13.1-701 - Determination and authorization of indemnification. - Virginia Statutes

§ 13.1-701. Determination and authorization of indemnification.

A. A corporation may not indemnify a director under § 13.1-697 unlessauthorized in the specific case after a determination has been made thatindemnification of the director is permissible because he has met therelevant standard of conduct set forth in § 13.1-697.

B. The determination shall be made:

1. If there are two or more disinterested directors, by the board ofdirectors by a majority vote of all the disinterested directors, a majorityof whom shall for such purpose constitute a quorum, or by a majority of themembers of a committee of two or more disinterested directors appointed bysuch a vote;

2. By special legal counsel:

a. Selected in the manner prescribed in subdivision 1 of this subsection; or

b. If there are fewer than two disinterested directors, selected by the boardof directors, in which selection directors who do not qualify asdisinterested directors may participate; or

3. By the shareholders, but shares owned by or voted under the control of adirector who at the time does not qualify as a disinterested director may notbe voted on the determination.

C. Authorization of indemnification shall be made in the same manner as thedetermination that indemnification is permissible, except that if there arefewer than two disinterested directors or if the determination is made byspecial legal counsel, authorization of indemnification shall be made bythose entitled under subdivision B 2 to select counsel.

(Code 1950, § 13.1-3.1; 1968, c. 570; 1975, c. 500; 1979, c. 99; 1985, c.522; 2005, c. 765.)