ANNAPOLIS -- The House Judiciary Committee is expected to vote Tuesday on an administration-backed bill that would allow Maryland corporations to extend protection to their officers and directors against stockholder-initiated lawsuits.

The legislation would allow stockholders of Maryland corporations to decide whether to expand or limit the liability of directors and officers for money damages in stockholder-initiated suits.

As drafted, the bill would bar corporations from extending that protection to anyone whose actions were deliberately dishonest, which makes it unlike any other of the laws in 35 states with the protection.

On Tuesday the committee will consider the bill with an amendment proposed last week by Delegate Robert Flanagan (R-Howard), who wants to expand the measure so that protection could be barred for a director or officer over "acts or omissions not in good faith."

Flanagan said his amendment, patterned after Delaware's corporate liability bill, would give corporations more leeway with the protection and would set a standard for officers and directors to act in the best interest of the company.

Eighteen states with similar laws embrace the "duty of loyalty" provision in Flanagan's amendment. "I'm just trying to apply a little common sense," he said. "There has to be a general standard."

In the 1987 session, a similar corporate liability bill died in the Judiciary Committee. Changes over the summer made the measure -- which has been pushed as a crucial incentive for businesses considering incorporating in Maryland -- more palatable to legislators, administration officials believe.

Thirty-five states extend such protection at least to directors; a handful offer the provision for both directors and officers. Last year's bill did not extend the protection to corporate officers.

Administration officials contend the legislation would help Maryland attract and retain corporations by creating a more favorable business climate.

Several Maryland business leaders have praised the bill, but some businessmen split with the Schaefer administration last week over the bill's proposal to exclude financial institutions from some of its provisions. And the Maryland Trial Lawyers' Association said the same proposal could open a gaping loophole in the state's regulatory powers.

Jim Hanks, chairman of the state bar association subcommittee that helped draft the measure, described it as moderate legislation, "not radical, not far out."