D.C. Mun. Regs. tit. 26, r. 26-A4504

Current through Register Vol. 71, No. 49, December 6, 2024

Rule 26-A4504 - FIDUCIARY OBLIGATIONS OF BOARD MEMBERS

4504.1

Directors shall carry out the corporation's purposes as set forth in its charter. In fulfilling this obligation, directors shall:

(a) Annually review the corporation's charter, by-laws and District of Columbia and federal law governing the corporation's operations;

(b) Review the activities of the corporation's officers, employees, and agents to ensure that they comply with the provisions of the corporation's charter, by-laws and District of Columbia and federal law governing the corporation's operations;

(c) Promptly investigate any case where a director learns of a suspected violation of the corporation's charter, by-laws or state or federal laws governing the corporation's operations by an officer or employee of the corporation;

(d) Review the use of the corporation's funds; and

(e) Use professional legal and financial advisors to monitor changes in the law and to ensure the corporation's compliance with all legal requirements.

4504.2

Directors shall act in good faith, in a reasonably prudent manner, and in a manner reasonably believed to further the best interests of the corporation as a charitable and benevolent institution. In fulfilling this obligation, Directors shall:

(a) Exhibit fairness, openness, and honesty in all corporation business;

(b) Apply sound practical judgment when making decisions for the corporation;

(c) Be attentive to the operations of the corporation and alert to potential problems;

(d) Manage the financial affairs of the corporation carefully and responsibly;

(e) Comply with all regulatory requirements affecting the corporation;

(f) Secure independent professional advice regarding any proposals that may result in a financial benefit for officers of the corporation; and

(g) Secure independent professional advice for any matter beyond the expertise of the board or the board committee considering the issue.

4504.3

Directors shall give their complete and undivided loyalty to the corporation's mission as set forth in ITS charter. In fulfilling this obligation; Directors shall:

(a) Further the goals of the corporation and not their own interests;

(b) Ensure that any prerequisites of their position are customary for directors of similar corporations;

(c) Ensure that they do not use their position or any information they receive in their official capacity to gain any personal advantage;

(d) Not receive excessive compensation or benefits;

(e) Not receive loans from the corporation; and

(f) Not use their positions to benefit third persons.

4504.4

Directors shall be entitled to rely upon information provided to them by officers and employees, but only to the extent that a reasonable person would believe such information to be reliable and competent. Directors have an affirmative duty to investigate any information provided to them by officers and employees that does not reasonably appear to be reliable and competent.

4504.5

Directors shall be entitled to rely upon the advice of lawyers and accountants regarding a director's compliance with these rules, but only to the extent that a reasonable person would believe such advice to be reliable and competent. Directors shall obtain a second opinion whenever advice provided to them by lawyers and accountants does not reasonably appear to be reliable competent.

D.C. Mun. Regs. tit. 26, r. 26-A4504

Notice of Final Rulemaking published at 51 DCR 9011, 9014 (September 17, 2004)

Authority: The Commissioner of the Department of Insurance, Securities and Banking, pursuant to the authority set forth in section 4 of the Department of Insurance and Securities Regulation Establishment Act of 1996, effective May 21, 1997 (D.C. Law 11-268; D.C. Official Code § 31-103(a)(1) (2001)) and section 21 of the Hospital and Medical Services Corporation Regulatory Act of 1996, effective April 9, 1997 (D.C. Law 11-245; D.C. Official Code § 31-3520 (2001)).