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Indemnification in bylaws?

11 years 8 months ago #161557 by texasebeth
Thanks for the advice. I think the former PTO was writing the bylaws as a corporation (since we are incorporated) versus as a non profit organization. There are some other screwy things in them as well.

The PTO is poor. We have insurance but to be honest I'm not even sure what kind. I've inherited a mess and am still sorting through old records, etc.

I did find one local school with only 1 sentence regarding indemnification in their bylaws. I put a call out to the PTO President but haven't heard back yet.

I'll check with a lawyer then.
11 years 9 months ago #161382 by MIDad
Replied by MIDad on topic Re:Indemnification in bylaws?
First, you need to understand the law in your state. Some states require nonprofits to indemnify their officers and directors; other states prohibit it. Some may even make it automatic.

Next, you need to determine whether the PTO has the financial resources to indemnify officers and directors. For instance, indemnification means the PTO would pay legal costs for an officer who successfully defends against a lawsuit regarding actions taken or not taken as an officer. That could quickly bankrupt many PTOs, so the next consideration is whether you need to purchase "directors and officers liability insurance". That will cost at least several hundred dollars a year but would pay the PTO's costs if the PTO actually had to indemnify anyone.

Finally, you need to balance the costs of D&O liability insurance and the risks of indemnifying your officers and directors against the risk that they'll be sued.

Even if you do keep an indemnification clause in your bylaws, though, four pages seems hugely excessive, but you really should consult a lawyer on this one. A poorly written indemnification statement could fail to protect your officers and directors or expose the PTO to crippling liability, or both.
11 years 9 months ago #161377 by texasebeth
Our PTO bylaws are very long and unwieldy. We are in the process of revamping and streamlining the 21 pages into bylaws and policy & procedures.
My question is in the current bylaws there are about 4 pages dedicated to Indemnification. Is all that necessary to be in the bylaws?

All the PTOs I've researched do not have anything about Indemnification anywhere in their bylaws.
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