Texas Statutes
Subchapter F. Powers and Duties of Fraternal Benefit Society
Section 885.256. Indemnification or Reimbursement in Relation to Breach of Duty Prohibited

Sec. 885.256. INDEMNIFICATION OR REIMBURSEMENT IN RELATION TO BREACH OF DUTY PROHIBITED. (a) Except as provided by Subsection (b), a person may not be indemnified or reimbursed under Section 885.255 in relation to:
(1) a matter in a proceeding in which the person is finally adjudged guilty of breach of a duty as a director, officer, employee, or agent of the fraternal benefit society; or
(2) an agreement that settles:
(A) a matter in a proceeding described by Subdivision (1); or
(B) the threat of a proceeding involving the person's alleged breach of a duty as a director, officer, employee, or agent of a fraternal benefit society.
(b) A fraternal benefit society may indemnify or reimburse a person in relation to a matter described by Subsection (a) only if the supreme governing body, the board of directors, or a court determines that:
(1) the person acted in good faith for a purpose the person reasonably believed to be in or not opposed to the best interests of the society; and
(2) in a criminal proceeding, the person had no reasonable cause to believe that the person's conduct was unlawful.
(c) A determination by a supreme governing body or board of directors under Subsection (b) must be made by majority vote of a quorum consisting of persons who were not parties to the proceeding under review.
(d) The termination of a proceeding by judgment, order, settlement, or conviction or on a plea of no contest does not create a conclusive presumption that a person does not meet the standard of conduct required to justify indemnification and reimbursement.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.

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