1) (1) A corporation shall have the officers described in its bylaws or appointed by its board of directors by resolution not inconsistent with the bylaws.

180.0840(2) (2) A duly appointed officer may appoint one or more officers or assistant officers if authorized by the bylaws or the board of directors.

180.0840(3) (3) The same natural person may simultaneously hold more than one office in a corporation.

180.0840 History History: 1989 a. 303; 1991 a. 16.

180.0841 180.0841 Duties of officers. Each officer has the authority and shall perform the duties set forth in the bylaws or, to the extent not inconsistent with the bylaws, the duties prescribed by the board of directors or by direction of an officer authorized by the bylaws or by the board of directors to prescribe the duties of other officers.

180.0841 History History: 1989 a. 303.

180.0843 180.0843 Resignation and removal of officers.

180.0843(1) (1) An officer may resign at any time by delivering notice to the corporation that complies with s. 180.0141. The resignation is effective when the notice is delivered, unless the notice specifies a later effective date and the corporation accepts the later effective date. If a resignation is effective at a later date, the corporation’s board of directors may fill the pending vacancy before the effective date if the board of directors provides that the successor may not take office until the effective date.

180.0843(2) (2) The board of directors may remove any officer and, unless restricted by the bylaws or by the board of directors, an officer may remove any officer or assistant officer appointed by that officer under s. 180.0840 (2), at any time, with or without cause and notwithstanding the contract rights, if any, of the officer removed.

180.0843 History History: 1989 a. 303.

180.0844 180.0844 Contract rights of officers.

180.0844(1) (1) The appointment of an officer does not itself create contract rights.

180.0844(2) (2) Except as provided in s. 180.0843 (2), an officer’s resignation or removal is subject to any remedies provided by any contract between the officer and the corporation or otherwise provided by law.

180.0844 History History: 1989 a. 303.

180.0850 180.0850 Definitions applicable to indemnification and insurance provisions. In ss. 180.0850 to 180.0859:

180.0850(1) (1) “Corporation” means a domestic corporation and any domestic or foreign predecessor of a domestic corporation where the predecessor corporation’s existence ceased upon the consummation of a merger or other transaction.

180.0850(2) (2) “Director or officer” of a corporation means any of the following:

180.0850(2)(a) (a) An individual who is or was a director or officer of the corporation.

180.0850(2)(b) (b) An individual who, while a director or officer of the corporation, is or was serving at the corporation’s request as a director, officer, partner, trustee, member of any governing or decision-making committee, manager, employee or agent of another corporation or foreign corporation, limited liability company, partnership, joint venture, trust or other enterprise.

180.0850(2)(c) (c) An individual who, while a director or officer of the corporation, is or was serving an employee benefit plan because his or her duties to the corporation also impose duties on, or otherwise involve services by, the person to the plan or to participants in or beneficiaries of the plan.

180.0850(2)(d) (d) Unless the context requires otherwise, the estate or personal representative of a director or officer.

180.0850(3) (3) “Expenses” include fees, costs, charges, disbursements, attorney fees and any other expenses incurred in connection with a proceeding.

180.0850(4) (4) “Liability” includes the obligation to pay a judgment, settlement, forfeiture, or fine, including an excise tax assessed with respect to an employee benefit plan, plus costs, fees, and surcharges imposed under ch. 814, and reasonable expenses.

180.0850(5) (5) “Party” includes an individual who was or is, or who is threatened to be made, a named defendant or respondent in a proceeding.

180.0850(6) (6) “Proceeding” means any threatened, pending or completed civil, criminal, administrative or investigative action, suit, arbitration or other proceeding, whether formal or informal, which involves foreign, federal, state or local law and which is brought by or in the right of the corporation or by any other person.

180.0850 History History: 1989 a. 303; 1993 a. 112; 2003 a. 139.

180.0851 180.0851 Mandatory indemnification.

180.0851(1) (1) A corporation shall indemnify a director or officer, to the extent that he or she has been successful on the merits or otherwise in the defense of a proceeding, for all reasonable expenses incurred in the proceeding if the director or officer was a party because he or she is a director or officer of the corporation.

180.0851(2) (2) 

180.0851(2)(a) (a) In cases not included under sub. (1), a corporation shall indemnify a director or officer against liability incurred by the director or officer in a proceeding to which the director or officer was a party because he or she is a director or officer of the corporation, unless liability was incurred because the director or officer breached or failed to perform a duty that he or she owes to the corporation and the breach or failure to perform constitutes any of the following:

180.0851(2)(a)1. 1. A willful failure to deal fairly with the corporation or its shareholders in connection with a matter in which the director or officer has a material conflict of interest.

180.0851(2)(a)2. 2. A violation of the criminal law, unless the director or officer had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful.

180.0851(2)(a)3. 3. A transaction from which the director or officer derived an improper personal profit.

180.0851(2)(a)4. 4. Willful misconduct.

180.0851(2)(b) (b) Determination of whether indemnification is required under this subsection shall be made under s. 180.0855.

180.0851(2)(c) (c) The termination of a proceeding by judgment, order, settlement or conviction, or upon a plea of no contest or an equivalent plea, does not, by itself, create a presumption that indemnification of the director or officer is not required under this subsection.

180.0851(3) (3) A director or officer who seeks indemnification under this section shall make a written request to the corporation.

180.0851(4) (4) 

180.0851(4)(a) (a) Indemnification under this section is not required to the extent limited by the articles of incorporation under s. 180.0852.

180.0851(4)(b) (b) Indemnification under this section is not required if the director or officer has previously received indemnification or allowance of expenses from any person, including the corporation, in connection with the same proceeding.

180.0851 History History: 1989 a. 303.

180.0851 Annotation Indemnification under this section is not self-executing. Certain formalities are required that prevent after-the-fact justification for taking corporate funds for personal use. Without these formalities, an officer could direct the corporation to pay funds for his own defense and only later assert that he or she had been indemnified by the corporation. Ehlinger v. Hauser, 2010 WI 54, 325 Wis. 2d 287, 785 N.W.2d 328, 07-0477.

180.0852 180.0852 Corporation may limit indemnification. A corporation’s articles of incorporation may limit its obligation to indemnify under s. 180.0851. Any provision of the articles of incorporation relating to a corporation’s power or obligation to indemnify that was in existence on June 13, 1987, does not constitute a limitation on the corporation’s obligation to indemnify under s. 180.0851. A limitation under this section applies if the first alleged act or omission of a director or officer for which indemnification is sought occurred while the limitation was in effect.

180.0852 History History: 1989 a. 303.

180.0853 180.0853 Allowance of expenses as incurred. Upon written request by a director or officer who is a party to a proceeding, a corporation may pay or reimburse his or her reasonable expenses as incurred if the director or officer provides the corporation with all of the following:

180.0853(1) (1) A written affirmation of his or her good faith belief that he or she has not breached or failed to perform his or her duties to the corporation.

180.0853(2) (2) A written undertaking, executed personally or on his or her behalf, to repay the allowance and, if required by the corporation, to pay reasonable interest on the allowance to the extent that it is ultimately determined under s. 180.0855 that indemnification under s. 180.0851 (2) is not required and that indemnification is not ordered by a court under s. 180.0854 (2) (b). The undertaking under this subsection shall be an unlimited general obligation of the director or officer and may be accepted without reference to his or her ability to repay the allowance. The undertaking may be secured or unsecured.

180.0853 History History: 1989 a. 303

180.0854 180.0854 Court-ordered indemnification.

180.0854(1) (1) Except as provided otherwise by written agreement between the director or officer and the corporation, a director or officer who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. Application shall be made for an initial determination by the court under s. 180.0855 (5) or for review by the court of an adverse determination under s. 180.0855 (1), (2), (3), (4) or (6). After receipt of an application, the court shall give any notice that it considers necessary.

180.0854(2) (2) The court shall order indemnification if it determines any of the following:

180.0854(2)(a) (a) That the director or officer is entitled to indemnification under s. 180.0851 (1) or (2). If the court also determines that the corporation unreasonably refused the director’s or officer’s request for indemnification, the court shall order the corporation to pay the director’s or officer’s reasonable expenses incurred to obtain the court-ordered indemnification.

180.0854(2)(b) (b) That the director or officer is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, regardless of whether indemnification is required under s. 180.0851 (2).

180.0854 History History: 1989 a. 303.

180.0855 180.0855 Determination of right to indemnification. Unless otherwise provided by the articles of incorporation or bylaws or by written agreement between the director or officer and the corporation, the director or officer seeking indemnification under s. 180.0851 (2) shall select one of the following means for determining his or her right to indemnification:

180.0855(1) (1) By a majority vote of a quorum of the board of directors consisting of directors who are not at the time parties to the same or related proceedings. If a quorum of disinterested directors cannot be obtained, by majority vote of a committee duly appointed by the board of directors and consisting solely of 2 or more directors who are not at the time parties to the same or related proceedings. Directors who are parties to the same or related proceedings may participate in the designation of members of the committee.

180.0855(2) (2) By independent legal counsel selected by a quorum of the board of directors or its committee in the manner prescribed in sub. (1) or, if unable to obtain such a quorum or committee, by a majority vote of the full board of directors, including directors who are parties to the same or related proceedings.

180.0855(3) (3) By a panel of 3 arbitrators consisting of one arbitrator selected by those directors entitled under sub. (2) to select independent legal counsel, one arbitrator selected by the director or officer seeking indemnification and one arbitrator selected by the 2 arbitrators previously selected.

180.0855(4) (4) By an affirmative vote of shares as provided in s. 180.0725. Shares owned by, or voted under the control of, persons who are at the time parties to the same or related proceedings, whether as plaintiffs or defendants or in any other capacity, may not be voted in making the determination.

180.0855(5) (5) By a court under s. 180.0854.

180.0855(6) (6) By any other method provided for in any additional right to indemnification permitted under s. 180.0858.

180.0855 History History: 1989 a. 303.