Are the 'incorporators' of a Maine nonprofit healthcare corporation, who number between 200 and 700 people and meet annually to elect trustees and vote on bylaws, already immune from corporate liability under the Maine Nonprofit Corporation Act?

Plain-English summary

Representative Rita B. Melendy asked AG James E. Tierney whether the "incorporators" of Northeast Health, Inc., a Rockland-area nonprofit healthcare corporation, were already immune from corporate liability or whether the Legislature needed to enact L.D. 1769 to make them so. Northeast Health's bylaws established a group of 200 to 700 "incorporators" who met at least annually to vote on bylaw changes, elect the smaller Board of Trustees that ran day-to-day operations, and take other governance actions. The Judiciary Committee, considering L.D. 1769, asked through Representative Melendy whether the existing statute already covered these incorporators.

Tierney concluded it did. Section 402(2) of the Maine Nonprofit Corporation Act, 13-B M.R.S.A. § 101 et seq., provides that "the directors, officers, employees and members of the corporation shall not, as such, be liable on its obligations." The term "incorporator" is not in that list, which is what prompted the proposed amendment. But the term "member" is defined separately in § 102(8) to include "persons by whatever name designated, including corporators" who have "membership rights in a corporation in accordance with the provisions of its articles in a corporation or by-laws."

Tierney applied that definition to Northeast Health's structure. The bylaws created the office of "incorporator." Persons elected to that office exercised membership rights, including bylaw amendment and trustee election authority. They therefore qualified as members under § 102(8), and as members they were already immune under § 402(2). L.D. 1769 was unnecessary.

Tierney added a cautionary footnote: enacting L.D. 1769 would substantially expand the immunity provision because the term "incorporator" is used elsewhere in the Maine Nonprofit Corporation Act to refer to persons who create the corporation in the first place (signing the articles of incorporation). If the Legislature added "incorporator" to § 402(2), the immunity might extend beyond governance to formation-stage actors in ways the Judiciary Committee may not have intended. The textually cleaner result was to leave the statute alone and rely on the existing "member" definition.

Currency note

This opinion was issued in 1989. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What does the immunity in § 402(2) actually cover?

Section 402(2) makes directors, officers, employees, and members of a Maine nonprofit corporation not liable "on its obligations." That is liability for the corporation's contracts, debts, and similar obligations, the standard veil that separates personal liability from corporate liability. The provision does not address tort liability, intentional wrongdoing, or any of the other contexts in which a board member might still face personal exposure.

Why are healthcare nonprofits structured with hundreds of "incorporators"?

The Northeast Health model used a large, diffuse membership body that delegated operational authority to a smaller Board of Trustees. The structure preserved broad community representation in the corporation (200-700 incorporators), with periodic accountability through annual meetings on bylaws and trustee elections, while keeping day-to-day governance manageable through the trustees. This was a common pattern for community hospitals and healthcare systems in the 1980s.

What is "L.D. 1769" and why was the committee considering it?

L.D. 1769 was a Maine House bill in the 114th Legislature (1989) that would have added "incorporators" to the immunity provision in § 402(2). The bill responded to concern that the existing list might not cover incorporators by name. Tierney's opinion concluded the concern was unfounded because the "member" definition already covered them.

Why does the meaning of "incorporator" matter for the legislative drafting?

Maine's nonprofit corporation statute uses "incorporator" in two distinct senses. In Northeast Health's bylaws, "incorporator" referred to the bylaw-designated members of the corporate body. Elsewhere in the Act, "incorporator" refers to the founders who sign the articles of incorporation. Adding the word to § 402(2) would extend immunity to both classes, which the Legislature may not have intended. Tierney's recommendation to leave the statute alone avoided that drafting trap.

Background and statutory framework

The Maine Nonprofit Corporation Act, like its for-profit counterpart, builds in personal-liability protection for those who participate in corporate governance, so long as they do so in their official capacity rather than personally. Section 402(2) is the operative immunity provision. The definitional architecture in § 102 controls which classes of participants get protection: "member" is defined functionally (anyone with membership rights in the articles or bylaws) rather than by formal title. That functional definition is what let Tierney conclude that a corporation's "incorporators" (in the bylaw sense) are members for § 402(2) purposes, even though the immunity provision does not name them. The opinion is a clean piece of statutory construction with practical implications for nonprofit governance: the bylaws decide who counts as a member, and members are protected.

Citations

• 13-B M.R.S.A. § 101 et seq. (Maine Nonprofit Corporation Act)
• 13-B M.R.S.A. § 102(8) (definition of "member" including corporators)
• 13-B M.R.S.A. § 402(2) (immunity of directors, officers, employees, and members)
• L.D. 1769 (114th Legis. 1989) (proposed amendment adding "incorporator" to immunity list)

Source

• Landing page: https://www.maine.gov/legis/lawlib/lldl/agops/agops.htm
• Original PDF: https://lldc.mainelegislature.org/Open/AG/Opinions/1989/ag_19890620b.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

89-10

JAMES E. TIERNEY
ATTORNEY GENERAL

STATE OF MAINE
DEPARTMENT OF THE ATTORNEY GENERAL
STATE HOUSE STATION 6
AUGUSTA, MAINE 04333

June 20, 1989

Honorable Rita B. Melendy
Maine House of Representatives
State House Station #2
Augusta, ME 04333

Dear Representative Melendy:

You have inquired into whether the immunity provisions of the Maine Nonprofit Corporation Act apply to the "incorporators" of Northeast Health, Inc., a nonprofit corporation which operates various institutional providers of health services in the Rockland area. For the reasons which follow, it is the opinion of this Department that the "incorporators" of Northeast Health, Inc. are immune from liability for their official acts.

Section 402(2) of the Maine Nonprofit Corporation Act, 13-B M.R.S.A. § 101 et seq., provides:

The directors, officers, employees and members of the corporation shall not, as such, be liable on its obligations.

You indicate that the by-laws of Northeast Health, Inc., which is incorporated under the Act, contemplate a group of between 200 and 700 "incorporators" who are nominated by existing "incorporators," and who meet at least annually for the purpose of voting on the changes in the by-laws; choosing a smaller group of people known as the "Board of Trustees," which exercises operational authority over the various institutions within the corporation; and taking other appropriate action. Since the term "incorporator" is not included in the list of persons immune from liability set forth in section 402(2), you have introduced legislation to add the word "incorporator" to that section. Legislative Document 1769 (114th Legis. 1989).

At the request of the Judiciary Committee, to which this legislation was assigned, you have asked whether the "incorporators" of Northeast Health, Inc. may be considered as already covered by section 402(2), thus obviating the need for your legislation. In the view of this Department, they are so covered. One of the classes of persons rendered immune by section 402(2) consists of "members of the corporation." The term member is defined by section 102(8) of the Act as follows:

'Member' includes persons by whatever name designated, including corporators, and means one having membership rights in a corporation in accordance with the provisions of its articles in a corporation or by-laws.

According to the description with which you have provided this Department, the "incorporators" of Northeast Health, Inc. appear clearly to fit this definition. The office of "incorporator" is established by the by-laws of the corporation, and persons appointed to such office exercise membership rights in the corporation in that they are responsible for its general governance. Accordingly, they are immune for any actions taken in their official capacity, and there is no need to amend section 402(2) to include the word "incorporator" to cover them. Indeed, the inclusion of such a word would substantially increase the range of liability to persons not already covered, since the term "incorporator" is used elsewhere in the Maine Nonprofit Corporation Act to refer to persons who create the corporation in the first place.

I hope the foregoing answers your question. Please feel free to reinquire if further clarification is necessary.

Sincerely,
JAMES E. TIERNEY
Attorney General

JET:SW

cc: Senator Barry J. Hobbins, Representative Patrick E. Paradis, Co-Chairmen, Joint Standing Committee on the Judiciary