SRC-BWC S.B. 731 77(R)BILL ANALYSIS


Senate Research CenterS.B. 731
By: Brown, J. E. "Buster"
Jurisprudence
5/30/2001
Enrolled


DIGEST AND PURPOSE 

Currently, volunteer directors in a nonprofit corporation receive only
limited liability with respect to acts and omissions performed within the
scope of their duties.  S.B. 731 amends the Texas Non-Profit Corporation
Act to include a limitation on officer liability.  S.B. 731 exempts a
nonprofit corporation officer from liability concerning any action taken or
omission made, unless the officer's conduct was not made in good faith or
in the best interest of the corporation.   

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends the Texas Non-Profit Corporation Act (Article 1396-1.01
et seq., V.T.C.S.), by adding Article 2.22, as follows: 

Art. 2.22.  OFFICER LIABILITY.  Provides that an officer is not liable to
the corporation or any other person for an action taken or omission made by
the officer in the person's capacity as an officer unless the officer's
conduct was not exercised in good faith, with ordinary care, and in a
manner the officer reasonably believes to be in the best interest of the
corporation. Prohibits this article from affecting the liability of the
corporation for an act or omission of the officer. 

SECTION 2.  Effective date:  September 1, 2001.
                       Makes application of this Act prospective.