(a)Fiduciary status and exercise of duties.--Except as provided in the declaration, the bylaws in subsection (b) or in other provisions of this subpart, the executive board may act in all instances on behalf of the association. In the performance of their duties, the officers and members of the executive board shall stand in a fiduciary relation to the association and shall perform their duties, including duties as members of any committee of the board upon which they may serve, in good faith, in a manner they reasonably believe to be in the best interests of the association and with such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances. In managing the association's reserve funds, the officers and members of t
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(a) Fiduciary status and exercise of duties.--Except as provided in the declaration, the bylaws in subsection (b) or in other provisions of this subpart, the executive board may act in all instances on behalf of the association. In the performance of their duties, the officers and members of the executive board shall stand in a fiduciary relation to the association and shall perform their duties, including duties as members of any committee of the board upon which they may serve, in good faith, in a manner they reasonably believe to be in the best interests of the association and with such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances. In managing the association's reserve funds, the officers and members of the executive board shall have the power to invest the association's reserve funds in investments permissible by law for the investment of trust funds and shall be governed in the management of the association's reserve funds by 20 Pa.C.S. § 7203 (relating to prudent investor rule). In performing his duties, an officer or executive board member shall be entitled to rely in good faith on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by any of the following:
(1) One or more other officers or employees of the association whom the officer or executive board member reasonably believes to be reliable and competent in the matters presented.
(2) Counsel, public accountants or other persons as to matters which the officer or executive board member reasonably believes to be within the professional or expert competence of such person.
(3) A committee of the executive board upon which he does not serve, duly designated in accordance with law, as to matters within its designated authority, which committee the officer or executive board member reasonably believes to merit confidence.
An officer or executive board member shall not be considered to be acting in good faith if he has knowledge concerning the matter in question that would cause his reliance to be unwarranted. The executive board and its members shall have no liability for exercising these powers provided they are exercised in good faith, in the best interest of the association and with such care in the manner set forth in this section.
(b) Limitation on authority.--The executive board may not act on behalf of the association to amend the declaration (section 4216), to terminate the cooperative (section 4217) or to elect members of the executive board or determine the qualifications, powers and duties or terms of office of executive board members (subsection (f)), but the executive board may fill vacancies in its membership for the unexpired portion of any term. The law governing corporations, including nonprofit corporations, and such other laws governing the legal entities of the same type as the association supplement the provisions of this subsection to the extent not inconsistent with the provisions of this subpart.
(c) Adoption and ratification of budget.--Within 30 days after adoption of any proposed budget for the cooperative, the executive board shall provide the budget to all the proprietary lessees and shall set a date for a meeting of the proprietary lessees to consider ratification of the budget not less than 14 days nor more than 30 days after mailing of the budget. Unless at that meeting a majority of all the proprietary lessees or any larger vote specified in the declaration reject the budget, the budget is ratified whether or not a quorum is present. In the event the proposed budget is rejected, the periodic budget last ratified by the proprietary lessees shall be continued until such time as the proprietary lessees ratify a subsequent budget proposed by the executive board.
(d) Status during period of declarant control.--Subject to subsection (e), the declaration may provide for a period of declarant control of the association during which period a declarant or persons designated by him may appoint and remove the officers and members of the executive board. Regardless of the period provided in the declaration, any period of declarant control terminates no later than the earlier of:
(1) 180 days after conveyance to proprietary lessees other than a declarant of 75% of the cooperative interests which may be created; or
(2) two years after the date of the first conveyance of cooperative interests to a person other than a declarant.
A declarant may voluntarily surrender the right to appoint and remove some or all of the officers and members of the executive board before termination of that period, but in that event he may require for the duration of the period of declarant control that specified actions of the association or executive board, as described in a recorded instrument executed by the declarant, be approved by the declarant before they become effective.
(e) Election of members during transfer of declarant control.--Not later than 60 days after conveyance to proprietary lessees, other than a declarant, of 25% of the cooperative interests which may be created, at least one member and not less than 25% of the members of the executive board must be elected by proprietary lessees other than the declarant. Not later than 60 days after conveyance to proprietary lessees, other than a declarant, of 50% of the cooperative interests which may be created, not less than 33 1/3% of the members of the executive board must be elected by proprietary lessees other than the declarant.
(f) Election of executive board following declarant control.--
(1) Not later than the termination of any period of declarant control, the proprietary lessees shall elect an executive board of at least three members, at least a majority of whom must be proprietary lessees. Unless the declarant has retained such right during the declarant control period, the executive board shall elect the officers. The executive board members and officers shall take office upon election.
(2) In the event that the election of the executive board by the proprietary lessees fails to take place not later than the termination of a period of declarant control as provided in this section, then a special meeting of the proprietary lessees may be called for such purpose by any member of the executive board elected by the proprietary lessees or, if there is no such member of the executive board, the proprietary lessees entitled to cast at least 10% of the votes in the association.
(g) Removal of member of executive board.--Notwithstanding any provision of the declaration or bylaws to the contrary, the proprietary lessees, by a two-thirds vote of all persons present and entitled to vote at any meeting of the proprietary lessees at which a quorum is present, may remove any member of the executive board with or without cause, other than a member appointed by the declarant, provided notice of the intention to remove a member of the executive board is given with the notice of the meeting at which such removal is considered.