Directors Accused of Personal Benefit May Not Be ‘Independent’ to Decide on Suit

Court questions role of accused directors in deciding whether derivative action should proceed

Directors of a homeowners’ association accused of obtaining personal benefit from their allocation of limited road construction and maintenance funds may not be sufficiently “independent” to determine whether a derivative suit brought against them by other homeowners is in the best interests of the corporation, the Utah Supreme Court has ruled. It has reversed a trial court decision dismissing the case when the committee conducted an investigation and recommended that the suit be dismissed. ( Hi-Country Property Rights Group v. Emmer , Supreme Ct., UT, No. 20120202, 6/7/13. )

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Directors Accused of Personal Benefit May Not Be ‘Independent’ to Decide on Suit

Directors Accused of Personal Benefit May Not Be ‘Independent’ to Decide on Suit