West Virginia 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. West Virginia Indemnification of Corporate Director: Explained In West Virginia, the Indemnification of Corporate Director refers to the legal provisions that protect and compensate corporate directors for expenses and liabilities they may incur in performing their duties. This is essential to attract and retain capable individuals to serve on corporate boards, as it provides them with an assurance that they will be protected from personal financial burden resulting from their corporate responsibilities. Under West Virginia law, there are primarily two types of indemnification available to corporate directors: mandatory indemnification and permissive indemnification. 1. Mandatory Indemnification: Mandatory indemnification refers to the broadest form of protection provided to corporate directors in West Virginia. According to §31D-8-52 of the West Virginia Business Corporation Act, a corporation is required to indemnify a director, officer, employee, or agent who has been successful in defending any proceeding, whether civil, criminal, administrative, or investigative, by reason of their position within the corporation. The mandatory indemnification covers all reasonable expenses, including attorney fees, court costs, judgments, fines, and settlement amounts incurred by the director. However, it does not include indemnification in cases where the director is found guilty of any actual wrongdoing, fraud, or intentional misconduct. 2. Permissive Indemnification: Permissive indemnification allows corporations to indemnify their directors in situations not covered under mandatory indemnification. Under §31D-8-53 of the West Virginia Business Corporation Act, the corporation has the discretion to indemnify a director, officer, employee, or agent for expenses incurred in defending a proceeding, even if they are not successful. This form of indemnification is subject to the corporation's determination that the director acted in good faith and had a reasonable belief that their actions were in the best interests of the corporation. The permissive indemnification grants greater flexibility to corporations to protect their directors, even in cases where the director's actions may have been unsuccessful or deemed harmful by others. It is important to note that obtaining indemnification under West Virginia law typically involves a two-step process. Firstly, the director must make a formal request for indemnification to the corporation. Secondly, the corporation's board of directors, independent legal counsel, or a committee of independent directors must evaluate the director's request and determine if the indemnification is appropriate and permissible under the law. Overall, West Virginia's indemnification of corporate directors is designed to mitigate the personal financial risks associated with serving on corporate boards, encouraging talented and experienced individuals to take on these crucial roles. The mandatory and permissive indemnification provisions work together to strike a balance between safeguarding directors from unwarranted liability and maintaining the integrity and accountability of corporate governance.

West Virginia Indemnification of Corporate Director: Explained In West Virginia, the Indemnification of Corporate Director refers to the legal provisions that protect and compensate corporate directors for expenses and liabilities they may incur in performing their duties. This is essential to attract and retain capable individuals to serve on corporate boards, as it provides them with an assurance that they will be protected from personal financial burden resulting from their corporate responsibilities. Under West Virginia law, there are primarily two types of indemnification available to corporate directors: mandatory indemnification and permissive indemnification. 1. Mandatory Indemnification: Mandatory indemnification refers to the broadest form of protection provided to corporate directors in West Virginia. According to §31D-8-52 of the West Virginia Business Corporation Act, a corporation is required to indemnify a director, officer, employee, or agent who has been successful in defending any proceeding, whether civil, criminal, administrative, or investigative, by reason of their position within the corporation. The mandatory indemnification covers all reasonable expenses, including attorney fees, court costs, judgments, fines, and settlement amounts incurred by the director. However, it does not include indemnification in cases where the director is found guilty of any actual wrongdoing, fraud, or intentional misconduct. 2. Permissive Indemnification: Permissive indemnification allows corporations to indemnify their directors in situations not covered under mandatory indemnification. Under §31D-8-53 of the West Virginia Business Corporation Act, the corporation has the discretion to indemnify a director, officer, employee, or agent for expenses incurred in defending a proceeding, even if they are not successful. This form of indemnification is subject to the corporation's determination that the director acted in good faith and had a reasonable belief that their actions were in the best interests of the corporation. The permissive indemnification grants greater flexibility to corporations to protect their directors, even in cases where the director's actions may have been unsuccessful or deemed harmful by others. It is important to note that obtaining indemnification under West Virginia law typically involves a two-step process. Firstly, the director must make a formal request for indemnification to the corporation. Secondly, the corporation's board of directors, independent legal counsel, or a committee of independent directors must evaluate the director's request and determine if the indemnification is appropriate and permissible under the law. Overall, West Virginia's indemnification of corporate directors is designed to mitigate the personal financial risks associated with serving on corporate boards, encouraging talented and experienced individuals to take on these crucial roles. The mandatory and permissive indemnification provisions work together to strike a balance between safeguarding directors from unwarranted liability and maintaining the integrity and accountability of corporate governance.