New York Rural Electric Cooperative Law
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.