Liability of directors, officers, employees, members and volunteers; indemnification and reimbursement of directors, officers, employees and agents.
1. The officers and members of the supreme governing body or any subordinate body of a society are not personally liable for payment of any benefits provided by the society.
2. A person may be indemnified and reimbursed by a society for expenses reasonably incurred by, and liabilities imposed upon, him in connection with or arising out of any action, suit or proceeding, whether civil, criminal, administrative or investigative, or threat thereof, in which the person may be involved because he is or was a director, officer, employee or agent of the society or of any firm, corporation or organization which he served in any capacity at the request of the society.
3. A person may not be so indemnified or reimbursed as to any matter in an action, suit or proceeding, or threat thereof, in which he is finally adjudged to be guilty of a breach of a duty as a director, officer, employee or agent of the society, or which is made the subject of a compromise settlement, unless:
(a) He acted in good faith for a purpose he reasonably believed to be in the best interests of the society; and
(b) If a criminal action, he had no reasonable cause to believe that his conduct was unlawful.
4. The determination of whether the conduct of a person meets the standard required for indemnification and reimbursement may only be made by:
(a) The supreme governing body or board of directors by a majority vote of a quorum consisting of persons who were not parties to the action, suit or proceeding; or
(b) A court of competent jurisdiction.
5. The termination of any action, suit or proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere, does not create a conclusive presumption that the person does not meet the standard of conduct required for indemnification and reimbursement.
6. The right of indemnification and reimbursement does not exclude other rights to which the person may be entitled as a matter of law, and inures to the benefit of his heirs, executors and administrators.
7. A society may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the society, or who is serving or has served at the request of the society as a director, officer, employee or agent of any other firm, corporation or organization, against any liability asserted against and incurred by him in that capacity or arising out of his status as such, whether or not the society may indemnify the person against liability pursuant to this section.
8. A director, officer, employee, member or volunteer of a society who serves without compensation is not liable, and no cause of action may be brought for damages resulting from his exercise of judgment or discretion in carrying out his duties or responsibilities on behalf of the society, unless the act or omission involved willful or wanton misconduct.
Last modified: February 27, 2006