Legislation
SECTION 720
Actions against directors, officers and key persons
Not-for-Profit Corporation (NPC) CHAPTER 35, ARTICLE 7
§ 720. Actions against directors, officers and key persons.
(a) An action may be brought against one or more directors, officers,
or key persons of a corporation to procure a judgment for the following
relief:
(1) To compel the defendant to account for his official conduct in the
following cases:
(A) The neglect of, or failure to perform, or other violation of his
duties in the management and disposition of corporate assets committed
to his charge.
(B) The acquisition by himself, transfer to others, loss or waste of
corporate assets due to any neglect of, or failure to perform, or other
violation of his duties.
(2) To set aside an unlawful conveyance, assignment or transfer of
corporate assets, where the transferee knew of its unlawfulness.
(3) To enjoin a proposed unlawful conveyance, assignment or transfer
of corporate assets, where there are reasonable grounds for belief that
it will be made.
(b) An action may be brought for the relief provided in this section
and in paragraph (a) of section 719 (Liabilities of directors in certain
cases) by the attorney general, by the corporation, or, in the right of
the corporation, by any of the following:
(1) A director or officer of the corporation.
(2) A receiver, trustee in bankruptcy, or judgment creditor thereof.
(3) Under section 623 (Members' derivative action brought in the right
of the corporation to procure a judgment in its favor), by one or more
of the members thereof.
(4) If the certificate of incorporation or the by-laws so provide, by
any holder of a subvention certificate or any other contributor to the
corporation of cash or property of the value of $1,000 or more.
(c) In a corporation having no members, an action may be brought by a
director against third parties to obtain a judgment in favor of the
corporation. The complaint shall set forth with particularity the
efforts of the plaintiff to secure the initiation of such action by the
board or the reason for not making such efforts. The court in its
discretion shall determine whether it is in the interest of the
corporation that the action be maintained, and if the action is
successful in whole or in part, what reimbursement if any should be made
out of the corporate treasury to the plaintiff for his reasonable
expenses including attorney's fees, incurred in the prosecution of the
action.
(a) An action may be brought against one or more directors, officers,
or key persons of a corporation to procure a judgment for the following
relief:
(1) To compel the defendant to account for his official conduct in the
following cases:
(A) The neglect of, or failure to perform, or other violation of his
duties in the management and disposition of corporate assets committed
to his charge.
(B) The acquisition by himself, transfer to others, loss or waste of
corporate assets due to any neglect of, or failure to perform, or other
violation of his duties.
(2) To set aside an unlawful conveyance, assignment or transfer of
corporate assets, where the transferee knew of its unlawfulness.
(3) To enjoin a proposed unlawful conveyance, assignment or transfer
of corporate assets, where there are reasonable grounds for belief that
it will be made.
(b) An action may be brought for the relief provided in this section
and in paragraph (a) of section 719 (Liabilities of directors in certain
cases) by the attorney general, by the corporation, or, in the right of
the corporation, by any of the following:
(1) A director or officer of the corporation.
(2) A receiver, trustee in bankruptcy, or judgment creditor thereof.
(3) Under section 623 (Members' derivative action brought in the right
of the corporation to procure a judgment in its favor), by one or more
of the members thereof.
(4) If the certificate of incorporation or the by-laws so provide, by
any holder of a subvention certificate or any other contributor to the
corporation of cash or property of the value of $1,000 or more.
(c) In a corporation having no members, an action may be brought by a
director against third parties to obtain a judgment in favor of the
corporation. The complaint shall set forth with particularity the
efforts of the plaintiff to secure the initiation of such action by the
board or the reason for not making such efforts. The court in its
discretion shall determine whether it is in the interest of the
corporation that the action be maintained, and if the action is
successful in whole or in part, what reimbursement if any should be made
out of the corporate treasury to the plaintiff for his reasonable
expenses including attorney's fees, incurred in the prosecution of the
action.