Authority to indemnify director
- report to members
(1)Except as provided in subsection (4) of this section, a cooperative may indemnify an individual against liability incurred in a proceeding to which the individual was made a party because the individual is or was a director if:
(a)The conduct of the individual was in good faith;
(b)The individual reasonably believed that the individual’s conduct was in the best interests of the cooperative, or at least was not opposed to the cooperative’s best interests; and
(c)In the case of a criminal proceeding, the individual did not have reasonable cause to believe the individual’s conduct was unlawful.
(2)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 beneficiaries of the plan is conduct that satisfies the requirement of subsection (1)(b) of this section.
(3)Terminating a proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or the equivalent of nolo contendere does not, of itself, determine that the director did not meet the standard of conduct described in this section.
(4)A cooperative may not indemnify a director under this section in connection with:
(a)A proceeding by or in the right of the cooperative in which the director was adjudged liable to the cooperative; or
(b)A proceeding that charged the director with and adjudged the director liable for improperly receiving a personal benefit.
(5)Indemnification permitted under this section in connection with a proceeding by or in the right of the cooperative is limited to reasonable expenses incurred in connection with the proceeding.
(6)(a) A cooperative that provides indemnification to a director in accordance with the cooperative’s articles of incorporation or bylaws may not amend the articles of incorporation or bylaws so as to eliminate or impair the director’s right to indemnification after an act or omission occurs that subjects the director to a proceeding or to liability for which the director seeks indemnification under the terms of the articles of incorporation or bylaws.
(b)Notwithstanding the prohibition set forth in paragraph (a) of this subsection, a cooperative may eliminate or impair a director’s right to indemnification if at the time the act or omission occurred the cooperative’s articles of incorporation or bylaws explicitly authorized the cooperative to eliminate or impair the right after an act or omission occurs.
(7)If a cooperative indemnifies or advances expenses to a director under this section or ORS 62.466 (Mandatory indemnification of director), 62.468 (Advance for expenses) or 62.472 (Court-ordered indemnification) in connection with a proceeding by or in the right of the cooperative, the cooperative shall report the indemnification or advance in writing to the members with or before the notice of the next membership meeting. [1995 c.195 §16; 2011 c.227 §3]
Atty. Gen. Opinions
Homestead as applied to a shareholder-tenant in a cooperative apartment, (1971) Vol 35, p 897