1997 Regular Session
To: Judiciary A
By: Representatives Frierson, Horne
House Bill 868
AN ACT TO PRESCRIBE THE FIDUCIARY DUTY OF EXECUTIVE DIRECTORS OF STATE AGENCIES; TO PROVIDE FOR PENALTIES FOR VIOLATING THE PROVISIONS OF THIS ACT; TO PROVIDE THAT THIS ACT SHALL BE SUPPLEMENTAL TO OTHER PROVISIONS; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. (1) An executive director of a state agency shall discharge his duties as a director:
(a) In good faith;
(b) With the care an ordinarily prudent person in a like position would exercise under similar circumstances; and
(c) In a manner he reasonably believes to be in the best interests of the agency.
(2) In discharging his duties a director is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by:
(a) One or more officers or employees of the agency whom the director reasonably believes to be reliable and competent in the matters presented; or
(b) Legal counsel, public accountants, or other persons as to matters the director reasonably believes are within the person's professional or expert competence.
(3) A director is not acting in good faith if he has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (2) unwarranted.
(4) A director is not liable for any action taken as a director, or any failure to take any action, if he performed the duties of his office in compliance with this section.
SECTION 2. (1) A conflict of interest transaction is a transaction with the agency in which a director of the agency has a direct or indirect interest. A conflict of interest transaction is not voidable by the agency solely because of the director's interest in the transaction if any one of the following is true:
(a) The material facts of the transaction and the director's interest were disclosed or known to the Mississippi Ethics Commission and the commission authorized, approved, or ratified the transaction; or
(b) The transaction was fair to the agency.
(2) For purposes of this section, a director of the agency has an indirect interest in a transaction if (a) another entity in which he has a material financial interest or which he is a general partner is a party to the transaction or (b) another entity of which he is a director, officer, or trustee is a party to the transaction.
(3) For purposes of subsection (1)(a), a conflict of interest transaction is authorized, approved, or ratified if it receives the affirmative vote of a majority of the Mississippi Ethics Commission who have no direct or indirect interest in the transaction, but a transaction may not be authorized, approved, or ratified under this section by a single commissioner. If a majority of the commissioners who have no direct or indirect interest in the transaction vote to authorize, approve, or ratify the transaction, a quorum is present for the purpose of taking action under this section. The presence of, or a vote cast by, a commissioner with a direct or indirect interest in the transaction does not affect the validity of any action taken under subsection (1)(a) if the transaction is otherwise authorized, approved, or ratified as provided in that subsection.
SECTION 3. Any executive director who violates the provisions of this act shall be fined an amount equal to three times the cost of such violation and shall be removed from office.
SECTION 4. The provisions of this act shall be supplemental to the provisions of Section 25-4-1 et seq., Section 25-4-101 et seq. and any other provision of law.
SECTION 5. This act shall take effect and be in force from and after July 1, 1997.