Bank Directors Seminar, Coeur d'Alene, ID, September 15-17, 2019

DIRECTOR PROTECTION: STATUTES

Delaware Code Title 8, Chapter 1 - Corporations § 145(a) and (b): Corporation may indemnify “any party”

Delaware Code Title 6, Chapter 18 Limited Liability Companies § 18-108: LLC may indemnify any member, manager or other person § 18-108: LLC may hold harmless any member, manager or other person § 18-1101 (e): Company agreement may eliminate or limit liabilities for breach of contract and breach of duties (including fiduciary duties) of a member, manager or other person

Revised Model Business Corporation Act

Uniform Limited Liability Company Act

§§ 2.02(b)(5); 8.51; 8.52: Articles of incorporation may permit or require indemnification of a director

§ 408(b): LLC shall indemnify a former or present member or manager

Indemnity

§ 408(b): LLC shall hold harmless a former or present member or manager § 105(d): Operating Agreement may alter or eliminate aspects of fiduciary duties “if not manifestly unreasonable”

Hold harmless Silent

Silent

§ 102(b)(7): Certificate of incorporation may eliminate or limit the liability of a director for monetary damages for breach of fiduciary duty as a director § 145(e): Corporation may advance expenses to officers and directors only

§ 2.02(b)(4): Articles of incorporation may eliminate or limit the liability of a director for money damages for any act or omission as a director

Exculpation

Duty to defend Silent

Silent

Silent

Silent

§ 8.53(a): Corporation may advance expenses incurred by a director

§ 408(c): LLC may advance expenses to former or present member or manager

Advancement of expenses

Silent (contract issue)

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SUMMARY: DELIBERATION AND DOCUMENTS

Deliberation – the process and not the product A. Duties of care and loyalty B. Business judgment rule C. Elements of decision and decision maker Documentation – at minimum, report the alternatives considered and the reason one alternative selected

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