Virginia Code 13.1-878: Advance for expenses
A. A corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if the director furnishes the corporation a signed written undertaking, executed personally or on his behalf, to repay any funds advanced if he is not entitled to mandatory indemnification under § 13.1-877 and it is ultimately determined under § 13.1-879.1 or 13.1-880 that he has not met the relevant standard of conduct.
Terms Used In Virginia Code 13.1-878
- Board of directors: means the group of persons vested with the management of the business of the corporation irrespective of the name by which such group is designated, and "director" means a member of the board of directors. See Virginia Code 13.1-803
- 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.
- Disinterested director: means a director who, at the time action is to be taken under § 13. See Virginia Code 13.1-803
- 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
- Interest: means either or both of the following rights under the organic law of a foreign or domestic unincorporated entity:
1. See Virginia Code 13.1-803
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Proceeding: includes civil suit and criminal, administrative and investigatory action conducted by a governmental agency. See Virginia Code 13.1-803
- Quorum: The number of legislators that must be present to do business.
- written: means any information in the form of a document. See Virginia Code 13.1-803
B. The undertaking required by subsection A shall be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment.
C. Authorizations of payments under this section shall be made by:
1. The board of directors:
a. If there are two or more disinterested directors, by a majority vote of all the disinterested directors, a majority of whom shall for such purpose constitute a quorum, or by a majority of the members of a committee of two or more disinterested directors appointed by such a vote; or
b. If there are fewer than two disinterested directors, by the vote necessary for action by the board in accordance with subsection C of § 13.1-868, in which authorization directors who do not qualify as disinterested directors may participate; or
2. The members, but any membership interest under the control of a director who at the time does not qualify as a disinterested director may not be voted on the authorization.
Code 1950, § 13.1-205.1; 1968, c. 689; 1975, c. 500; 1981, c. 57; 1985, c. 522; 2007, c. 925; 2010, c. 171; 2015, c. 611.