Redress Against Wayward Directors of Mutual Benefit Nonprofit Corporations Without Members - Articles

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Redress Against Wayward Directors of Mutual Benefit Nonprofit Corporations Without Members

Posted by: Azya Thornton on Jun 18, 2025

Court: TN Attorney General Opinions

Hearing Date: 06/03/2025

Opinion Number: 12

Question 1: If the directors of a mutual benefit nonprofit corporation without members breach their fiduciary duties or engage in unlawful actions, how—and by whom—can they be held accountable?

Opinion 1: A court may hold accountable the memberless corporation’s director or directors in a derivative action brought by another director on behalf of the corporation. Additionally, the Attorney General may ask a court in a direct action to dissolve the corporation or to provide other remedies in connection with claims that the corporation lacks or lacked the power to act.

Question 2: If affected individuals do not have standing to bring legal action, how are the fiduciary duties of good faith, loyalty, and care imposed upon directors under Tennessee law enforced in practice?

Opinion 2: See response to Question 1.

Question 3: Can the Attorney General and Reporter intervene in cases involving alleged illegal actions or abuse of authority by a mutual benefit nonprofit corporation without members?

Opinion 3: Yes, the Attorney General may intervene as of right in any proceeding brought by others under the Nonprofit Corporation Act if he was required to be provided notice of the proceeding or if he was statutorily authorized to commence the proceeding.

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