Code of Virginia

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Code of Virginia
Title 13.1. Corporations
Chapter 9. Virginia Stock Corporation Act
9/27/2020

§ 13.1-697. Authority to indemnify.

A. Except as provided in subsection D, a corporation may indemnify an individual who is a party to a proceeding because the individual is or was a director against liability incurred in the proceeding if:

1. The director:

a. Conducted himself in good faith; and

b. Believed:

(1) In the case of conduct in his official capacity with the corporation, that his conduct was in its best interests; and

(2) In all other cases, that his conduct was at least not opposed to its best interests; and

c. In the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful; or

2. The director engaged in conduct for which broader indemnification has been made permissible or obligatory as authorized by subsection C of § 13.1-704.

B. A director's conduct with respect to an employee benefit plan for a purpose he believed to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subdivision A 1 b (2).

C. The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, is not, of itself, determinative that the director did not meet the relevant standard of conduct described in this section.

D. Unless ordered by a court under subsection C of § 13.1-700.1 or broader indemnification has been made permissible or obligatory as authorized by subsection C of § 13.1-704, a corporation may not indemnify a director under this section:

1. In connection with a proceeding by or in the right of the corporation except for expenses incurred in connection with the proceeding if it is determined that the director has met the relevant standard under subsection A; or

2. In connection with any other proceeding charging improper personal benefit to the director, whether or not involving action in his official capacity, in which he was adjudged liable on the basis that personal benefit was improperly received by him.

Code 1950, § 13.1-3.1; 1968, c. 570; 1975, c. 500; 1979, c. 99; 1985, c. 522; 2005, c. 765; 2019, c. 734.

The chapters of the acts of assembly referenced in the historical citation at the end of this section may not constitute a comprehensive list of such chapters and may exclude chapters whose provisions have expired.