The statutory liabilities of a New York business corporation's shareholders, officers and directors.

Jul 14, 2021

Law Offices of John Kiritsis, Esq. Phone: 212-922-0005

By: John Kiritsis, Esq., CPA, MBA, MS, JD, LL.M

 

A review of the New York Business Corporation Law (BCL) statutes would generally be necessary, with regards to addressing corporate governance issues, involving business corporations of New York.  This is a relatively complex area of the law, which is consistently changing all the time. 

 

Under Section 630 of the BCL, the ten largest shareholders of a corporation, which is not a registered investment company and no shares of which are publicly traded, are jointly and severally liable to its employees for all wages due them for services they performed for the corporation.

 

Directors are jointly and severally liable if they vote for or concur (a director is presumed to concur unless he or she expressly dissents) in a declaration of dividends or purchase of shares contrary to Section 513 of the BCL or a loan to a director contrary to Sections 714 and 719 of the BCL.

 

It is worth noting, that subject to Section 720 of the BCL, there is a cause of action against a director or officer for self-dealing or loss or waste of corporate assets.

 

Although, the recent revisions brought about by the 1998 revisions, have brought New York corporate laws with regards to this area of the law, more in line with other States – it should be noted that significant changes can be construed when comparing the New York BCL with the functionally equivalent statutory frameworks of other States.

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