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Tennessee Code Title 48. Corporations and Associations § 48-58-506

Current as of January 02, 2024 | Updated by Findlaw Staff

(a) A corporation may not indemnify a director who is not a qualified director under § 48-58-502 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 standard of conduct set forth in § 48-58-502.

(b) The determination shall be made by:

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

(2) If a quorum cannot be obtained under subdivision (b)(1), 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 proceedings;

(3) Independent special legal counsel:

(A) Selected by the board of directors or its committee in the manner prescribed in subdivision (b)(1) or (b)(2); or

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

(4) The members, but directors who are at the time parties to the proceeding may not vote on the determination; or

(5) Qualified directors as provided in § 48-58-703.

(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 independent special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subdivision (b)(3) to select counsel.

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Cite this article: FindLaw.com - Tennessee Code Title 48. Corporations and Associations § 48-58-506 - last updated January 02, 2024 | https://codes.findlaw.com/tn/title-48-corporations-and-associations/tn-code-sect-48-58-506/

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