Montana Code 35-2-451. Determination and authorization of indemnification
35-2-451. Determination and authorization of indemnification. (1) A corporation may not indemnify a director under 35-2-447 unless it is 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 35-2-447.
Terms Used In Montana Code 35-2-451
- board of directors: means the board of directors except that a person or group of persons is not the board of directors because of powers delegated to that person or group pursuant to 35-2-414. See Montana Code 35-2-114
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Corporation: means a public benefit corporation, mutual benefit corporation, or religious corporation. See Montana Code 35-2-114
- Directors: means individuals:
(a)designated in the articles or bylaws or elected by the incorporators and their successors; and
(b)elected or appointed by any other name or title to act as members of the board. See Montana Code 35-2-114
- Indemnification: In general, a collateral contract or assurance under which one person agrees to secure another person against either anticipated financial losses or potential adverse legal consequences. Source: FDIC
- Notice: means that term as described in 35-2-115. See Montana Code 35-2-114
- Proceeding: includes a civil suit and a criminal, administrative, and investigatory action. See Montana Code 35-2-114
- Public benefit corporation: means a domestic corporation designated as a public benefit corporation. See Montana Code 35-2-114
- Quorum: The number of legislators that must be present to do business.
(2)The determination must be made:
(a)by the board of directors by majority vote of a quorum consisting of directors not at the time parties to the proceeding;
(b)if a quorum cannot be obtained under subsection (2)(a), by majority vote of a committee designated by the board of directors consisting solely of two or more directors not at the time parties to the proceeding;
(c)by special legal counsel:
(i)selected by the board of directors or its committee in the manner prescribed in subsection (2)(a) or (2)(b); or
(ii)if a quorum of the board cannot be obtained under subsection (2)(a) and a committee cannot be designated under subsection (2)(b), selected by majority vote of the full board, in which selected directors who are parties may participate; or
(d)by the members of a mutual benefit corporation. However, directors who are at the time parties to the proceeding may not vote on the determination.
(3)Authorization of indemnification and evaluation as to reasonableness of expenses must 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 must be made by those entitled under subsection (2)(c) to select counsel.
(4)A director of a public benefit corporation may not be indemnified until 20 days after the effective date of written notice to the attorney general of the proposed indemnification.