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HomeCorporations CodeCh. 2Art. 2§ 12363 Director Removal For Misconduct

§ 12363 Director Removal For Misconduct

Corporations Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 12363 Director Removal For Misconduct

This law lets shareholders who own at least 5% of the voting power go to court to remove a director if they act dishonestly or abuse their power, and the court can also stop that director from being elected again for a set time.

Key Takeaways

  • •Shareholders with 5% of voting power can start a lawsuit to remove a director.
  • •The court can remove a director for fraud, dishonesty, or serious abuse of authority.
  • •The court may also bar that director from being reelected for a time it chooses.
  • •The corporation must be included as a party in the lawsuit.

Example

A company director secretly takes money from the business and lies about it.

Shareholders who own 5% of the voting shares can sue and ask the court to fire that director and prevent him from running for office again for a period the court decides.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 12363 Director Removal For Misconduct

The superior court of the proper county may, at the suit of a director, or members possessing 5 percent of the voting power, remove from office any director in case of fraudulent or dishonest acts or gross abuse of authority or discretion with reference to the corporation and may bar from reelection any director so removed for a period prescribed by the court. The corporation shall be made a party to such action. (Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

Last verified: January 10, 2026

Key Terms

fraudulent or dishonest actsgross abuse of authority or discretion

Related Statutes

  • § 5223 Director Removal For Misconduct
  • § 7223 Director Removal For Misconduct
  • § 12360 Director Term Limits
  • § 12361 Director Removal Conditions
  • § 12362 Director Removal By Members

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Corporations Code. Section 12363.
View Official Source