InsurancE & Indemnification

Question 1

Delaware Corporate Law

Answer 1

authorizes corporations to indemnify Directors and Officers of the corporation for legal fees incurred in defending suits that arise out of their corporate duties. It also authorizes corporations to purchase insurance on directors and officers to pay for such expenses in the event that they are sued.

Question 2

Indemnification for 3rd Party Suits under DE Law

Answer 2

authorizes the corporation to indemnify for third party suits subject to the following limitations:

1. Must have acted in good faith and in the best interest of the corporation.
2. Must not have knowingly violated a criminal law, but can be indemnified if they didn’t know that what they were doing was illegal.
3. They can be indemnified for expenses in defending the suit and the ultimate liability on the suit.

Question 3

Indemnification for Corporate Suits under DE Law

Answer 3

• authorizes the corporation to indemnify for derivative suits or suits by the corporation for breach of duty.
• The corporation will not pay the legal fees if the director is found to be liable, if the director is not found to be liable or settles the corporation can indemnify for legal fees.

Question 4

Mandatory Indemnification

Answer 4

makes indemnification mandatory if the director is successful on the merits or otherwise.

Question 5

Insurance

Answer 5

A corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director officer employee or agent of the corporation whether or not the corporation would have the power to indemnify that person.