N.Y. Business Corporation Law § 714: Loans to directors

§ 714. Loans to directors.

(a) A corporation may not lend money to or guarantee the obligation of

a director of the corporation unless:

(1) the particular loan or guarantee is approved by the shareholders,

with the holders of a majority of the votes of the shares entitled to

vote thereon constituting a quorum, but shares held of record or

beneficially by directors who are benefitted by such loan or guarantee

shall not be entitled to vote or to be included in the determination of

a quorum; or

(2) with respect to any corporation in existence on the effective date

of this subparagraph (2) the certificate of incorporation of which

expressly provides such and with respect to any corporation incorporated

after the effective date of this subparagraph (2), the board 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.

(b) The fact that a loan or guarantee is made in violation of this

section does not affect the borrower's liability on the loan.