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273.215 General standards for directors.
(1)
(2)
(3)
(4)
(5)
(6)
(7)
A director of a nonprofit corporation subject to the provisions of KRS 273.161
to 273.387 shall discharge his duties as a director, including his duties as a
member of a committee:
(a) In good faith;
(b) On an informed basis; and
(c) In a manner he honestly believes to be in the best interests of the
corporation.
Such director shall be considered to discharge his duties on an informed basis
if he makes, with the care an ordinarily prudent person in a like position would
exercise under similar circumstances, inquiry into the business and affairs of
the corporations, or into a particular action to be taken or decision to be made.
In discharging his duties such director shall be entitled to rely on information,
opinions, reports, or statements, including financial statements and other
financial data, if prepared or presented by:
(a) One (1) or more officers or employees of the corporation whom the
director honestly believes to be reliable and competent in the matters
presented;
(b) Legal counsel, public accountants, or other persons as to matters the
director honestly believes are within the person's professional or expert
competence; or
(c) A committee of the board of directors of which he is not a member if the
director honestly believes the committee merits confidence.
A director of a nonprofit corporation shall not be considered to act in good faith
if he has knowledge concerning the matter in question that makes reliance
otherwise permitted by subsection (3) of this section unwarranted.
In addition to any other limitation on such director's liability for monetary
damages contained in any provision of the corporation's articles of
incorporation adopted in accordance with the provisions of KRS 273.248, any
action taken as a director, or any failure to take any action as a director, shall
not be the basis for monetary damages or injunctive relief unless:
(a) The director has breached or failed to perform the duties of the director's
office in compliance with this section; and
(b) In the case of an action for monetary damages, the breach or failure to
perform constitutes willful misconduct or wanton or reckless disregard for
human rights, safety or property.
A person bringing an action for monetary damages under this section shall
have the burden of proving by clear and convincing evidence the provisions of
subsection (5)(a) and (b) of this section, and the burden of proving that the
breach or failure to perform was the legal cause of the damages suffered.
Nothing in this section shall eliminate or limit the liability of any director for any
act or omission occurring prior to July 15, 1988.
Effective:July 15, 1988
History: Amended 1988 Ky. Acts ch. 224, sec. 12, effective July 15, 1988. -Created 1988 Ky. Acts ch. 23, sec. 245, effective January 1, 1989.
Legislative Research Commission Note. This section was created by two 1988
Acts which do not appear to be in conflict and have been compiled together.
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