Tennessee § 43-38-117 - Limitation of liability.

§ 43-38-117. Limitation of liability.

Except as provided in subsections (e) and (f), a member, holder of financial interest, director, officer, employee or other agent of a cooperative does not have any personal obligation and is not otherwise personally liable for the acts, debts, liabilities, or obligations of the cooperative, whether they arise in contract, tort or otherwise. A member, holder of financial interest, director, officer, employee or other agent of a cooperative does not have any personal obligation and is not otherwise personally liable for the acts or omissions of any other member, officer, director, employee or other agent of the cooperative. Notwithstanding subsection (a), a member, holder of financial interest, director, officer, employee or other agent may become personally liable in contract, tort or otherwise by reason of that person's own acts or conduct. The limited liability described in subsection (a) continues in full force regardless of any dissolution, winding up, and termination of a cooperative. A member, holder of financial interest, director, or officer of a cooperative is not a proper party to a proceeding by or against a cooperative except: Where the object of the proceeding is to enforce the person's right against or liability to the cooperative; In a derivative action brought pursuant to this chapter, the articles or the bylaws; or Where the proceeding asserts personal liability of the member, holder of financial interest, director or officer described in subdivision (a)(3). Notwithstanding any other provision of this chapter to the contrary, each person, member, or employee required to collect or truthfully account for, and pay over to the department of revenue any tax collected from the customers of a cooperative shall be personally liable for such taxes in the manner as responsible persons of a corporation under § 67-1-1443. The failure of a cooperative to observe the usual company formalities or requirements relating to the exercise of its cooperative powers or management of its business is not a ground for imposing personal liability upon the members, directors, officers, employees or other agents of the cooperative. Notwithstanding any provision to the contrary, the articles may provide that one (1) or more specifically identified members, as named in the articles, shall be personally liable for all of the debts, obligations and liabilities of the cooperative, and, if so, each such specifically identified member shall be liable to the same extent as a general partner in a general partnership; provided however, that: In order to be effective, each member so identified must sign the articles, or an amendment to the articles containing this provision; and Each member shall continue to be personally liable for debts, obligations and liabilities of the cooperative until the articles are amended to strike such member's name, but the amendment must be signed by the chief manager or secretary and any remaining members who continue to be identified in the articles as being personally liable for the debts, obligations and liabilities of the cooperative. A member who is identified in the articles as being personally liable has the power to withdraw from the cooperative by filing an amendment to the articles stating that the member has withdrawn from the cooperative and shall not be liable for any future debts, obligations and liabilities of the cooperative; provided, that such an amendment to the articles shall be effective immediately, except with respect to parties that have reasonably relied upon the articles naming the person as individually liable for the debts, obligations and liabilities of the cooperative. An amendment to the articles filed pursuant to subdivisions (f)(1) and (f)(2) is not effective against parties reasonably relying upon the articles until the passage of ninety (90) days from the filing of the amendment to the articles. Notwithstanding this subdivision (f)(3), the member or former member will continue to be liable for all debts and obligations of the cooperative incurred by the cooperative while the member assumed liability. Acts 2004, ch. 534, § 16.