Under what circumstances is indemnification of a director's expenses from litigation mandatory under Delaware law?

C. 145) gives Delaware corporations the power to indemnify any person who has been made a party to a proceeding "by reason of" that person's service to the corporation. This indemnification becomes mandatory if the person succeeds in that proceeding.

What is the purpose of an indemnification agreement?

Indemnification clauses are clauses in contracts that set out to protect one party from liability if a third-party or third entity is harmed in any way. It's a clause that contractually obligates one party to compensate another party for losses or damages that have occurred or could occur in the future.

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Director Favorable Director Indemnification Agreement

California Director Favorable Director Indemnification Agreement

Name: California Director Favorable Director Indemnification Agreement
Brand: US Legal Forms
Rating: 4.63 (380 reviews)

Category:

Corporations - Due Diligence

State:

Multi-State

Control #:

US-DD0603

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Description

This is a due diligence contract provision that a company will provide reimbursement for any losses that the director may incur in business transactions.

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Indemnification under Companies Act, 2013: While Section 201 of the erstwhile Companies Act, 1956 had restricted a company from indemnifying the directors of the company, the Companies Act, 2013 does not have any such restriction and therefore, directors can now be indemnified by companies against liabilities.

C. § 145) gives Delaware corporations the power to indemnify any person who has been made a party to a proceeding "by reason of" that person's service to the corporation. This indemnification becomes mandatory if the person succeeds in that proceeding.

Indemnification clauses are clauses in contracts that set out to protect one party from liability if a third-party or third entity is harmed in any way. It's a clause that contractually obligates one party to compensate another party for losses or damages that have occurred or could occur in the future.

Subject to the exceptions mentioned below, the Companies Law prohibits a company and its subsidiaries from exempting any director from, or indemnifying any director against, any liability incurred by the director as a result of the director acting as a director of the company.

Companies may indemnify directors against the legal and financial costs of proceedings brought by third parties. This does not extend to the legal costs of unsuccessful defence of criminal proceedings, fines imposed by criminal proceedings and fines imposed by regulatory bodies.

Any UK company can now indemnify any of its directors, and any director of a company in the same group, against damages, costs and interest awarded against him in civil proceedings brought by a third party, and against legal and other costs incurred in defending both civil and criminal proceedings if and when the

A director's or officer's right to indemnification and advancement of expenses is subject to the company's ability to pay, and several legal limitations. Bankruptcy Law Limits. Claims against directors and officers more frequently occur when the company is under financial distress that leads to bankruptcy.

Further, in light of the recent amendments to Section 145, only certain officers are entitled to mandatory indemnification of expenses as a matter of law when they are successful on the merits; an indemnification agreement allows a director or officer to secure such rights in the absence of express statutory coverage.

By statute, Delaware has established a minimum standard of conduct that, if met by a director or officer, permits a corporation to indemnify such director or officer pursuant to a charter or bylaw provision, an indemnification agreement with such D&O, or a resolution of the board or stockholders.

An indemnity agreement is a contract that protect one party of a transaction from the risks or liabilities created by the other party of the transaction. Hold harmless agreement, no-fault agreement, release of liability, or waiver of liability are other terms for an indemnity agreement.200c

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WHEREAS, Indemnitee is a director, and/or officer, and/or employee of thepartial or complete) permitted by law and as set forth in this Agreement, and, ... Its shareholders to contract with some or all of its directors and officers, including the. Indemnitee, to indemnify them to the fullest extent permitted by ...Notice requirements can also be included; for example: "This indemnity shall not cover any claims in which there is a failure to give the indemnifying party ... The Indemnification Agreement will be the form used for all newly appointed directors and officers and certain newly hired employees. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has ... (c) The Company hereby agrees to fully indemnify and hold harmless Indemnitee from any claims for contribution which may be brought by officers, directors or ... By RP McKinney · 1987 · Cited by 12 ? tion.10 The mandatory part of California's indemnification statuteenough to cover a termination of claims by agreement without any payment or ... Company shall indemnify and hold Executive harmless to the fullest extentagreement governing his conduct as an officer and director of the Company. Under both Delaware and California corporation law (as well as under the corporation laws ofFill out the form to access a sample of Practical Guidance. Particularly in today's business climate, officers and directors ofthat the indemnity agreement was never intended to cover expenses ...

California Director Favorable Director Indemnification Agreement

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