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Senate Study Bill 1068

Bill Text

PAG LIN
  1  1    Section 1.  Section 497.33, Code 2003, is amended to read
  1  2 as follows:
  1  3    497.33  PERSONAL LIABILITY.
  1  4    1.  Except as otherwise provided in subsection 2 or as
  1  5 otherwise provided in this chapter, all of the following
  1  6 apply:
  1  7    a.  A person who acts in the capacity of a director,
  1  8 officer, employee, or member of the corporation an association
  1  9 is not personally liable on for the corporation's
  1 10 association's debts or obligations. and a
  1 11    b.  A person who acts in the capacity of a director,
  1 12 officer, member, or other volunteer of an association is not
  1 13 personally liable in that capacity, for a claim based upon an
  1 14 act or omission of the person performed in the discharge of
  1 15 the person's duties, except for a breach of the duty of
  1 16 loyalty to the corporation, for acts or omissions not in good
  1 17 faith or which involve.
  1 18    2.  A person who acts in the capacity of a director,
  1 19 officer, employee, member, or volunteer of an association is
  1 20 personally liable for any of the following:
  1 21    a.  The amount of a financial benefit received by the
  1 22 person to which the person is not entitled.
  1 23    b.  The amount of monetary damages suffered by the
  1 24 association or its members caused by the person's intentional
  1 25 infliction of harm to the association or its members.
  1 26    c.  The amount of monetary damages suffered by the
  1 27 association or its members caused by the person's intentional
  1 28 misconduct or knowing violation of the criminal law, or for a
  1 29 transaction from which the person derives an improper personal
  1 30 benefit.
  1 31    Sec. 2.  Section 498.35, Code 2003, is amended to read as
  1 32 follows:
  1 33    498.35  PERSONAL LIABILITY.
  1 34    1.  Except as otherwise provided in subsection 2 or as
  1 35 otherwise provided in this chapter, all of the following
  2  1 apply:
  2  2    a.  A person who acts in the capacity of a director,
  2  3 officer, employee, or member of the an association is not
  2  4 personally liable on for the association's debts or
  2  5 obligations and
  2  6    b.  A person who acts in the capacity of a director,
  2  7 officer, member, or other volunteer is not personally liable
  2  8 in that capacity, for a claim based upon an act or omission of
  2  9 the person performed in the discharge of the person's duties,
  2 10 except for a breach of the duty of loyalty to the association,
  2 11 for acts or omissions not in good faith or which involve.
  2 12    2.  A person who acts in the capacity of a director,
  2 13 officer, employee, member, or volunteer of an association is
  2 14 personally liable for any of the following:
  2 15    a.  The amount of a financial benefit received by the
  2 16 person to which the person is not entitled.
  2 17    b.  The amount of monetary damages suffered by the
  2 18 association or its members caused by the person's intentional
  2 19 infliction of harm to the association or its members.
  2 20    c.  The amount of monetary damages suffered by the
  2 21 association or its members caused by the person's intentional
  2 22 misconduct or knowing violation of the criminal law, or for a
  2 23 transaction from which the person derives an improper personal
  2 24 benefit.
  2 25    Sec. 3.  Section 499.37, Code 2003, is amended to read as
  2 26 follows:
  2 27    499.37  OFFICERS AND EMPLOYEES.
  2 28    1.  The board of directors of the association shall select
  2 29 from their own number a president, one or more vice
  2 30 presidents, a secretary-treasurer or a secretary and a
  2 31 treasurer the association's officers as provided in its
  2 32 articles of incorporation or bylaws, and shall fill vacancies
  2 33 in such offices.  The articles of incorporation or bylaws
  2 34 shall delegate to an officer the responsibility for all of the
  2 35 following:
  3  1    a.  Preparing minutes of meetings of the directors and the
  3  2 shareholders.
  3  3    b.  Authenticating the association's records.
  3  4    2.  Unless the association's articles of incorporation or
  3  5 bylaws otherwise provide, said the association's officers
  3  6 shall be chosen serve for annual terms beginning at the close
  3  7 of the first regular meeting of members in each year.
  3  8    The directors shall also choose and may remove such other
  3  9 officers and employees as they deem proper, or as the articles
  3 10 or bylaws may prescribe.
  3 11    Sec. 4.  Section 499.59, Code 2003, is amended to read as
  3 12 follows:
  3 13    499.59  PERSONAL LIABILITY.
  3 14    1.  Except as otherwise provided in subsection 2 or as
  3 15 otherwise provided in this chapter, all of the following shall
  3 16 apply:
  3 17    a.  A person who acts in the capacity of a director,
  3 18 officer, employee, or member of the association is not
  3 19 personally liable on for the association's debts or
  3 20 obligations., and a
  3 21    b.  A person who acts in the capacity of a director,
  3 22 officer, member, or other volunteer is not personally liable
  3 23 in that capacity, for a claim based upon an act or omission of
  3 24 the person performed in the discharge of the person's duties,
  3 25 except for a breach of the duty of loyalty to the association,
  3 26 for acts or omissions not in good faith or which involve.
  3 27    2.  A person who acts in the capacity of a director,
  3 28 officer, employee, member, or volunteer of an association is
  3 29 personally liable for any of the following:
  3 30    a.  The amount of a financial benefit received by the
  3 31 person to which the person is not entitled.
  3 32    b.  The amount of monetary damages suffered by the
  3 33 association or its members caused by the person's intentional
  3 34 infliction of harm to the association or its members.
  3 35    c.  The amount of monetary damages suffered by the
  4  1 association or its members caused by the person's intentional
  4  2 misconduct or knowing violation of the criminal law, or for a
  4  3 transaction from which the person derives an improper personal
  4  4 benefit.
  4  5    Sec. 5.  Section 501.407, Code 2003, is amended to read as
  4  6 follows:
  4  7    501.407  PERSONAL LIABILITY.
  4  8    The articles may contain a provision eliminating or
  4  9 limiting the personal liability of a person acting in the
  4 10 capacity of a director, officer, or interest holder of the
  4 11 cooperative for monetary damages for breach of a fiduciary
  4 12 duty as a director, officer, or interest holder, provided that
  4 13 the provision does not eliminate or limit liability.  However,
  4 14 a person who acts in that capacity is personally liable for
  4 15 any of the following:
  4 16    1.  A breach of the duty of loyalty to the cooperative or
  4 17 its interest holders The amount of financial benefit received
  4 18 by the person to which the person is not entitled.
  4 19    2.  An act or omission not in good faith or which involves
  4 20 intentional misconduct or a knowing violation of law The
  4 21 amount of monetary damages to the cooperative or its interest
  4 22 holders caused by the person's intentional infliction of harm
  4 23 to the cooperative or its interest holders.
  4 24    3.  A transaction from which the director, officer, or
  4 25 interest holder derives an improper personal benefit The
  4 26 amount of monetary damages to the association or its interest
  4 27 holders caused by the person's intentional violation of
  4 28 criminal law.
  4 29    4.  An The amount of monetary damages to the cooperative or
  4 30 its interest holders caused by the person's act or omission
  4 31 occurring prior to the date when the provision in the articles
  4 32 becomes effective.  
  4 33                           EXPLANATION
  4 34    This bill provides for the governance of cooperatives.
  4 35 Code chapters 497, 498, and 499 have traditionally governed
  5  1 the organization and management of cooperatives (most commonly
  5  2 referred to as "associations").  Code chapter 499 is
  5  3 considered the modern cooperative chapter.  The fourth type of
  5  4 cooperative structure was established in 1996 and codified in
  5  5 Code chapter 501 for purposes relating to value-added
  5  6 agricultural production by producers.
  5  7    The bill amends provisions in all four Code chapters
  5  8 governing the liability of persons acting in the capacity of a
  5  9 director, officer, or interest holder of a cooperative.
  5 10 Generally, a person acting on behalf of the cooperative is not
  5 11 held personally liable for actions of the cooperative.  Under
  5 12 current law, there are several exceptions.  Such a person may
  5 13 be personally liable for an act or omission that represents a
  5 14 breach of the duty of loyalty to the cooperative, is not in
  5 15 good faith, is intentional misconduct, or is a knowing
  5 16 violation of the law.  The bill changes those standards to
  5 17 provide that personal liability attaches when the person
  5 18 receives an unwarranted financial benefit, intentionally
  5 19 inflicts harm to the cooperative, or commits a criminal
  5 20 violation.
  5 21    The bill also eliminates a provision in Code chapter 499
  5 22 which provides for the selection of a president and other
  5 23 officers by an association's board of directors.  The bill
  5 24 provides that the cooperative's articles of incorporation or
  5 25 bylaws may delegate to an officer responsibility for preparing
  5 26 minutes and authenticating records.  It also eliminates a
  5 27 provision for the removal of officers and employees.  
  5 28 LSB 1615SC 80
  5 29 da/sh/8
     

Text: SSB01067                          Text: SSB01069
Text: SSB01000 - SSB01099               Text: SSB Index
Bills and Amendments: General Index     Bill History: General Index

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