§ 22 — Liability of directors in certain cases

New York § 22

• Jurisdiction: New York
• Law REL: Rural Electric Cooperative
• Art. 2: Purpose; Organization and Management; Powers

Text

§ 22. Liability of directors in certain cases. (a) Directors of a\ncooperative who vote for or concur in any of the following corporate\nactions shall be jointly and severally liable to the cooperative for the\nbenefit of its creditors or members or the ultimate beneficiaries of its\nactivities, to the extent of any injury suffered by such persons,\nrespectively, as a result of such action, or, if there be no creditors\nor members or ultimate beneficiaries so injured, to the cooperative as a\nresult of such action:\n (1) the distribution of the cooperative's cash or property to members,\ndirectors or officers, other than a distribution permitted under\nsections thirty-five, sixty and sixty-one of this chapter; or\n (2) the distribution of assets after dissolution of the cooperative in\nviolation of section thirty-five of this chapter or without paying or\nadequately providing for all known liabilities of the cooperative.\n (b) A director who is present at a meeting of the board, or any\ncommittee thereof, at which action specified in paragraph one or two of\nsubdivision (a) of this section is taken shall be presumed to have\nconcurred in the action unless the director's dissent thereto shall be\nentered in the minutes of the meeting, or unless the director shall\nsubmit his or her written dissent to the person acting as the secretary\nof the meeting before the adjournment thereof, or shall deliver or send\nby registered mail such dissent to the secretary of the cooperative\npromptly after the adjournment of the meeting. Such right to dissent\nshall not apply to a director who voted in favor of such action. A\ndirector who is absent from a meeting of the board, or any committee\nthereof, at which such action is taken shall be presumed to have\nconcurred in the action unless he shall deliver or send by registered\nmail his dissent thereto to the secretary of the cooperative or shall\ncause such dissent to be filed with the minutes of the proceedings of\nthe board or committee within a reasonable time after learning of such\naction.\n (c) Any director against whom a claim is successfully asserted under\nthis section shall be entitled to contribution from the other directors\nwho voted for or concurred in the action upon which the claim is\nasserted.\n (d) Directors against whom a claim is successfully asserted under this\nsection shall be entitled, to the extent of the amounts paid by them to\nthe cooperative as a result of such claims:\n (1) Upon reimbursement to the cooperative of any amount of an improper\ndistribution of the cooperative's cash or property, to be subrogated to\nthe rights of the cooperative against members, directors or officers who\nreceived such distribution with knowledge of facts indicating that it\nwas not authorized by this chapter, in proportion to the amounts\nreceived by them respectively.\n (2) Upon payment to the cooperative of the claim of the attorney\ngeneral or of any creditor by reason of a violation of subdivision (a)\nof this section, to be subrogated to the rights of the cooperative\nagainst any person who received an improper distribution of assets.\n (e) (1) A director or officer shall not be liable under this section\nif, in the circumstances, the director discharged his or her duty to the\ncooperative in good faith and with that degree of diligence, care and\nskill which ordinarily prudent persons would exercise under similar\ncircumstances in like positions.\n (2) In discharging their duties, directors and officers, when acting\nin good faith, may rely on information, opinions, reports or statements\nincluding financial statements and other financial data, in each case\nprepared or presented by: (i) one or more officers or employees of the\ncooperative, whom the director believes to be reliable and competent in\nthe matters presented, (ii) counsel, public accountants or other persons\nas to matters which the directors or officers believe to be within such\nperson's professional or expert competence, or (iii) a committee of the\nboard upon which they do not serve, duly designated in accordance with a\nprovision of the certificate of incorporation or the bylaws, as to\nmatters within its designated authority, which committee the directors\nor officers believe to merit confidence, so long as in so relying they\nshall be acting in good faith and with that degree of care specified in\nsubdivision (a) of this section. Persons shall not be considered to be\nacting in good faith if they have knowledge concerning the matter in\nquestion that would cause such reliance to be unwarranted. Persons who\nso perform their duties shall have no liability by reason of being or\nhaving been directors or officers of the cooperative.\n (f) This section shall not affect any liability otherwise imposed by\nlaw upon any director or officer.\n