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

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

(a)        A corporation shallnot indemnify a director under G.S. 55A‑8‑51 unless authorized inthe specific case after a determination has been made that indemnification ofthe director is permissible in the circumstances because the director has metthe standard of conduct set forth in G.S. 55A‑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) of this subsection, by a majority vote of acommittee duly designated by the board of directors (in which designationdirectors who are parties may participate), consisting solely of two or moredirectors not at the time 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) of this subsection; or (ii) if a quorum ofthe board cannot be obtained under subdivision (1) of this subsection and acommittee cannot be designated under subdivision (2) of this subsection,selected by majority vote of the full board (in which selection directors whoare parties may participate); or

(4)        By the members, butdirectors who are at the time parties to the proceeding shall not vote on thedetermination.

(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 subdivision (b)(3) of thissection to select counsel. (1977, c. 236, s. 2; 1993, c. 398, s. 1.)