§ 55-8-55. Determination and authorization of indemnification. - North Carolina Statutes

§55‑8‑55.  Determination and authorization of indemnification.

(a)        A corporation maynot indemnify a director under G.S. 55‑8‑51 unless authorized inthe specific case after a determination has been made that indemnification ofthe director is permissible in the circumstances because he has met thestandard of conduct set forth in G.S. 55‑8‑51.

(b)        The determinationshall be made:

(1)        By the board ofdirectors by majority vote of a quorum consisting of directors not at the timeparties to the proceeding;

(2)        If a quorum cannotbe obtained under subdivision (1), by majority vote of a committee dulydesignated by the board of directors (in which designation directors who areparties may participate), consisting solely of two or more directors not at thetime parties to the proceeding;

(3)        By special legalcounsel (i) selected by the board of directors or its committee in the mannerprescribed in subdivision (1) or (2); or (ii) if a quorum of the board ofdirectors cannot be obtained under subdivision (1) and a committee cannot bedesignated under subdivision (2), selected by majority vote of the full boardof directors (in which selection directors who are parties may participate); or

(4)        By the shareholders,but shares owned by or voted under the control of directors who are at the timeparties to the proceeding may not be voted on the determination.

(c)        Authorization ofindemnification and evaluation as to reasonableness of expenses shall be madein 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 ofexpenses shall be made by those entitled under subsection (b)(3) to selectcounsel. (1955, c. 1371, s. 1; 1969, c. 797, s. 2; 1973, c.469, s. 6; 1985 (Reg. Sess., 1986), c. 1027, s. 39; 1989, c. 265, s. 1.)