Co-Operative Societies Act 2008
76. Liability of directors
1. Where directors vote for, approve by resolution or by any other means—
a. the purchase of shares contrary to section 94;
b. the payment of a dividend on shares contrary to section 123;
c. the payment of a bonus contrary to section 123;
d. a loan or guarantee or the giving of financial assistance contrary to section 115;
e. a payment of an indemnity described in section 73 to a director or a former director, without the approval of the court required by subsection (3) of that section; or
f. an act not consistent with the purpose of the society as set out in its by-laws and with respect to which the society has paid compensation to a person, they are jointly and severally liable to make good any loss or damage suffered by the society.
2. On the application of a director, the court may declare whether or not, having regard to any of the circumstances the court considers appropriate—
a. the society is insolvent; or
b. the payment of a bonus or dividend or the lending of money would make the society insolvent.
3. The liability imposed by subsection (1) is in addition to and not in derogation from a liability imposed on a director by any other enactment or rule of law.
4. For the purpose of this section, a director who is present at a meeting of directors or of a committee is deemed to have cast an affirmative vote, giving consent to a resolution or giving the approval mentioned in subsection (1), unless—
a. the director’s dissent is entered in the minutes of the meeting; or
b. the director’s written dissent is—
i. delivered to the secretary of the meeting before its adjournment; or
ii. delivered or sent by registered mail to the registered office of the society immediately after the adjournment of the meeting.
5. A director who votes for a resolution mentioned in subsection (1) is not entitled to dissent under subsection (4).
6. Where a director is not present at a meeting of directors or of a committee at which a vote, resolution or approval mentioned in subsection (1) is cast or given, he is deemed to have cast an affirmative vote, consented to the resolution or given approval, unless, within 14 days after becoming aware of the proceedings, the director delivers or sends by registered mail his written dissent to the registered office of the society.
7. On receipt of a written dissent, the secretary of the society shall—
a. certify on the written dissent the date, time and place it is received, and
b. keep the written dissent in the minutes of the meeting at which the resolution was passed.
8. No action to enforce a liability imposed in subsection (1) is to be commenced after 2 years from the date of the meeting at which the vote resolution or approval was taken or given.
9. In an action to enforce a liability imposed in subsection (1), the Court may, on the application of the society of a defendant—
a. join as a defendant a person who received a benefit as a result of the resolution complained of; and
b. make the person mentioned in paragraph (a) liable to the society jointly and severally with the directors to the extent of the amount paid to him.
10. A director is not liable under subsection (1) where he—
a. proves that he did not know or could not reasonably have known that the act authorised by the resolution was contrary to this Act;
b. relies and acts in good faith—
i. on statements of facts represented to him by an officer of the society to be correct, or
ii. on statements contained in a written report or opinion of the auditor of the society or a professional person engaged by the society who is competent to give advice in respect of the matter.
11. A director who is found liable pursuant to subsection (1) is entitled to apply to a Court for an order compelling a member or other recipient to pay or deliver to the director any money or property that was paid or distributed to the member, or other recipient contrary to section 94,115 or 123.
12. In connection with an application pursuant to subsection (11) and where the Court is satisfied that it is equitable to do so, it may—
a. order a member or other recipient to pay or deliver to a director any money or property that was paid or distributed to the member or other recipient contrary to section 94, 115 or 123; or
b. make an order, other than that described in paragraph (a), that it consider just.