16-10a-906 - Determination and authorization of indemnification of directors. - Utah Statutes

16-10a-906. Determination and authorization of indemnification of directors.
(1) A corporation may not indemnify a director under Section 16-10a-902 unlessauthorized and a determination has been made in the specific case that indemnification of thedirector is permissible in the circumstances because the director has met the applicable standardof conduct set forth in Section 16-10a-902. A corporation may not advance expenses to adirector under Section 16-10a-904 unless authorized in the specific case after the writtenaffirmation and undertaking required by Subsections 16-10a-904(1)(a) and (b) are received andthe determination required by Subsection 16-10a-904(1)(c) has been made.
(2) The determinations required by Subsection (1) shall be made:
(a) by the board of directors by a majority vote of those present at a meeting at which aquorum is present, and only those directors not parties to the proceeding shall be counted insatisfying the quorum; or
(b) if a quorum cannot be obtained as contemplated in Subsection (2)(a), by a majorityvote of a committee of the board of directors designated by the board of directors, whichcommittee shall consist of two or more directors not parties to the proceeding, except thatdirectors who are parties to the proceeding may participate in the designation of directors for thecommittee;
(c) by special legal counsel:
(i) selected by the board of directors or its committee in the manner prescribed inSubsection (2)(a) or (b); or
(ii) if a quorum of the board of directors cannot be obtained under Subsection (2)(a) anda committee cannot be designated under Subsection (2)(b), selected by a majority vote of the fullboard of directors, in which selection directors who are parties to the proceeding may participate;or
(d) by the shareholders, by a majority of the votes entitled to be cast by holders ofqualified shares present in person or by proxy at a meeting.
(3) A majority of the votes entitled to be cast by the holders of all qualified sharesconstitutes a quorum for purposes of action that complies with this section. Shareholders' actionthat otherwise complies with this section is not affected by the presence of holders, or the voting,of shares that are not qualified shares.
(4) Unless authorization is required by the bylaws, authorization of indemnification andadvance of expenses shall be made in the same manner as the determination that indemnificationor advance of expenses is permissible. However, if the determination that indemnification oradvance of expenses is permissible is made by special legal counsel, authorization ofindemnification and advance of expenses shall be made by a body entitled under Subsection(2)(c) to select legal counsel.

Amended by Chapter 324, 2010 General Session