NRS
78.138 Directors and officers: Fiduciary duties; exercise of powers;
presumptions and considerations; liability to corporation, stockholders and
creditors.
1. The fiduciary duties of directors and
officers are to exercise their respective powers in good faith, on an informed
basis and with a view to the interests of the corporation.
2. In exercising their respective powers, directors
and officers may, and are entitled to, rely on information, opinions, reports,
books of account or statements, including financial statements and other
financial data, that are prepared or presented by:
(a) One or more directors, officers or employees
of the corporation reasonably believed to be reliable and competent in the
matters prepared or presented;
(b) Counsel, public accountants, financial
advisers, valuation advisers, investment bankers or other persons as to matters
reasonably believed to be within the preparer’s or presenter’s professional or
expert competence; or
(c) A committee on which the director or officer
relying thereon does not serve, established in accordance with NRS 78.125, as to matters within the
committee’s designated authority and matters on which the committee is
reasonably believed to merit confidence,
Ê but a
director or officer is not entitled to rely on such information, opinions,
reports, books of account or statements if the director or officer has
knowledge concerning the matter in question that would cause reliance thereon
to be unwarranted.
3. Except as otherwise provided in
subsection 1 of NRS 78.139, directors and
officers, in deciding upon matters of business, are presumed to act in good
faith, on an informed basis and with a view to the interests of the
corporation. A director or officer is not individually liable for damages as a
result of an act or failure to act in his or her capacity as a director or
officer except as described in subsection 7.
4. Directors and officers, in exercising
their respective powers with a view to the interests of the corporation, may:
(a) Consider all relevant facts, circumstances,
contingencies or constituencies, which may include, without limitation, one or
more of the following:
(1) The interests of the corporation’s
employees, suppliers, creditors or customers;
(2) The economy of the State or Nation;
(3) The interests of the community or of
society;
(4) The long-term or short-term interests
of the corporation, including the possibility that these interests may be best
served by the continued independence of the corporation; or
(5) The long-term or short-term interests
of the corporation’s stockholders, including the possibility that these
interests may be best served by the continued independence of the corporation.
(b) Consider or assign weight to the interests of
any particular person or group, or to any other relevant facts, circumstances,
contingencies or constituencies.
5. Directors and officers are not required
to consider, as a dominant factor, the effect of a proposed corporate action
upon any particular group or constituency having an interest in the
corporation.
6. The provisions of subsections 4 and 5
do not create or authorize any causes of action against the corporation or its
directors or officers.
7. Except as otherwise provided in NRS 35.230, 90.660, 91.250,
452.200, 452.270, 668.045
and 694A.030, or unless the articles
of incorporation or an amendment thereto, in each case filed on or after
October 1, 2003, provide for greater individual liability, a director or
officer is not individually liable to the corporation or its stockholders or
creditors for any damages as a result of any act or failure to act in his or
her capacity as a director or officer unless:
(a) The presumption established by subsection 3
has been rebutted; and
(b) It is proven that:
(1) The director’s or officer’s act or
failure to act constituted a breach of his or her fiduciary duties as a
director or officer; and
(2) Such breach involved intentional
misconduct, fraud or a knowing violation of law.
8. This section applies to all cases,
circumstances and matters, including, without limitation, any change or
potential change in control of the corporation unless otherwise provided in the
articles of incorporation or an amendment thereto.
(Added to NRS by 1991,
1184; A 1993,
951; 1999,
1580; 2001,
3171; 2003,
3084; 2017,
3998; 2019,
90; 2021,
1501; 2025,
795)
Notes of Decisions
Cited in
45
cases (
16 in the last 5 years), 1994–2025 · leading case:
Guzman Vs. Johnson, 2021 NV 13 (Nev. 2021).
Guzman Vs. Johnson, 2021 NV 13 (Nev. 2021).
· cites it 52× “The individual directors and AMC moved to dismiss under NRCP 12(b)(5), arguing that Guzman failed to rebut the business judgment rule under NRS 78.138. Guzman countered that she sufficiently pleaded facts to rebut the business judgment rule by arguing the fiduciaries here were…”
Shoen v. SAC Holding Corp., 137 P.3d 1171 (Nev. 2006).
· cites it 5× “” 10 In 1991, the Nevada Legislature codified the business judgment rule at NRS 78.138. 11 In managing the corporation’s affairs, the board of directors may generally decide whether to take legal action on the corporation’s behalf.”
Pikk v. Pedersen, 826 F.3d 1222 (10th Cir. 2016).
· cites it 4× “Nev. Rev. Stat. § 78.138 (7). Most important here, the Director Defendants are not liable unless their actions constituted “intentional misconduct, fraud or a knowing violation of law.”
Louisiana Mun. Police Employees' Ret. Sys. v. Wynn, 829 F.3d 1048 (9th Cir. 2016).
· cites it 2× “Nev. Rev. Stat. § 78.138 (7)(b). The complaint acknowledges that Steve Wynn had obtained a legal opinion blessing the donation, but alleges that the directors did not request to see the opinion before the vote.”
Glenbrook Capital Ltd. P'ship v. Dodds, 252 P.3d 681 (Nev. 2011).
· cites it 4× “Respondents contend that this court should affirm the district court’s order because appellants have not overcome the presumption that respondents acted in good faith.”
In Re Amerco Derivative Litig., 252 P.3d 681 (Nev. 2011).
· cites it 4× “As a consequence, it is clear that the bankruptcy court order provides no basis for resolving whether the directors were interested for purposes of demand futility. [10] Respondents contend that this court should affirm the district court's order because appellants have not…”
Hilton Hotels Corp. v. ITT Corp., 978 F. Supp. 1342 (D. Nev. 1997).
· cites it 5× “§ 78.138 addresses several powers of a corporate board in undertaking defensive measures to resist a hostile takeover, nothing in the Nevada statutes, or elsewhere in the law of Nevada, authorizes the incumbent board of a corporation to entrench itself by effectively removing…”
Chur Vs. Dist. Ct. (state, Comm'r of Ins.), 2020 NV 7 (Nev. 2020).
· cites it 60× “We further conclude that the gross negligence-based allegations in the operative complaint below fail to state an actionable claim under NRS 78.138. FACTS AND PROCEDURAL HISTORY Petitioners (collectively, the Directors) formerly served as directors of Lewis & Clark LTC Risk…”
Tsatas v. Airborne Wireless Network, Inc. (D. Nev. 2023).
· cites it 24× “Whether the FAC Fails to Comply with NRS 78.138(7) and Whether 17 the FAC’s Common Law Causes of Action Would be Subsumed in a 18 NRS 78.”
Rocker v. Centex Corp., 377 S.W.3d 907 (Tex. App. 2012).
“” See Nev.Rev.Stat. § 78.138(7) (West, Westlaw through 76th Reg.”
— Nev. Rev. Stat. § 78.138(1) — 2 cases
— Nev. Rev. Stat. § 78.138(2) — 4 cases
— Nev. Rev. Stat. § 78.138(3) — 10 cases
Shoen v. SAC Holding Corp., 137 P.3d 1171 (Nev. 2006).
“” 10 In 1991, the Nevada Legislature codified the business judgment rule at NRS 78.138. 11 In managing the corporation’s affairs, the board of directors may generally decide whether to take legal action on the corporation’s behalf.”
Guzman Vs. Johnson, 2021 NV 13 (Nev. 2021).
“The individual directors and AMC moved to dismiss under NRCP 12(b)(5), arguing that Guzman failed to rebut the business judgment rule under NRS 78.138. Guzman countered that she sufficiently pleaded facts to rebut the business judgment rule by arguing the fiduciaries here were…”
Chur Vs. Dist. Ct. (state, Comm'r of Ins.), 2020 NV 7 (Nev. 2020).
“We further conclude that the gross negligence-based allegations in the operative complaint below fail to state an actionable claim under NRS 78.138. FACTS AND PROCEDURAL HISTORY Petitioners (collectively, the Directors) formerly served as directors of Lewis & Clark LTC Risk…”
— Nev. Rev. Stat. § 78.138(4) — 1 case
— Nev. Rev. Stat. § 78.138(4)(b) — 1 case
— Nev. Rev. Stat. § 78.138(5) — 2 cases
— Nev. Rev. Stat. § 78.138(7) — 21 cases
Guzman Vs. Johnson, 2021 NV 13 (Nev. 2021).
“The individual directors and AMC moved to dismiss under NRCP 12(b)(5), arguing that Guzman failed to rebut the business judgment rule under NRS 78.138. Guzman countered that she sufficiently pleaded facts to rebut the business judgment rule by arguing the fiduciaries here were…”
Glenbrook Capital Ltd. P'ship v. Dodds, 252 P.3d 681 (Nev. 2011).
“Respondents contend that this court should affirm the district court’s order because appellants have not overcome the presumption that respondents acted in good faith.”
In Re Amerco Derivative Litig., 252 P.3d 681 (Nev. 2011).
“As a consequence, it is clear that the bankruptcy court order provides no basis for resolving whether the directors were interested for purposes of demand futility. [10] Respondents contend that this court should affirm the district court's order because appellants have not…”
Shoen v. SAC Holding Corp., 137 P.3d 1171 (Nev. 2006).
“” 10 In 1991, the Nevada Legislature codified the business judgment rule at NRS 78.138. 11 In managing the corporation’s affairs, the board of directors may generally decide whether to take legal action on the corporation’s behalf.”
— Nev. Rev. Stat. § 78.138(7)(2) — 1 case
— Nev. Rev. Stat. § 78.138(7)(a) — 2 cases
Chur Vs. Dist. Ct. (state, Comm'r of Ins.), 2020 NV 7 (Nev. 2020).
“We further conclude that the gross negligence-based allegations in the operative complaint below fail to state an actionable claim under NRS 78.138. FACTS AND PROCEDURAL HISTORY Petitioners (collectively, the Directors) formerly served as directors of Lewis & Clark LTC Risk…”
— Nev. Rev. Stat. § 78.138(7)(b) — 8 cases
Glenbrook Capital Ltd. P'ship v. Dodds, 252 P.3d 681 (Nev. 2011).
“Respondents contend that this court should affirm the district court’s order because appellants have not overcome the presumption that respondents acted in good faith.”
In Re Amerco Derivative Litig., 252 P.3d 681 (Nev. 2011).
“As a consequence, it is clear that the bankruptcy court order provides no basis for resolving whether the directors were interested for purposes of demand futility. [10] Respondents contend that this court should affirm the district court's order because appellants have not…”
Chur Vs. Dist. Ct. (state, Comm'r of Ins.), 2020 NV 7 (Nev. 2020).
“We further conclude that the gross negligence-based allegations in the operative complaint below fail to state an actionable claim under NRS 78.138. FACTS AND PROCEDURAL HISTORY Petitioners (collectively, the Directors) formerly served as directors of Lewis & Clark LTC Risk…”
— Nev. Rev. Stat. § 78.138(7)(b)(1) — 1 case
— Nev. Rev. Stat. § 78.138(7)(b)(2) — 3 cases
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