2023 New York Laws › REL - Rural Electric Cooperative › Article 2 - Purpose; Organization and Management; Powers › 22 - Liability of Directors in Certain Cases.

§ 22. Liability  of  directors  in  certain  cases. (a) Directors of a
cooperative who vote for or concur in any  of  the  following  corporate
actions shall be jointly and severally liable to the cooperative for the
benefit of its creditors or members or the ultimate beneficiaries of its
activities,  to  the  extent  of  any  injury  suffered by such persons,
respectively, as a result of such action, or, if there be  no  creditors
or members or ultimate beneficiaries so injured, to the cooperative as a
result of such action:
(1) the distribution of the cooperative's cash or property to members,
directors  or  officers,  other  than  a  distribution  permitted  under
sections thirty-five, sixty and sixty-one of this chapter; or
(2) the distribution of assets after dissolution of the cooperative in
violation of section thirty-five of this chapter or  without  paying  or
adequately providing for all known liabilities of the cooperative.
(b)  A  director  who  is  present  at  a meeting of the board, or any
committee thereof, at which action specified in paragraph one or two  of
subdivision  (a)  of  this  section  is  taken shall be presumed to have
concurred in the action unless the director's dissent thereto  shall  be
entered  in  the  minutes  of  the meeting, or unless the director shall
submit his or her written dissent to the person acting as the  secretary
of  the meeting before the adjournment thereof, or shall deliver or send
by registered mail such dissent to  the  secretary  of  the  cooperative
promptly  after  the  adjournment  of the meeting. Such right to dissent
shall not apply to a director who voted  in  favor  of  such  action.  A
director  who  is  absent  from a meeting of the board, or any committee
thereof, at which such  action  is  taken  shall  be  presumed  to  have
concurred  in  the  action unless he shall deliver or send by registered
mail his dissent thereto to the secretary of the  cooperative  or  shall
cause  such  dissent  to be filed with the minutes of the proceedings of
the board or committee within a reasonable time after learning  of  such
action.
(c)  Any  director against whom a claim is successfully asserted under
this section shall be entitled to contribution from the other  directors
who  voted  for  or  concurred  in  the  action  upon which the claim is
asserted.
(d) Directors against whom a claim is successfully asserted under this
section shall be entitled, to the extent of the amounts paid by them  to
the cooperative as a result of such claims:
(1) Upon reimbursement to the cooperative of any amount of an improper
distribution  of the cooperative's cash or property, to be subrogated to
the rights of the cooperative against members, directors or officers who
received such distribution with knowledge of facts  indicating  that  it
was  not  authorized  by  this  chapter,  in  proportion  to the amounts
received by them respectively.
(2) Upon payment to the cooperative  of  the  claim  of  the  attorney
general  or  of any creditor by reason of a violation of subdivision (a)
of this section, to be subrogated  to  the  rights  of  the  cooperative
against any person who received an improper distribution of assets.
(e)  (1)  A director or officer shall not be liable under this section
if, in the circumstances, the director discharged his or her duty to the
cooperative in good faith and with that degree of  diligence,  care  and
skill  which  ordinarily  prudent  persons  would exercise under similar
circumstances in like positions.
(2) In discharging their duties, directors and officers,  when  acting
in  good faith, may rely on information, opinions, reports or statements
including financial statements and other financial data,  in  each  case
prepared  or presented by:  (i) one or more officers or employees of the
cooperative, whom the director believes to be reliable and competent  in

the matters presented, (ii) counsel, public accountants or other persons
as  to matters which the directors or officers believe to be within such
person's professional or expert competence, or (iii) a committee of  the
board upon which they do not serve, duly designated in accordance with a
provision  of  the  certificate  of  incorporation  or the bylaws, as to
matters within its designated authority, which committee  the  directors
or  officers  believe to merit confidence, so long as in so relying they
shall be acting in good faith and with that degree of care specified  in
subdivision  (a)  of this section. Persons shall not be considered to be
acting in good faith if they have knowledge  concerning  the  matter  in
question  that would cause such reliance to be unwarranted.  Persons who
so perform their duties shall have no liability by reason  of  being  or
having been directors or officers of the cooperative.
(f)  This  section shall not affect any liability otherwise imposed by
law upon any director or officer.