Title 13.1. Corporations
Chapter 10. Virginia Nonstock Corporation Act
This section has more than one version with varying effective dates. Scroll down to see all versions.
§ 13.1-879.1. (Effective until January 1, 2027) Court orders for advances, reimbursement or indemnification.
A. An individual who is made a party to a proceeding because he is a director of the corporation may apply to a court for an order directing the corporation to make advances or reimbursement for expenses, or to provide indemnification. Such application may be made to the court conducting the proceeding or to another court of competent jurisdiction.
B. The court shall order the corporation to make advances, reimbursement, or both, for expenses or to provide indemnification if it determines that the director is entitled to such advances, reimbursement or indemnification and shall also order the corporation to pay the director's reasonable expenses incurred to obtain the order.
C. With respect to a proceeding by or in the right of the corporation, the court may (i) order indemnification of the director to the extent of the director's reasonable expenses if it determines that, considering all the relevant circumstances, the director is entitled to indemnification even though he was adjudged liable to the corporation and (ii) also order the corporation to pay the director's reasonable expenses incurred to obtain the order of indemnification.
D. Neither (i) the failure of the corporation, including its board of directors, its independent legal counsel and its members, to have made an independent determination prior to the commencement of any action permitted by this section that the applying director is entitled to receive advances, reimbursement, or both, nor (ii) the determination by the corporation, including its board of directors, its independent legal counsel and its members, that the applying director is not entitled to receive advances and/or reimbursement or indemnification shall create a presumption to that effect or otherwise of itself be a defense to that director's application for advances for expenses, reimbursement or indemnification.
1987, cc. 59, 257; 2007, c. 925.
§ 13.1-879.1. (Effective January 1, 2027) Court orders for advances, reimbursement or indemnification.
A. An individual who is a party to a proceeding because he is a director of the corporation may apply for indemnification or an advance of expenses to the court conducting the proceeding or to another court of competent jurisdiction. After receipt of an application and after giving any notice it considers necessary, the court shall:
1. Order indemnification if the court determines that the director is entitled to mandatory indemnification under § 13.1-877;
2. Order indemnification or advance for expenses if the court determines that the director is entitled to indemnification or advance for expenses pursuant to a provision authorized by § 13.1-883; or
3. Order indemnification or advance for expenses if the court determines, in view of all the relevant circumstances, that it is fair and reasonable (i) to indemnify the director or (ii) to advance expenses to the director, even if, in the case of clause (i) or (ii), the director has not met the relevant standard of conduct set forth in subsection A of § 13.1-876, failed to comply with § 13.1-878, or was adjudged liable in a proceeding referred to in subsection D of § 13.1-876; however, if the director was adjudged so liable, indemnification shall be limited to expenses incurred in connection with the proceeding.
B. If the court determines that the director is entitled to indemnification under subdivision A 1 or to indemnification or advance for expenses under subdivision A 2, it shall also order the corporation to pay the director's expenses incurred in connection with obtaining court-ordered indemnification or advance for expenses. If the court determines that the director is entitled to indemnification or advance for expenses under subdivision A 3, it may
also order the corporation to pay the director's expenses to obtain the court-ordered indemnification or advance for expenses.
C. Neither (i) the failure of the corporation, including its board of directors, its independent legal counsel and its members, to have made a determination prior to the commencement of any action permitted by this section that the applying director is entitled to receive an advance, reimbursement, or indemnification, nor (ii) the determination by the corporation, including its board of directors, its independent legal counsel and its members, that the applying director is not entitled to receive an advance, reimbursement, or indemnification shall create a presumption to that effect or otherwise of itself be a defense to that director's application for an advance for expenses, reimbursement, or indemnification.
