Section 369.124

Title XXIV BUSINESS AND FINANCIAL INSTITUTIONS

Chapter 369

Effective - 06 Jul 1994, see footnote   

  369.124.  Reimbursement of certain legal costs, when — liability insurance for certain personnel, who may issue, policy modifications, how — reciprocal organizations, when, annual report. — 1.  Subject to the provisions of subsections 2 and 3 of this section, any person shall be indemnified or reimbursed by the association for reasonable expenses actually incurred by such person, including but not limited to reasonable attorney fees, and for amounts actually paid on account of compromise, settlement or discharge of any claim asserted or any judgment or decree rendered against such person in connection with any action, suit or proceeding, instituted or threatened, judicial or administrative, civil or criminal, to which the person is made a party or has otherwise become involved by reason of such person's being or having been a director, officer or employee of the association.

  2.  Except as provided in subsection 3 of this section, no person shall be so indemnified or reimbursed, nor shall the person retain any advancement or allowance for indemnification which may have been made by the association in advance of final disposition, in relation to such action, suit or proceeding to the extent that it is determined by final adjudication or otherwise, that the person is guilty of a breach of good faith or has been negligent in the performance of such person's duties, or has committed an act or failed to perform a duty for which there is a common law or a statutory liability.

  3.  Notwithstanding the provisions of subsection 2 of this section, a person may be so indemnified or reimbursed even though negligent or having committed an act or failed to perform a duty for which there is a common law or a statutory liability, if:

  (1)  The board of directors finds that the person acted in good faith and in what he believed to be the best interests of the association and approves the indemnification or reimbursement; and

  (2)  The director of the division of finance concurs in the findings of the board set forth in subdivision (1) of this subsection, and approves such indemnification or reimbursement.

  4.  Amounts paid to the association whether pursuant to judgment or settlement by any person included in subsection 1 of this section shall not be indemnified or reimbursed in any case.

  5.  The association at its cost may obtain insurance to protect it, its directors, officers and employees against losses arising out of claims of negligence or misconduct, both those for which the association may indemnify a person under this section and those for which no indemnification may be made.  Such insurance policy shall be issued by an insurance company licensed to do business in this state and shall be in such form as approved by the director of the division of finance.  No modification of the terms shall be made by any insurance company without serving prior written notice on the director of the division of finance setting forth the proposed changes.  Upon receipt of such notice, the director of the division of finance shall send copies to all associations covered by such policies and invite comments thereon.  The director of the division of finance may, in the director's discretion, order a hearing to be held.  The requested change shall become effective within ninety days unless the director of the division of finance shall issue an order denying the change.

  6.  In the event it appears to the director of the division of finance that such directors', officers' and employees' liability insurance policies are not available or are not available at premium rates which the director of the division of finance deems reasonable, then the director of the division of finance, upon a petition signed by twenty or more associations covered by this chapter, may permit the establishment of a reciprocal organization on such terms as the director of the division of finance may require to provide directors', officers' and employees' liability insurance coverage, and any association covered by this chapter and any federal association with its principal office in this state may become a member thereof.  Such reciprocal organization, if established, shall render an annual report to the director of the division of finance and shall be subject to examination by the director of the division of finance.

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(L. 1971 S.B. 3 § 24, A.L. 1982 S.B. 464, A.L. 1994 H.B. 1165)

Effective 7-06-94