369.124. Reimbursement of certain legal costs, when--liability insurance for certain personnel, who may issue, policy modifications, how--reciprocal organizations, when, annual report.
Reimbursement of certain legal costs, when--liability insurance forcertain personnel, who may issue, policy modifications,how--reciprocal organizations, when, annual report.
369.124. 1. Subject to the provisions of subsections 2 and3 of this section, any person shall be indemnified or reimbursedby the association for reasonable expenses actually incurred bysuch person, including but not limited to reasonable attorneyfees, and for amounts actually paid on account of compromise,settlement or discharge of any claim asserted or any judgment ordecree rendered against such person in connection with anyaction, suit or proceeding, instituted or threatened, judicial oradministrative, civil or criminal, to which the person is made aparty or has otherwise become involved by reason of such person'sbeing or having been a director, officer or employee of theassociation.
2. Except as provided in subsection 3 of this section, noperson shall be so indemnified or reimbursed, nor shall theperson retain any advancement or allowance for indemnificationwhich may have been made by the association in advance of finaldisposition, in relation to such action, suit or proceeding tothe extent that it is determined by final adjudication orotherwise, that the person is guilty of a breach of good faith orhas been negligent in the performance of such person's duties, orhas committed an act or failed to perform a duty for which thereis a common law or a statutory liability.
3. Notwithstanding the provisions of subsection 2 of thissection, a person may be so indemnified or reimbursed even thoughnegligent or having committed an act or failed to perform a dutyfor which there is a common law or a statutory liability, if:
(1) The board of directors finds that the person acted ingood faith and in what he believed to be the best interests ofthe association and approves the indemnification orreimbursement; and
(2) The director of the division of finance concurs in thefindings of the board set forth in subdivision (1) of thissubsection, and approves such indemnification or reimbursement.
4. Amounts paid to the association whether pursuant tojudgment or settlement by any person included in subsection 1 ofthis section shall not be indemnified or reimbursed in any case.
5. The association at its cost may obtain insurance toprotect it, its directors, officers and employees against lossesarising out of claims of negligence or misconduct, both those forwhich the association may indemnify a person under this sectionand those for which no indemnification may be made. Suchinsurance policy shall be issued by an insurance company licensedto do business in this state and shall be in such form asapproved by the director of the division of finance. Nomodification of the terms shall be made by any insurance companywithout serving prior written notice on the director of thedivision of finance setting forth the proposed changes. Uponreceipt of such notice, the director of the division of financeshall send copies to all associations covered by such policiesand invite comments thereon. The director of the division offinance may, in the director's discretion, order a hearing to beheld. The requested change shall become effective within ninetydays unless the director of the division of finance shall issuean order denying the change.
6. In the event it appears to the director of the divisionof finance that such directors', officers' and employees'liability insurance policies are not available or are notavailable at premium rates which the director of the division offinance deems reasonable, then the director of the division offinance, upon a petition signed by twenty or more associationscovered by this chapter, may permit the establishment of areciprocal organization on such terms as the director of thedivision of finance may require to provide directors', officers'and employees' liability insurance coverage, and any associationcovered by this chapter and any federal association with itsprincipal office in this state may become a member thereof. Suchreciprocal organization, if established, shall render an annualreport to the director of the division of finance and shall besubject to examination by the director of the division offinance.
(L. 1971 S.B. 3 § 24, A.L. 1982 S.B. 464, A.L. 1994 H.B. 1165)Effective 7-6-94