Title 10 – Corporations and Associations

Chapter 31 – Directors and officers-nonprofit Corporations

Article 3 – Standards of Conduct

• A. A director’s duties, including duties as a member of a committee, shall be discharged:
• 1. In good faith.
• 2. With the care an ordinarily prudent person in a like position would exercise under similar circumstances.
• 3. In a manner the director reasonably believes to be in the best interests of the corporation.
• B. In discharging duties, a director is entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, if prepared or presented by any of the following:
• 1. One or more officers or employees of the corporation whom the director reasonably believes are reliable and competent in the matters presented.
• 2. Legal counsel, public accountants or other person as to matters the director reasonably believes are within the person’s professional or expert competence.
• 3. A committee of or appointed by the board of directors of which the director is not a member if the director reasonably believes the committee merits confidence.
• 4. In the case of corporations organized for religious purposes, religious authorities and ministers, priests, rabbis or other persons whose position or duties in the religious organization the director believes justify reliance and confidence and whom the director believes to be reliable and competent in the matters presented.
• C. A director is not acting in good faith if the director has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection B unwarranted.
• D. A director is not liable for any action taken as a director or any failure to take any action if the director’s duties were performed in compliance with this section. In any proceeding commenced under this section or any other provision of this chapter, a director has all of the defenses and presumptions ordinarily available to a director. A director is presumed in all cases to have acted, failed to act or otherwise discharged such director’s duties in accordance with subsection A. The burden is on the party challenging a director’s action, failure to act or other discharge of duties to establish by clear and convincing evidence facts rebutting the presumption.
• E. A director shall not be deemed to be a trustee with respect to the corporation or with respect to any property held or administered by the corporation, including property that may be subject to restrictions imposed by the donor or transferor of that property.