It is a Class B misdemeanor for any director of an association to concur in any vote or act of the directors of the association if the director knows or has reason to know that the vote or act is intended to:

(1) Place the association in an impaired condition;

Attorney's Note

Under the Tennessee Code, punishments for crimes depend on the classification. In the case of this section:
ClassPrisonFine
class B misdemeanorup to 6 monthsup to $500
For details, see Tenn. Code § 40-35-111

Terms Used In Tennessee Code 45-3-1309

  • Association: means a capital stock or mutual savings and loan association. See Tennessee Code 45-3-104
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • Impaired condition: means a condition in which the assets of an association in the aggregate do not equal the aggregate amount of its liabilities. See Tennessee Code 45-3-104
  • Reason to know: means that, upon the information available, a person of ordinary intelligence in the particular business, or of the superior intelligence or experience that the person in question may have, would infer that the fact in question exists or that there is such a substantial chance of its existence that, if exercising reasonable care with reference to the matter in question, conduct would be predicated upon the assumption of its possible existence. See Tennessee Code 45-1-103
(2) Cause the association to pay dividends on its outstanding capital stock in violation of law;
(3) Cause a reduction of the capital stock of an association in violation of law;
(4) Cause the association to receive or discount any note or other evidence of debt in payment of capital stock required to be paid; or
(5) Apply any of the funds of the association, except as permitted by law, directly or indirectly, to the purchase of shares of its own capital stock.
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