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This entry was published on 2014-09-22
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SECTION 725
Other provisions affecting indemnification of directors and officers
Not-for-Profit Corporation (NPC) CHAPTER 35, ARTICLE 7
§ 725. Other provisions affecting indemnification of directors and

officers.

(a) All expenses incurred in defending a civil or criminal action or
proceeding which are advanced by the corporation under paragraph (c) of
section 723 (Payment of indemnification other than by court award) or
allowed by a court under paragraph (c) of section 724 (Indemnification
of directors and officers by a court) shall be repaid in case the person
receiving such advancement or allowance is ultimately found, under the
procedure set forth in this article, not to be entitled to
indemnification or, where indemnification is granted, to the extent the
expenses so advanced by the corporation or allowed by the court exceed
the indemnification to which he is entitled.

(b) No indemnification, advancement or allowance shall be made under
this article in any circumstance where it appears:

(1) That the indemnification would be inconsistent with the law of the
jurisdiction of incorporation of a foreign corporation which prohibits
or otherwise limits such indemnification; or

(2) That the indemnification would be inconsistent with a provision of
the certificate of incorporation, a by-law, a resolution of the board or
of the members, an agreement or other proper corporate action, in effect
at the time of the accrual of the alleged cause of action asserted in
the threatened or pending action or proceeding in which the expenses
were incurred or other amounts were paid, which prohibits or otherwise
limits indemnification; or

(3) If there has been a settlement approved by the court, that the
indemnification would be inconsistent with any condition with respect to
indemnification expressly imposed by the court in approving the
settlement.

(c) If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the members,
the corporation shall prepare a statement specifying the persons paid,
the amounts paid, and the nature and status at the time of such payment
of the litigation or threatened litigation, and

(1) Not later than the next annual meeting of members, unless such
meeting is held within three months from the date of such payment, and,
in any event, within fifteen months of the date of such payment, shall
mail the statement to its members of record entitled at the time to vote
for the election of directors; or

(2) If the corporation has no members, shall include the statement in
the records of the corporation open to public inspection, or

(3) If the corporation is a cemetery corporation, as defined in
paragraph (a) of section 1502 (Definitions), which term, for the
purposes of this section, shall include a religious corporation having
members, (i) by including the statement required by this paragraph or
paragraph (d) of section 726 (Insurance for indemnification of directors
and officers), as the case may be in the records of the corporation open
to public inspection; (ii) by including the information required by the
statement in any notice published pursuant to the provisions of section
605 (Notice of meeting of members), except as otherwise provided by law;
(iii) by enclosing the statement with the notice of annual meeting if
such notice is in fact mailed to the members; and (iv) by raising the
issue for approval at the next annual meeting of the members.

(d) If any action with respect to indemnification of directors and
officers is taken by way of amendment of the by-laws, resolution of
directors, or by agreement, then the corporation shall, not later than
the next annual meeting of members, unless such meeting is held within
three months from the date of such action, and, in any event, within
fifteen months from the date of such action, mail to its members of
record at the time entitled to vote for the election of directors a
statement specifying the action taken. If the corporation has no
members, the statement shall be included in the records of the
corporation open to public inspection.

(e) The provisions of this article relating to indemnification of
directors and officers and insurance therefor shall apply to domestic
corporations and foreign corporations conducting activities in this
state, except as provided in section 1321 (Exemption from certain
provisions).