SENATE BILL REPORT

SB 5827

BYSenators Moore and Newhouse

Changing provisions governing cooperative associations.

Senate Committee on Judiciary

Senate Hearing Date(s):March 4, 1985

Senate Staff:Dick Armstrong (786-7460)

AS OF FEBRUARY 25, 1987

BACKGROUND:

Many cooperative associations are experiencing difficulty in getting qualified persons to serve on their board of directors because of lawsuits by shareholders claiming the directors are personally liable for acts or omissions performed in official capacities. 

SUMMARY:

Statutes on cooperative associations and agricultural cooperative associations are amended to allow the articles of incorporation to include a provision eliminating or limiting the personal liability of a director for damages caused by any action taken by the director in good faith. Such provisions may not limit a director's liability for acts involving intentional misconduct, such as a knowing violation of the law or knowing breach of the director's fiduciary duty to the cooperative association.

Fiscal Note:      none requested