2023 New York Laws › NPC - Not-For-Profit Corporation › Article 7 - Directors and Officers › 719 - Liability of Directors in Certain Cases.

§ 719. Liability of directors in certain cases.
(a)  Directors  of  a corporation who vote for or concur in any of the
following corporate actions shall be jointly and severally liable to the
corporation 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
corporation,  to the extent of any injury suffered by the corporation as
a result of such action:
(1) The distribution of the corporation's cash or property to members,
directors or officers, other than a distribution permitted under section
515 (Dividends prohibited; certain distributions  of  cash  or  property
authorized).
(2) The redemption of capital certificates, subvention certificates or
bonds,  to  the  extent such redemption is contrary to the provisions of
section 502 (Member's capital contributions), section 504 (Subventions),
or section 506 (Bonds and security interests).
(3) The payment of a fixed or contingent periodic sum to  the  holders
of   subvention   certificates   or   of  interest  to  the  holders  or
beneficiaries of bonds to the extent such payment  is  contrary  to  the
provisions of section 504 or section 506.
(4)  The  distribution  of  assets  in  violation  of  section  1002-a
(Carrying out the plan of dissolution and  distribution  of  assets)  or
without  paying or adequately providing for all known liabilities of the
corporation, excluding any claims not filed by creditors within the time
limit set in a notice given to creditors under articles 10 (Non-judicial
dissolution) or 11 (Judicial dissolution).
(5) The making of any loan contrary to section 716 (Loans to directors
and officers).
(b) A director who is present at  a  meeting  of  the  board,  or  any
committee  thereof,  at which action specified in paragraph (a) is taken
shall be presumed to have concurred in the  action  unless  his  dissent
thereto  shall  be  entered  in the minutes of the meeting, or unless he
shall submit his 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  corporation
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  corporation  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 corporation as a result of such claims:
(1) Upon reimbursement to the corporation of any amount of an improper
distribution  of the corporation's cash or property, to be subrogated to
the rights of the corporation 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 reimbursement to the corporation of an amount representing an
improper redemption of a capital certificate,  subvention  or  bond,  to
have  the  corporation  rescind such improper redemption and recover the
amount paid, for their benefit but at their expense, from any member  or
holder who received such payment with knowledge of facts indicating that
such redemption by the corporation was not authorized by this chapter.
(3)  Upon  reimbursement  to the corporation of an amount representing
all or part of an improper payment of a fixed or contingent periodic sum
to the holder of a subvention certificate, or of interest to the  holder
or  beneficiary of a bond, to have the corporation recover the amount so
paid, for their benefit  but  at  their  expense,  from  any  holder  or
beneficiary who received such payment with knowledge of facts indicating
that such payment by the corporation was not authorized by this chapter.
(4)  Upon  payment  to  the  corporation  of the claim of the attorney
general or of any creditor by reason of a violation of subparagraph  (a)
(4),  to  be  subrogated  to  the  rights of the corporation against any
person who received an improper distribution of assets.
(5) Upon reimbursement to the corporation of the amount  of  any  loan
made  contrary  to  section 716 (Loans to directors and officers), to be
subrogated to the rights  of  the  corporation  against  a  director  or
officer who received the improper loan.
(e)  A  director or officer shall not be liable under this section if,
in the circumstances, he discharged his duty to  the  corporation  under
section 717 (Duty of directors and officers).
(f)  This  section shall not affect any liability otherwise imposed by
law upon any director or officer.