Are directors of a company liable for debts?

Because a company is a separate legal entity, directors and shareholders are generally protected from being personally liable for the company's debts. This protection however may be abused when directors allow companies to continue trading and incurring debt despite warnings of potential insolvency.

Can a director indemnify a company?

A director's indemnity involves a company undertaking to protect its directors against liabilities that they may incur in the course of performing their company's duties. A director's indemnity may be required (as in some instances by ASIC) or a company can choose to indemnify its directors.

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Articles of Incorporation with Indemnification

Queens New York Articles of Incorporation with Indemnification

Name: Queens New York Articles of Incorporation with Indemnification
Brand: US Legal Forms
Rating: 4.58 (400 reviews)

Category:

Corporations - Public - Indemnification

State:

Multi-State

County:

Queens

Control #:

US-CC-17-124C

Format:

Instant download

Description

This sample form, a detailed Articles of Incorporation, is a model for use in corporate matters. The language is easily adapted to fit your specific circumstances. Available in several standard formats.

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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.

The rule of indemnity, or the indemnity principle, says that an insurance policy should not confer a benefit that is greater in value than the loss suffered by the insured. Indemnities and insurance both guard against financial losses and aim to restore a party to the financial status held before an event occurred.

Modification: As opposed to indemnification and advancement rights created by the company's organizational documents, which may be amended by the board or shareholders, indemnification agreements allow the director or officer to prevent the company from unilaterally terminating or reducing the indemnitee's rights.

A deed of indemnity is a contractual agreement between a company and a company director. A deed of indemnity can help to indemnify a director against liabilities or legal costs incurred in his or her professional capacity as a director of the company.

Indemnification is where the company reimburses the 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.

What does "Corporate Indemnification" mean? Generally, indemnification refers to a situation in which one party (the indemnifying party) agrees or is required to cover the costs, losses and/or expenses experienced by another party (the indemnified party).

Because a company is a separate legal entity, directors and shareholders are generally protected from being personally liable for the company's debts. This protection however may be abused when directors allow companies to continue trading and incurring debt despite warnings of potential insolvency.

A director's indemnity involves a company undertaking to protect its directors against liabilities that they may incur in the course of performing their company's duties. A director's indemnity may be required (as in some instances by ASIC) or a company can choose to indemnify its directors.

Indemnification clauses are common in corporations and LLCs. Often a company will agree to indemnify its shareholders, members, officers, and directors for actions they take in such roles on behalf of the company.

Maric Law Office A company can usually indemnify a director for his/her defense costs and/or damages, judgments and settlements if he/she was the only one responsible for the procedure and was found guilty. In such case the usual conditions would apply as to proof of the amount of damage, defense costs etc.

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Queens New York Articles of Incorporation with Indemnification

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FAQ

Do directors have the right to indemnification?

What is the rule of indemnification?

What is a director indemnification agreement?

What is a directors Deed of indemnity?

Are directors indemnified?

What is a corporate indemnification agreement?

Are directors of a company liable for debts?

Can a director indemnify a company?

Can a corporation indemnify its shareholders?

When can a company indemnify its directors?

Interesting Questions

What are the Queens Articles of Incorporation with Indemnification643109?

Why is indemnification important in the Articles of Incorporation?

Who does the indemnification clause protect?

What liabilities and expenses are covered under indemnification?

Can the corporation refuse to indemnify someone?

Are there any limitations to indemnification?

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