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Arkansas Code Title 4. Business and Commercial Law § 4-33-855. Restrictions

Current as of March 28, 2024 | Updated by Findlaw Staff

(a) A corporation may not indemnify a director under § 4-33-851 unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standards of conduct set forth in § 4-33-851.

(b) The determination shall be made:

(1) by the board of directors by majority vote of a quorum consisting of directors not at the time parties to the proceeding;

(2) if a quorum cannot be obtained under subdivision (b)(1) of this section, by majority vote of a committee duly designated by the board of directors (in which designation directors who are parties may participate), consisting solely of two (2) or more directors not at the time parties to the proceeding;

(3) by special legal counsel:

(i) selected by the board of directors or its committee in the manner prescribed in subdivision (b)(1) or (b)(2) of this section; or

(ii) if a quorum of the board cannot be obtained under subdivision (b)(1) of this section and a committee cannot be designated under subdivision (b)(2) of this section, selected by majority vote of the full board (in which selection directors who are parties may participate); or

(4) by the members of a mutual benefit corporation, but directors who are at the time parties to the proceeding may not vote on the determination.

(c) Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subsection (b)(3) of this section to select counsel.

(d) A director of a public benefit corporation may not be indemnified until twenty (20) days after the effective date of written notice to the Attorney General of the proposed indemnification.

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Cite this article: FindLaw.com - Arkansas Code Title 4. Business and Commercial Law § 4-33-855. Restrictions - last updated March 28, 2024 | https://codes.findlaw.com/ar/title-4-business-and-commercial-law/ar-code-sect-4-33-855/

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