On Aug. 2, a number of amendments to the DGCL became effective. Of particular interest to directors and officers are amendments to §145 regarding indemnification and interim advancement of expenses. As background, interim advancement by the corporation of litigation expenses and indemnification serve two objectives: securing able corporate officials and encouraging them to resist claims perceived to be meritless.
Section 145 of the DGCL sets forth Delaware’s statutory basis for indemnification and advancement. As in New York, the Delaware statute distinguishes between indemnification for third-party actions and derivative actions. For non-derivative actions, §145(a) permits (but does not require) a corporation to indemnify directors and officers made or threatened to be made a party to an action for attorney’s fees actually and necessarily incurred, as well as judgments or amounts paid in settlement in civil, criminal, administrative or investigative proceedings.
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