Arkansas Indemnification of Corporate Director

• Category: Corporations - Officers and Employees
• State: Multi-State
• Control #: US-13374BG
• Format: Word; Rich Text

Description

Indemnification is where the company reimburses a director or officer for the attorneys' fees and costs, and potentially judgments, incurred in connection with claims arising out of the director's or officer's service to the company. Arkansas Indemnification of Corporate Director is a legal provision designed to protect corporate directors in Arkansas from financial liabilities arising from their actions or decisions made in their role as directors of a company. This protection is provided through indemnification, which is the reimbursement or compensation of expenses or losses incurred by directors in legal proceedings or lawsuits. Under Arkansas law, there are two main types of indemnification available for corporate directors: mandatory indemnification and permissive indemnification. 1. Mandatory Indemnification: Mandatory indemnification is provided under Arkansas Business Corporation Act (ABCs) Section 4-32-860. According to this provision, a corporation must indemnify a director who was successful in defending any claim or proceeding against them by reason of their position as a director of the corporation. This includes reimbursement of reasonable expenses incurred, such as legal fees, court costs, and other related costs. 2. Permissive Indemnification: Permissive indemnification, as per ABCs Section 4-32-861, allows a corporation to indemnify a director if it is determined that the director has acted in good faith, in a manner they reasonably believed to be in the best interests of the corporation, and with the care an ordinary prudent person in a similar position would exercise. This provision applies to situations where the director is facing legal actions or liabilities due to their actions or decisions taken in their capacity as a director. In addition to the types of indemnification, it is important to mention that the protection provided under Arkansas Indemnification of Corporate Director may also include the advancement of expenses. This means that if a director is involved in legal proceedings, the corporation may advance funds to cover the costs of legal defense before the final outcome of the case. Arkansas Indemnification of Corporate Director is a crucial provision that offers financial protection to corporate directors, encouraging them to fulfill their duties without the fear of personal liability. It serves to attract qualified individuals to serve on corporate boards, ensuring the availability of competent directors who can contribute to the successful operation and growth of businesses in Arkansas.

Arkansas Indemnification of Corporate Director is a legal provision designed to protect corporate directors in Arkansas from financial liabilities arising from their actions or decisions made in their role as directors of a company. This protection is provided through indemnification, which is the reimbursement or compensation of expenses or losses incurred by directors in legal proceedings or lawsuits. Under Arkansas law, there are two main types of indemnification available for corporate directors: mandatory indemnification and permissive indemnification. 1. Mandatory Indemnification: Mandatory indemnification is provided under Arkansas Business Corporation Act (ABCs) Section 4-32-860. According to this provision, a corporation must indemnify a director who was successful in defending any claim or proceeding against them by reason of their position as a director of the corporation. This includes reimbursement of reasonable expenses incurred, such as legal fees, court costs, and other related costs. 2. Permissive Indemnification: Permissive indemnification, as per ABCs Section 4-32-861, allows a corporation to indemnify a director if it is determined that the director has acted in good faith, in a manner they reasonably believed to be in the best interests of the corporation, and with the care an ordinary prudent person in a similar position would exercise. This provision applies to situations where the director is facing legal actions or liabilities due to their actions or decisions taken in their capacity as a director. In addition to the types of indemnification, it is important to mention that the protection provided under Arkansas Indemnification of Corporate Director may also include the advancement of expenses. This means that if a director is involved in legal proceedings, the corporation may advance funds to cover the costs of legal defense before the final outcome of the case. Arkansas Indemnification of Corporate Director is a crucial provision that offers financial protection to corporate directors, encouraging them to fulfill their duties without the fear of personal liability. It serves to attract qualified individuals to serve on corporate boards, ensuring the availability of competent directors who can contribute to the successful operation and growth of businesses in Arkansas.