§ 4-28-623 — Duties of managers

(a) A manager owes to the unincorporated nonprofit association and to its members the fiduciary duties of loyalty and care. (b) A manager shall manage the unincorporated nonprofit association in good faith, in a manner the manager reasonably believes to be in the best interests of the association, and with such care, including reasonable inquiry, as a prudent person would reasonably exercise in a similar position and under similar circumstances. A manager may rely in good faith upon any opinion, report, statement, or other information provided by another person that the manager reasonably believes is a competent and reliable source for the information. (c) After full disclosure of all material facts, a specific act or transaction that would otherwise violate the duty of loyalty by a manager may be authorized or ratified by a majority of the members that are not interested directly or indirectly in the act or transaction. (d) A manager that makes a business judgment in good faith satisfies the duties specified in subsection (a) if the manager: (1) is not interested, directly or indirectly, in the subject of the business judgment and is otherwise able to exercise independent judgment; (2) is informed with respect to the subject of the business judgment to the extent the manager reasonably believes to be appropriate under the circumstances; and (3) believes that the business judgment is in the best interests of the unincorporated nonprofit association and in accordance with its purposes. (e) The governing principles in a record may limit or eliminate the liability of a manager to the unincorporated nonprofit association or its members for damages for any action taken, or for failure to take any action, as a manager, except liability for: (1) the amount of financial benefit improperly received by a manager; (2) an intentional infliction of harm on the association or one or more of its members; (3) an intentional violation of criminal law; (4) breach of the duty of loyalty; or (5) improper distributions.

Legislative History

Acts 2011, No. 202, § 2.