Indemnification of Directors, Officers and Employees

Question 1

When must a corporation indemnify an officer or director?

Answer 1

when the officer is successful in defending a suit against themselves and incurs costs in doing so.

Question 2

When may a corporation indemnify a director?

Answer 2

when the officer is unsuccessful in defending a suit against themselves and incurs costs in doing so and 1) acted in good faith; 2) acted in the best interests of the company; and 3) did not act unlawfully.

Question 3

Are officers and directors indemnified to the same extent?

Answer 3

yes

Question 4

Can a court order indemnification of an officer or director?

Answer 4

yes

Question 5

When can a corporation advance funds to a director defending an action?

Answer 5

when the director gives the corporation a statement claiming to have met the appropriate standard of conduct and that he will repay the advance if he is later found to have not met the appropriate standard.