Utah Code 16-6a-905. Court-ordered indemnification of directors

16-6a-905. Court-ordered indemnification of directors.

(1)

Unless a nonprofit corporation‘s articles of incorporation provide otherwise, a director of the nonprofit corporation who is or was a party to a proceeding may apply for indemnification to:

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Terms Used In Utah Code 16-6a-905

Articles of incorporation: include :

(a)	amended articles of incorporation;

(b)	restated articles of incorporation;

(c)	articles of merger; and

(d)

a document of a similar import to the documents described in Subsections (3)(a) through (c). See Utah Code 16-6a-102

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.

Director: includes , unless the context requires otherwise, the estate or personal representative of a director. See Utah Code 16-6a-901

Expenses: includes attorneys' fees. See Utah Code 16-6a-901

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}

Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.

Liability: means the obligation incurred with respect to a proceeding to pay a judgment, settlement, penalty, or fine, including:

(a)	an excise tax assessed with respect to an employee benefit plan; or

(b)

reasonable expenses. See Utah Code 16-6a-901

Nonprofit corporation: includes any domestic or foreign entity that is a predecessor of a nonprofit corporation by reason of a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction. See Utah Code 16-6a-901

Notice: means the same as that term is defined in Section 16-6a-103. See Utah Code 16-6a-102

Party: includes an individual who was, is, or is threatened to be made a named defendant or respondent in a proceeding. See Utah Code 16-6a-901

Proceeding: means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal. See Utah Code 16-6a-901

(a)

the court conducting the proceeding; or

(b)	another court of competent jurisdiction.

(2)

On receipt of an application described in Subsection (1), the court, after giving any notice the court considers necessary, may order indemnification in the following manner:

(a)

if the court determines that the director is entitled to mandatory indemnification under Section 16-6a-903, the court shall:

(i)	order indemnification; and

(ii)	order the nonprofit corporation to pay the director’s reasonable expenses incurred to obtain court-ordered indemnification; and

(b)

if the court determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director met the applicable standard of conduct set forth in Section 16-6a-902 or was adjudged liable as described in Subsection 16-6a-902(4), the court may order indemnification as the court determines to be proper, except that the indemnification with respect to any proceeding in which liability has been adjudged in the circumstances described in Subsection 16-6a-902(4) is limited to reasonable expenses incurred.

Amended by Chapter 240, 2015 General Session

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