North Carolina 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. North Carolina Indemnification of Corporate Director is a legal provision that aims to protect directors of corporations from personal liability for the acts or omissions committed in their official capacity. It provides assurance to directors that they will receive financial compensation or reimbursement for any expenses incurred during legal proceedings resulting from their service to the corporation. Under North Carolina law, there are several types of indemnification available to corporate directors: 1. Mandatory Indemnification: This type of indemnification is required by law and applies to situations where the director has been successful in defending against any proceeding or action, or has been involved in a proceeding in a different capacity and was judged to be not liable. In such cases, the director is entitled to indemnification against expenses incurred during the legal proceedings. 2. Permissive Indemnification: This type of indemnification is discretionary and allows corporations to provide indemnification to directors, officers, or employees when they are involved in legal proceedings. Permissive indemnification can only be offered if it is determined by the corporation's board or a designated committee that the director acted in good faith and in a manner believed to be in the best interest of the corporation, or in cases where the director had no reasonable ground to believe their conduct was unlawful. 3. Advancement of Expenses: In addition to indemnification, North Carolina law also permits corporations to advance expenses to a director involved in legal proceedings. This means that if a director incurs legal costs prior to the final disposition of the proceeding, the corporation can pay for these expenses in advance. 4. Insurance: North Carolina law allows corporations to purchase liability insurance on behalf of directors and officers to provide coverage for both indemnification and advancement of expenses. This insurance policy serves as an additional safeguard, ensuring that directors are protected from personal liability, and the corporation can cover the associated costs. It is important to note that North Carolina Indemnification of Corporate Director provisions may vary depending on the specific corporation's bylaws and the circumstances of the legal proceedings. Directors should consult with legal professionals to fully understand their rights and obligations under North Carolina law.

North Carolina Indemnification of Corporate Director is a legal provision that aims to protect directors of corporations from personal liability for the acts or omissions committed in their official capacity. It provides assurance to directors that they will receive financial compensation or reimbursement for any expenses incurred during legal proceedings resulting from their service to the corporation. Under North Carolina law, there are several types of indemnification available to corporate directors: 1. Mandatory Indemnification: This type of indemnification is required by law and applies to situations where the director has been successful in defending against any proceeding or action, or has been involved in a proceeding in a different capacity and was judged to be not liable. In such cases, the director is entitled to indemnification against expenses incurred during the legal proceedings. 2. Permissive Indemnification: This type of indemnification is discretionary and allows corporations to provide indemnification to directors, officers, or employees when they are involved in legal proceedings. Permissive indemnification can only be offered if it is determined by the corporation's board or a designated committee that the director acted in good faith and in a manner believed to be in the best interest of the corporation, or in cases where the director had no reasonable ground to believe their conduct was unlawful. 3. Advancement of Expenses: In addition to indemnification, North Carolina law also permits corporations to advance expenses to a director involved in legal proceedings. This means that if a director incurs legal costs prior to the final disposition of the proceeding, the corporation can pay for these expenses in advance. 4. Insurance: North Carolina law allows corporations to purchase liability insurance on behalf of directors and officers to provide coverage for both indemnification and advancement of expenses. This insurance policy serves as an additional safeguard, ensuring that directors are protected from personal liability, and the corporation can cover the associated costs. It is important to note that North Carolina Indemnification of Corporate Director provisions may vary depending on the specific corporation's bylaws and the circumstances of the legal proceedings. Directors should consult with legal professionals to fully understand their rights and obligations under North Carolina law.