KRS 381.9170: Discharge of board member's duties -- Standards for monetary damages

and injunctive relief.

(1) A board member shall discharge his or her duties as an officer or a member of the

executive board, including his or her duties as a member of a committee:

(a) In good faith;

(b) On an informed basis; and

(c) In a manner he or she honestly believes to be in the best interests of the

corporation.

(2) Such board member shall be considered to discharge his or her duties on an

informed basis if he or she makes, with the care an ordinarily prudent person in a

like position would exercise under similar circumstances, inquiry into the business

and affairs of the association, or into a particular action to be taken or decision to be

made.

(3) In discharging his or he r duties, such board member shall be entitled to rely on

information, opinions, reports, or statements, including financial statements and

other financial data, if prepared or presented by:

(a) One (1) or more officers or employees of the association whom the board

member honestly believes to be reliable and competent in the matters

presented;

(b) Legal counsel, public accountants, or other persons as to matters the director

honestly believes are within the person's professional or expert competence; or

(c) A committee of the executive board of which he or she is not a member if the

board member honestly believes the committee merits confidence.

(4) A board member of an association shall not be considered to act in good faith if he

or she has knowledge conce rning the matter in question that makes reliance

otherwise permitted by subsection (3) of this section unwarranted.

(5) In addition to any other limitation on such board member's liability for monetary

damages contained in any provision of the association' s articles of incorporation

adopted in accordance with state law, any action taken as a board member, or any

failure to take any action as a board member, shall not be the basis for monetary

damages or injunctive relief unless:

(a) The board member has bre ached or failed to perform the duties of the board

member's office in compliance with this section; and

(b) In the case of an action for monetary damages, the breach or failure to perform

constitutes willful misconduct or wanton or reckless disregard for h uman

rights, safety, or property.

(6) A person bringing an action for monetary damages under this section shall have the

burden of proving by clear and convincing evidence the provisions of subsection

(5)(a) and (b) of this section, and the burden of provi ng that the breach or failure to

perform was the legal cause of the damages suffered.