Hello and thank you for your question.
The legal obligations of not-for-profit trustees and corporate
directors in the State of Tennessee are set forth in the Tennessee
statutes. Courtesy of the Cornell Law School and Lexis, the statutes
are available on-line free of charge.
Tennessee Legal Materials
http://www.law.cornell.edu/states/tennessee.html
http://198.187.128.12/tennessee/lpext.dll?f=templates&fn=fs-main.htm&2.0
The principal obligations are the same as those of corporate
directors:
"48-58-301. General standards for directors.
(a) A director shall discharge all duties as a director, including
duties as a member of a committee:
(1) In good faith;
(2) With the care an ordinarily prudent person in a like position
would exercise under similar circumstances; and
(3) In a manner the director reasonably believes to be in the best
interests of the corporation."
Tennessee Code/TITLE 48 CORPORATIONS AND ASSOCIATIONS/CHAPTER 58
DIRECTORS AND OFFICERS/PART 3 STANDARDS OF CONDUCT/48-58-301. General
standards for directors.
They are also required to refrain from conflicts of interest:
"48-58-302. Director and officer conflict of interest.
(a) A conflict of interest transaction is a transaction with the
corporation in which a director or officer of the corporation has a
direct or indirect interest. A conflict of interest transaction is not
voidable or the basis for imposing liability on the director or
officer if the transaction was fair at the time it was entered into or
is approved as provided in subsection (b).
(b) A transaction in which a director or officer of a corporation
has a conflict of interest may be approved if:
(1) The material facts of the transaction and the director's or
officer's interest were disclosed or known to the board of directors
or a committee consisting entirely of members of the board of
directors and the board of directors or such committee authorized,
approved, or ratified the transaction;
(2) The material facts of the transaction and the director's or
officer's interest were disclosed or known to the members and they
authorized, approved, or ratified the transaction; or
(3) Approval is obtained from:
(A) The attorney general and reporter; or
(B) A court of record having equity jurisdiction in an action in
which the attorney general and reporter is joined as party."
Tennessee Code TITLE 48 CORPORATIONS AND ASSOCIATIONS/CHAPTER 58
DIRECTORS AND OFFICERS/PART 3 STANDARDS OF CONDUCT/48-58-302. Director
and officer conflict of interest.
However, because it is the State's policy to encourage people to serve
as Trustees or Directors of nonprofit organizations, the law protects
them from liability except in the case of willful, wanton or gross
negligence:
"48-58-601(b). Limitation of and immunity from actions for breach of
fiduciary duty.
(b) The general assembly finds and declares that the services of
nonprofit boards are critical to the efficient conduct and management
of the public and charitable affairs of the citizens of this state.
Members of such nonprofit boards must be permitted to operate without
concern for the possibility of litigation arising from the discharge
of their duties as policy makers.
(c) All directors, trustees or members of the governing bodies of
nonprofit cooperatives, corporations, clubs, associations and
organizations described in subsection (d), whether compensated or not,
shall be immune from suit arising from the conduct of the affairs of
such cooperatives, corporations, clubs, associations or organizations.
Such immunity from suit shall be removed when such conduct amounts to
willful, wanton or gross negligence. Notwithstanding other provisions
of this subsection to the contrary, all directors, trustees or members
of the governing bodies of nonprofit cemetery corporations,
associations and organizations referred to in subdivision (d)(6) shall
be immune from personal liability only if such cemetery corporations,
associations or organizations carry liability insurance coverage in an
amount to be determined by the department of commerce and insurance;
provided, that such requirement shall not apply in any county having a
population of not less than six thousand (6,000) nor more than six
thousand one hundred twenty-five (6,125) according to the 1980 federal
census or any subsequent federal census. Nothing in chapters 51-68 of
this title shall be construed to grant immunity to the nonprofit
cooperative, corporation, association or organization.
(d) Subsection (c) shall apply to the following:
....
(3) Nonprofit corporations, associations and organizations which are
exempt from federal income taxation under § 501(c)(3) of the Internal
Revenue Code of 1986 (26 U.S.C. § 501(c)(3)), as amended;
(4) Not-for-profit civic leagues or organizations which are exempt
from federal income taxation under § 501(c)(4) of the Internal Revenue
Code of 1954 (26 U.S.C. § 501(c)(4)), as amended;
(5) Nonprofit corporations, associations and organizations which are
exempt from federal income taxation under § 501(c)(6) of the Internal
Revenue Code of 1986 (26 U.S.C. § 501(c)(6)), as amended;
(6) Not-for-profit cemetery corporations, associations and
organizations which are exempt from federal income taxation under §
501(c)(13) of the Internal Revenue Code (26 U.S.C. § 501(c)(13)), as
amended;
(7) Not-for-profit agricultural or horticultural organizations which
are exempt from federal income taxation under § 501(c)(5) of the
Internal Revenue Code of 1986 (26 U.S.C. § 501(c)(5)), as amended;
(8) Nonprofit corporations, associations and organizations that are
exempt from federal income taxation under § 115 of the Internal
Revenue Code of 1986 (26 U.S.C. § 115), as amended;
....
(12) Not-for-profit corporations or associations which are exempt
from federal income taxation under Internal Revenue Code of 1954, §
501(c)(7), (26 U.S.C. § 501(c)(7)), as amended, but only if general
liability insurance in a reasonable amount is carried by or on behalf
of any such club...."
Tennessee Code/TITLE 48 CORPORATIONS AND ASSOCIATIONS/CHAPTER 58
DIRECTORS AND OFFICERS/PART 6 LIMITATION OF ACTIONS AND
IMMUNITY/48-58-601. Limitation of and immunity from actions for breach
of fiduciary duty.
Search Terms Used:
On Google:
Tennessee Statutes
On the Cornell Law Website link to Lexis:
not-for-profit and trustees
nonprofit
nonprofit and obligations
I hope you find this information useful. If you have any questions
about this answer or if you feel my answer needs to provide something
more, please post a Clarification Request. I would appreciate your
holding off on rating this answer until I have an opportunity to
reply.
Good luck!
richard-ga |
,
0 Comments
)