RS 12:83 Indemnification of officers, directors, employees, and agents; insurance - Louisiana Statutes

§83.  Indemnification of officers, directors, employees, and agents; insurance

A.(1)  A corporation may indemnify any person who was or is a party or is threatened to be made a party to any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, including any action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another business, foreign or nonprofit corporation, partnership, joint venture, or other enterprise against expenses, including attorneys' fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit, or proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.  

(2)  However, in case of actions by or in the right of the corporation, the indemnity shall be limited to expenses, including attorneys' fees and amounts paid in settlement not exceeding, in the judgment of the board of directors, the estimated expense of litigating the action to conclusion, actually and reasonably incurred in connection with the defense or settlement of such action, and no indemnification shall be made in respect of any claim, issue, or matter as to which such person shall have been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable for willful or intentional misconduct in the performance of his duty to the corporation, unless, and only to the extent that the court shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, he is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.  

(3)  The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.  

B.  To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any such action, suit or proceeding, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith.  

C.  Any indemnification under Subsection A of this Section, unless ordered by the court, shall be made by the corporation only as authorized in a specific case upon a determination that the applicable standard of conduct has been met.  Such determination shall be made:

(1)  By the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit, or proceeding, or

(2)  If such a quorum is not obtainable and the board of directors so directs, by independent legal counsel, or

(3)  By the shareholders.  

D.  Expenses incurred in defending such an action, suit, or proceeding may be paid by the corporation in advance of the final disposition thereof if authorized by the board of directors, without regard to whether participating members thereof are parties to such action, suit, or proceeding, upon receipt of an undertaking by or on behalf of the director, officer, employee, or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized in this Section.  

E.  The indemnification and advancement of expenses provided by or granted pursuant to the other Subsections of this Section shall not be deemed exclusive of any other rights to which the person indemnified or obtaining advancement of expenses is entitled under any bylaw, agreement, authorization of shareholders or directors, regardless of whether directors authorizing such indemnification are beneficiaries thereof, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of his heirs and legal representative; however, no such other indemnification measure shall permit indemnification of any person for the results of such person's willful or intentional misconduct.  

F.(1)  A corporation shall have power to procure or maintain insurance or other similar arrangement on behalf of any person who is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another business, nonprofit or foreign corporation, partnership, joint venture, or other enterprise against any liability asserted against or incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Section.  Without limiting the power of the corporation to procure or maintain any other kind of insurance or similar arrangement, a corporation may create a trust fund or other form of self-insurance arrangement for the benefit of persons indemnified by the corporation and may procure or maintain such insurance with any insurer deemed appropriate by the board of directors regardless of whether all or part of the stock or other securities thereof are owned in whole or part by the corporation.  In the absence of actual fraud, the judgment of the board of directors as to the terms and conditions of such insurance or self-insurance arrangement and the identity of the insurer or other person participating in a self-insurance arrangement shall be conclusive, and such arrangements for insurance shall not be subject to voidability and shall not subject the directors approving such arrangement to liability, on any ground, regardless of whether directors participating in approving such insurance arrangements shall be beneficiaries thereof.  

(2)  The provisions of the Louisiana Insurance Code, Title 22 of the Louisiana Revised Statutes of 1950, do not apply to a wholly-owned subsidiary of a business corporation that issues no contracts of insurance other than as permitted by this Subsection for coverage of a person who is or was a director, officer, employee, or agent of its parent corporation, or who is or was serving at the request of the parent corporation as a director, officer, employee, or agent of another business, nonprofit or foreign corporation, partnership, joint venture, or other enterprise, which contracts of insurance for such directors, officers, employees, or agents may be issued by such wholly-owned subsidiary without compliance with the provisions of the Insurance Code.  

G.  Any indemnity or insurance arrangements entered into prior to the date of any amendment to this Section and not inconsistent herewith shall be deemed to have been valid and effective as of the date of entering thereinto.  

Acts 1968, No. 105, §1.  Amended by Acts 1970, No. 50, §5, emerg. eff. June 18, 1970, at 5:05 P.M.; Acts 1986, No. 561, §1, eff. July 2, 1986.