Legal Question in Business Law in Texas

Personal Liability If Serving On Non-Profit Board

I am considering whether to accept a position as President of a non-profit organization. If anyone wishes to sue the organization, are my personal assets at risk, since I'd likely be named as a defendant or party in the suit?

This is a non-religious group, a sports/recreation group in Texas. There used to be insurance for this type of thing but I believe most companies have stopped offering this protection in our area.

We certainly don't consider ourselves a controversial organization in any way, but we had a case 3 years ago where someone injured themselves (or claimed to) and brought suit - it was eventually discarded. So it can happen, even to the most seemingly benign group like ours.

So I want to know if in the event of such a lawsuit, since I volunteer and receive no compensation, if the litigant could try to recover damages from my personal, not organizational assets.

Thanks


Asked on 2/24/03, 1:16 pm

1 Answer from Attorneys

Re: Personal Liability If Serving On Non-Profit Board

Liability is different depending on the type of entity the organization chose to form under (corporations, LLC, partnerships etc).

Also look at the document it filed to crete itself (Articles of Incorporation, Articles of Organization, ect). You want to make sure that as the president that the organization maintains funds to avoid undercapitalization. There are companies who do provide liability insurance officers and directors. IF you take the position, this may be the first item of business.

Generally a president will be named solely because he/she represents the organization. It is usually a formality unless there is another strategy at play.

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Answered on 2/24/03, 1:35 pm


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