Connecticut Indemnification of Corporate Director is a legal provision that aims to protect corporate directors from personal liability for acts performed in their official capacity. As a state-specific law, it outlines the rights, responsibilities, and legal recourse available to directors serving in Connecticut-based corporations. Under Connecticut General Statutes Section 33-1098, corporations incorporated in Connecticut have the authority to indemnify directors against expenses (including attorneys' fees), judgments, fines, and settlement amounts incurred during legal proceedings arising from their directorial duties. The purpose of indemnification is to ensure directors are not deterred from taking appropriate actions in the best interests of the corporation out of fear of potential personal liability. The Connecticut Indemnification of Corporate Director includes important keywords such as: 1. Indemnification: The provision offers protection against financial losses. 2. Corporate Director: This refers to individuals holding positions of directorship within a corporation, entrusted with making important business decisions. 3. Liability: Refers to legal responsibility for one's actions or omissions. 4. Directorial duties: The range of responsibilities and actions entrusted to corporate directors. 5. Statutes: The legislative enactments that govern the legal framework for indemnification provisions in Connecticut. 6. Expenses: The costs incurred during legal proceedings, such as attorney fees and court expenses. 7. Judgments: Legal decisions or rulings made by a court or tribunal. 8. Fines: Monetary penalties imposed by regulatory authorities or courts. 9. Settlements: Resolutions reached by parties involved in a legal dispute without proceeding to trial. Different types of Connecticut Indemnification of Corporate Director can be classified based on the extent of indemnification provided, such as: 1. Mandatory Indemnification: The corporation must indemnify directors to the fullest extent permitted by law, provided they meet specific eligibility criteria. 2. Permissive Indemnification: The corporation has the discretionary power to indemnify directors in certain circumstances, but it is not obligatory. 3. Advancement of Expenses: This clause allows directors to request the corporation to advance funds to cover legal expenses before the final outcome of legal proceedings. 4. Limitations or Exceptions: Some indemnification provisions may impose limits or exceptions, such as excluding indemnification for willful misconduct or acts not in good faith. In conclusion, Connecticut Indemnification of Corporate Director is a legal mechanism that protects corporate directors from personal liability by providing financial support in the form of indemnification for expenses, judgments, fines, and settlements incurred during legal proceedings arising from their directorial duties. Understanding the intricacies of this provision is vital for directors, ensuring they can fulfill their roles without fear of personal liability.
Connecticut Indemnification of Corporate Director
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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.
The Solution: Personal Indemnification Agreements These agreements promise to (1) advance legal fees, and (2) pay loss (indemnification) on behalf of an individual should he or she be named in a lawsuit in his or her capacity as a director or officer of the company.
An Alberta corporation is not permitted to indemnify its directors for their actions if they have not acted honestly and in good faith with a view to the best interests of the corporation that is, if they have breached their fiduciary duty to the corporation.
Indemnification.acted in good faith.acted in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and,had no reasonable cause to believe that his or her conduct was unlawful, in the case of a criminal action or proceeding.
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.
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.
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.
As described above, directors and officers can never be indemnified for bad faith actions. Two other limits are also notable: the derivative settlement exclusion and the by reason of limitation.
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.