New York 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. New York Indemnification of Corporate Director is a legal provision that offers protection and financial assistance to individuals serving as directors in corporations based in the state of New York. It serves as a safeguard for directors who may face legal actions or liabilities arising from their decisions or actions while acting in their corporate capacity. Indemnification of Corporate Directors is of utmost importance as it provides a sense of security to directors who may be hesitant about taking on such roles due to potential risks. This provision assures them that they will not be left personally liable for any damages or losses incurred during their tenure as corporate directors. Under New York law, there are several types of indemnification available to corporate directors, namely "mandatory indemnification," "permissive indemnification," and "advancement of expenses." 1. Mandatory indemnification: As per Section 721 of the New York Business Corporation Law (BCL), a corporation is required to indemnify a director for all reasonable expenses, including attorney fees, judgments, fines, and settlement amounts. This indemnification is applicable if the director acted in good faith, with the belief that their actions were in the corporation's best interest, and without any reasonable cause to believe their conduct was unlawful. 2. Permissive indemnification: Under Section 722 of the BCL, a corporation has the option to indemnify directors in situations that do not meet the criteria for mandatory indemnification. Permissive indemnification can be granted by corporate bylaws, a resolution of the board of directors, or by agreement between the director and the corporation. 3. Advancement of expenses: This type of indemnification, covered under Section 723 of the BCL, ensures that directors are not faced with significant financial burdens during legal proceedings related to their corporate duties. It allows directors to request the advancement of expenses (such as attorney fees, court costs, and other legal expenses) from the corporation. The corporation is required to provide this advancement unless it is determined that the director did not meet the necessary threshold of conduct or acted in bad faith. It is crucial for corporate directors to understand the intricacies of New York indemnification laws and how they apply to their specific roles and responsibilities. By having a comprehensive understanding of these provisions, directors can navigate their duties with confidence, knowing they are protected from personal liability in many instances.

New York Indemnification of Corporate Director is a legal provision that offers protection and financial assistance to individuals serving as directors in corporations based in the state of New York. It serves as a safeguard for directors who may face legal actions or liabilities arising from their decisions or actions while acting in their corporate capacity. Indemnification of Corporate Directors is of utmost importance as it provides a sense of security to directors who may be hesitant about taking on such roles due to potential risks. This provision assures them that they will not be left personally liable for any damages or losses incurred during their tenure as corporate directors. Under New York law, there are several types of indemnification available to corporate directors, namely "mandatory indemnification," "permissive indemnification," and "advancement of expenses." 1. Mandatory indemnification: As per Section 721 of the New York Business Corporation Law (BCL), a corporation is required to indemnify a director for all reasonable expenses, including attorney fees, judgments, fines, and settlement amounts. This indemnification is applicable if the director acted in good faith, with the belief that their actions were in the corporation's best interest, and without any reasonable cause to believe their conduct was unlawful. 2. Permissive indemnification: Under Section 722 of the BCL, a corporation has the option to indemnify directors in situations that do not meet the criteria for mandatory indemnification. Permissive indemnification can be granted by corporate bylaws, a resolution of the board of directors, or by agreement between the director and the corporation. 3. Advancement of expenses: This type of indemnification, covered under Section 723 of the BCL, ensures that directors are not faced with significant financial burdens during legal proceedings related to their corporate duties. It allows directors to request the advancement of expenses (such as attorney fees, court costs, and other legal expenses) from the corporation. The corporation is required to provide this advancement unless it is determined that the director did not meet the necessary threshold of conduct or acted in bad faith. It is crucial for corporate directors to understand the intricacies of New York indemnification laws and how they apply to their specific roles and responsibilities. By having a comprehensive understanding of these provisions, directors can navigate their duties with confidence, knowing they are protected from personal liability in many instances.