AN ACT
ENTITLED, An Act to
provide certain provisions concerning the indemnification of the directors
of cooperatives.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section 1. That chapter 47-21 be amended by adding thereto a NEW SECTION to read as follows:
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section 1. That chapter 47-21 be amended by adding thereto a NEW SECTION to read as follows:
Except as otherwise provided in section 2 of this Act, a rural electric cooperative may indemnify
a director who is a party to a proceeding by reason of being a director, against liability incurred in
the proceeding if the director:
(1) Acted in good faith; and
(2) Reasonably believed:
(a) In the case of conduct in an official capacity, that the conduct was in the best
interests of the cooperative; and
(b) In all other cases, that the conduct was at least not opposed to the best interests of
the cooperative; and
(3) In the case of any criminal proceeding, had no reasonable cause to believe the conduct
was unlawful.
A rural electric cooperative may also, except as provided in section 2 of this Act, indemnify a
director who is a party to a proceeding against liability incurred in the proceeding if the director
engaged in conduct for which broader indemnification has been made permissible or obligatory
under a provision of the articles of incorporation.
A director's conduct with respect to an employee benefit plan for a purpose the director
reasonably believed to be in the interests of the participants in, and the beneficiaries of, the plan is
conduct that satisfies the requirement of subsection (2)(b) of this section.
The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea
of nolo contendere or its equivalent, is not, of itself, determinative that the director did not meet the
relevant standard of conduct described in this section.
Section 2. That chapter 47-21 be amended by adding thereto a NEW SECTION to read as follows:
Section 2. That chapter 47-21 be amended by adding thereto a NEW SECTION to read as follows:
Unless otherwise ordered by a court, a rural electric cooperative may not indemnify a director:
(1) In connection with a proceeding by or in the right of the cooperative, except for
reasonable expenses incurred in connection with the proceeding if it is determined that
the director has met the relevant standard of conduct pursuant to section 1 of this Act; or
(2) In connection with any proceeding with respect to conduct for which the director was
adjudged liable on the basis that the director received a financial benefit to which the
director was not entitled, whether or not involving action in the director's official capacity.
Section 3. That chapter 47-21 be amended by adding thereto a NEW SECTION to read as follows:
Section 3. That chapter 47-21 be amended by adding thereto a NEW SECTION to read as follows:
A rural electric cooperative shall indemnify a director who was wholly successful, on the merits
or otherwise, in the defense of any proceeding to which the director was a party by reason of being
a director of the cooperative, against reasonable expenses incurred in connection with the
proceeding.
Section 4. That chapter 47-17 be amended by adding thereto a NEW SECTION to read as follows:
Section 4. That chapter 47-17 be amended by adding thereto a NEW SECTION to read as follows:
Except as otherwise provided in section 5 of this Act, a cooperative may indemnify a director
who is a party to a proceeding by reason of being a director, against liability incurred in the
proceeding if the director:
(1) Acted in good faith; and
(2) Reasonably believed:
(a) In the case of conduct in an official capacity, that the conduct was in the best
interests of the cooperative; and
(b) In all other cases, that the conduct was at least not opposed to the best interests of
the cooperative; and
(3) In the case of any criminal proceeding, had no reasonable cause to believe the conduct
was unlawful.
A cooperative may also, except as provided in section 5, indemnify a director who is a party to
a proceeding against liability incurred in the proceeding if the director engaged in conduct for which
broader indemnification has been made permissible or obligatory under a provision of the articles
of incorporation.
A director's conduct with respect to an employee benefit plan for a purpose the director
reasonably believed to be in the interests of the participants in, and the beneficiaries of, the plan is
conduct that satisfies the requirement of subsection (2)(b).
The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea
of nolo contendere or its equivalent, is not, of itself, determinative that the director did not meet the
relevant standard of conduct described in this section.
Section 5. That chapter 47-17 be amended by adding thereto a NEW SECTION to read as follows:
Section 5. That chapter 47-17 be amended by adding thereto a NEW SECTION to read as follows:
Unless otherwise ordered by a court, a cooperative may not indemnify a director:
(1) In connection with a proceeding by or in the right of the cooperative, except for
reasonable expenses incurred in connection with the proceeding if it is determined that
the director has met the relevant standard of conduct pursuant to section 4 of this Act; or
(2) In connection with any proceeding with respect to conduct for which the director was
adjudged liable on the basis that the director received a financial benefit to which the
director was not entitled, whether or not involving action in the director's official capacity.
Section
6.
That chapter
47-17
be amended by adding thereto a NEW SECTION to read as
follows:
A cooperative shall indemnify a director who was wholly successful, on the merits or otherwise,
in the defense of any proceeding to which the director was a party by reason of being a director of
the cooperative, against reasonable expenses incurred in connection with the proceeding.
Section 7. That § 47-21-21.1 be repealed.
Section 8. That § 47-17-19 be repealed.
An Act to provide certain provisions concerning the indemnification of the directors of cooperatives.
Section 7. That § 47-21-21.1 be repealed.
Section 8. That § 47-17-19 be repealed.
An Act to provide certain provisions concerning the indemnification of the directors of cooperatives.
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I certify that the attached Act originated in the
HOUSE as
Bill
No.
1252
____________________________ Chief Clerk ____________________________ Speaker of the House
Attest:
____________________________ Chief Clerk
____________________________
Attest:
____________________________ Secretary of the Senate
House
Bill
No.
1252
File No. ____ Chapter No. ______ |
Received at this Executive Office this _____ day of _____________ ,
20____ at ____________ M.
By _________________________ for the Governor
The attached Act is hereby
approved this ________ day of
______________ , A.D., 20___
____________________________ Governor STATE OF SOUTH DAKOTA, ss. Office of the Secretary of State
Filed ____________ , 20___
____________________________ Secretary of State
By _________________________ |
