Massachusetts 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. Massachusetts Indemnification of Corporate Director refers to the legal provisions in the state of Massachusetts that protect and provide financial security to directors of corporations against lawsuits or legal claims arising from their actions or decisions while acting in their official capacity. This indemnification is crucial for attracting and retaining qualified directors, as it addresses the potential risks associated with their roles and responsibilities. Under Massachusetts law, there are primarily two types of indemnification available to corporate directors: mandatory indemnification and permissive indemnification. 1. Mandatory Indemnification: According to Massachusetts General Laws Chapter 156D, Section 8.51, a corporation must indemnify its director for all expenses, including attorney's fees, judgments, fines, and settlement amounts, reasonably incurred in connection with any legal proceedings or investigations, as long as the director acted in good faith and in a manner reasonably believed to be in the corporation's best interests. This provision brings assurance to directors that they will not suffer financial loss due to the performance of their duties. 2. Permissive Indemnification: In addition to the mandatory indemnification, a corporation may also provide permissive indemnification to its directors under Section 8.52 of the same chapter. This provision allows a corporation, at its discretion and by means of its bylaws, resolutions, or agreements, to indemnify its directors, officers, employees, and agents against any liabilities or expenses incurred in connection with legal matters, even if they did not meet the criteria for mandatory indemnification. Such permissive indemnification can provide additional protection to directors who may face legal challenges related to their positions. Both mandatory and permissive indemnification provisions play a crucial role in safeguarding the interests of corporate directors in Massachusetts. The indemnification not only covers the costs associated with legal proceedings but also helps in ensuring that directors can fulfill their duties without the fear of personal financial liability. The Massachusetts Indemnification of Corporate Directors is an essential aspect of corporate governance, allowing directors to make informed decisions without being unduly influenced by personal risk. It promotes transparency, accountability, and trust within the corporate framework, ultimately benefiting shareholders, stakeholders, and the overall business ecosystem.

Massachusetts Indemnification of Corporate Director refers to the legal provisions in the state of Massachusetts that protect and provide financial security to directors of corporations against lawsuits or legal claims arising from their actions or decisions while acting in their official capacity. This indemnification is crucial for attracting and retaining qualified directors, as it addresses the potential risks associated with their roles and responsibilities. Under Massachusetts law, there are primarily two types of indemnification available to corporate directors: mandatory indemnification and permissive indemnification. 1. Mandatory Indemnification: According to Massachusetts General Laws Chapter 156D, Section 8.51, a corporation must indemnify its director for all expenses, including attorney's fees, judgments, fines, and settlement amounts, reasonably incurred in connection with any legal proceedings or investigations, as long as the director acted in good faith and in a manner reasonably believed to be in the corporation's best interests. This provision brings assurance to directors that they will not suffer financial loss due to the performance of their duties. 2. Permissive Indemnification: In addition to the mandatory indemnification, a corporation may also provide permissive indemnification to its directors under Section 8.52 of the same chapter. This provision allows a corporation, at its discretion and by means of its bylaws, resolutions, or agreements, to indemnify its directors, officers, employees, and agents against any liabilities or expenses incurred in connection with legal matters, even if they did not meet the criteria for mandatory indemnification. Such permissive indemnification can provide additional protection to directors who may face legal challenges related to their positions. Both mandatory and permissive indemnification provisions play a crucial role in safeguarding the interests of corporate directors in Massachusetts. The indemnification not only covers the costs associated with legal proceedings but also helps in ensuring that directors can fulfill their duties without the fear of personal financial liability. The Massachusetts Indemnification of Corporate Directors is an essential aspect of corporate governance, allowing directors to make informed decisions without being unduly influenced by personal risk. It promotes transparency, accountability, and trust within the corporate framework, ultimately benefiting shareholders, stakeholders, and the overall business ecosystem.