Can a Board of Directors be held liable for the acts of nonprofit corporation?
Under Title 11B, Subchapter 3, Standard of Conduct, there are very specific standards of conduct which are required of board of directors. These standards emphasize good faith, ordinary care, and reasonableness, but not perfection. In practice, a board of director who reads Title 11B, reviews the nonprofit corporation’s articles of incorporation and bylaws, and performs his or her duties in a timely and reasonable manner will likely be protected from liability under the law. However, a board member that has a question about potential liability should consult with his or her attorney. In addition, whether a board of director has complied with the Standards of Conduct defined by law is a factual question. While a board of director may ultimately be found not liable in a lawsuit, this does not mean that he or she cannot be sued personally for actions taken as a member of the board of directors. For this reason, many nonprofit corporations purchase directors and officers liability insuranc
