Strange Company Bylaws :Is this common?

Published by: smith 2010-03-12

Is this a standard bylaw to add to a company formed in Nevada? The officers totally screwed over the company, to the point that 2 of the signatures on this bylaw were forged. They claim that this is a standard addition, and is very common. They reason they did not they forged the shareholders agreements was they were sure they would agree to this standard clause. Is this standard? 1. Article II of the By-Laws is amended to add Paragraph 8 as follows: 8. LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICER To the fullest extent permitted by law, no director or officer of the Corporation shall be personally liable to the Corporation or its shareholders for damages for breach of any duty owed to the Corporation or its shareholders. In addition, the Corporation shall have the power, in its By-Laws or in any resolution of its shareholders or directors, to undertake to indemnify the officers and directors of this Corporation against any contingency or peril as may be determined to be in the best interests of this Corporation, and in conjunction therewith, to procure, at this corporation's expense, policies of insurance. The undersigned by his signature below, hereby consents to this action without notice and without a meeting, and adopt the foregoing Resolution.

The signature is mine... I would have never agreed to it, and did not. This is from an SEC filing. We paid someone $50,000 (and were supposed to pay him another $50k when the job was done) to setup a shell, make it tradable on the Pink Sheets, and get a loan for the company. It turns out the whole thing was a scam. The people who ran the scam made themselves officers of the company, and did the filings.

Dear edgreen321-ga; Thank you for allowing me an opportunity to answer your interesting question. They are correct that this clause is standard legalese used for by-laws or for other contractual agreements designed to indemnify particular person or positions within an organization. How “common” such an indemnification is in the particular corporate entity you are referring to remains to be seen and only an attorney can advise you further with regard to the appropriateness of the clause. It is interesting, however, that in Nevada Corporate Law (81.090 Bylaws: Permissible provisions), no mention is made of an indemnification clause when outlining additional permissible provisions. This of course is not to say that it is NOT permissible, but simply that such a clause is not mentioned “specifically” by corporate law. Logically, this leads a person to question how common such a clause really is within coporations at large. While the wording (when the clause “is” used) is obviously standard, the clause itself, as applied in this instance, may not be and the timing with wich it was adopted may also be questionable depending on the individual circumstances and the "odd" way it was presented. They “may” also be correct in their assumption that those persons for whom signatures were forged would have ultimately agreed to such a disclaimer, but this does not necessiarily make an exemption that would allow them to affix signatures without going the the formal channels established by corporate and contractual law. The only way to dispute this of course would be to poll the individuals themselves whose signatures were forged and find out from them personally if they did indeed agree to the support the clause by a two-thirds majority in order to ammend the by-laws. What is ironic about this is that the organization unquestionably attempted to maintain and cover all legal and civil bases, but in doing so they may very well have exceeded their legal authority by forging the signatures to the very document that is proposed to protect them. The question now, I presume, is whether or not the clause is deemed void due to this unorthodox act. Unfortunately, since policy prohibits us from practicing law or advising on legal matters, only a licensed attorney can instruct you from here. In short, the answer to your question is “yes” this is a standard clause; and “no” the forging of signatures on a legal document is never an acceptable or a legal practice unless the party affixing the signature has the legal authority (i.e. power of attorney) to do so. In my (unlicensed) opinion you may have a basis upon which you can make a legal point if your primary interest is to suggest some sort of incompetence on the part of the corporate board (or perhaps allude to deceptive practices). Whether or not punitive measures would be taken against the corporation or it’s officers for such an act would be an issue that only a court (or an arbitrator) could decide. I hope you find that that my research exceeds your expectations. If you have any questions about my research please post a clarification request prior to rating the answer. I welcome your rating and your final comments and I look forward to working with you again in the near future. Thank you for bringing your question to us. Best regards; Tutuzdad-ga INFORMATION SOURCES NRS 81: NEVADA LAW GOVERNING MISCELLANEOUS ORGANIZATIONS See: 81.080 Bylaws: Adoption; amendment; effectiveness. 81.090 Bylaws: Permissible provisions. 81.100 Bylaws: Provisions for unequal property rights. http://www.lectlaw.com/files/sts12.htm SEARCH STRATEGY SEARCH ENGINE USED: Google ://www.google.com SEARCH TERMS USED: NEVADA CORPORATE LAW NEVADA BY-LAWS NEVADA CRIMINAL STATUTES NEVADA CRIMINAL CODE

This changes things dramaticially of course. In this instance I'd suspect that you most certainly have a valid complaint in which you, as a victim, could probably expect a legal remedy up to, or possibly including restitution (if applicable), potential punitive damages or conviction of the offender(s). Legally, it would be difficult for the corporation to defend this action in view of the fact that you are the aggrieved party and willing to testify against them. In addition, I believe that a court would hold that if your signature was affixed to a document without your consent with the explicit purpose to defraud or deceive both investors and the governement (SEC & IRS) this would serve as prima facie evidence as to the intent to knowingly commit the crime of forgery. I recommend you consult your attorney. Good luck. Regards; tutuzdad-ga