273.215 General standards for directors.
443 words·~2 min read·
/ky/chapter-273/273-215A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
(1)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.
(2)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.
(3)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.
(4)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.
(5)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.
(6)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.
(7)Nothing in this section shall eliminate or limit the liability of any director for any
act or omission occurring prior to July 15, 1988.