§ 10A-3A-8.30 — Standards of Conduct for Directors

Alabama § 10A-3A-8.30

• Jurisdiction: Alabama
• Title 10A: Alabama Business and Nonprofit Entities Code
• Ch. 3A: Alabama Nonprofit Corporation Law
• Art. 8: Directors and Officers
• Div. C: Directors

Text

Division C of Article 3 of Chapter 1 shall not apply to this chapter. Instead:
(a) Each member of the board of directors, when discharging the duties of a director, shall act: (i) in good faith, and (ii) in a manner the director reasonably believes to be in the best interests of the nonprofit corporation.
(b) The members of the board of directors or a board committee, when becoming informed in connection with their decision-making function or devoting attention to their oversight function, shall discharge their duties with the care that a person in a like position would reasonably believe appropriate under similar circumstances.
(c) In discharging board of directors or board committee duties, a director shall disclose, or cause to be disclosed, to the other board of directors or board committee members information not already known by them but known by the director to be material to the discharge of their decision-making or oversight functions, except that disclosure is not required to the extent that the director reasonably believes that doing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule.
(d) In discharging board of directors or board committee duties, a director who does not have knowledge that makes reliance unwarranted is entitled to rely on the performance by any of the persons specified in subsection (f)(1) or subsection (f)(3) to whom the board of directors may have delegated, formally or informally by course of conduct, the authority or duty to perform one or more of the board of directors’ functions that are delegable under applicable law.
(e) In discharging board of directors or board committee duties, a director who does not have knowledge that makes reliance unwarranted is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, prepared or presented by any of the persons specified in subsection (f).
(f) A director is entitled to rely, in accordance with subsection (d) or (e), on:
(1) one or more officers, employees, or volunteers of the nonprofit corporation or one or more persons associated with the nonprofit corporation, whom the director reasonably believes to be reliable and competent in the functions performed or the information, opinions, reports, or statements provided;
(2) legal counsel, public accountants, or other persons retained by the nonprofit corporation as to matters involving skills or expertise the director reasonably believes are matters (i) within the particular person’s professional or expert competence, or (ii) as to which the particular person merits confidence; or
(3) a board committee of which the director is not a member if the director reasonably believes the committee merits confidence.
(g) Except as set forth in subsections (a) and (b), a director, when discharging the duties of a director, has no duty to any person other than the nonprofit corporation.

Legislative History

(Act 2023-503, §1.)