500.5242a Indemnification against expenses of action, suit, or proceeding; mandatory; standard of conduct; determination.

339 words·~2 min read·/mi/chapter-500/500-5242a

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Sec. 5242a.

(1)To the extent that a director, officer, employee, or agent of a corporation has been successful on the merits or otherwise in defense of an action, suit, or proceeding referred to in section 5241 or 5242, or in defense of a claim, issue, or matter in the action, suit, or proceeding, he or she shall be indemnified against expenses, including actual and reasonable attorneys' fees, incurred by him or her in connection with the action, suit, or proceeding and an action, suit, or proceeding brought to enforce the mandatory indemnification provided in this subsection.

(2)An indemnification under section 5241 or 5242, unless ordered by a court, shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee, or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in sections 5241 and 5242. This determination shall be made in any of the following ways:

(a)By a majority vote of a quorum of the board consisting of directors who were not parties to the action, suit, or proceeding.

(b)If the quorum described in subdivision

(a)is not obtainable, then by a majority vote of a committee of directors who are not parties to the action. The committee shall consist of not less than 2 disinterested directors.

(c)By independent legal counsel in a written opinion.

(d)By the shareholders or policyholders.

(3)If a person is entitled to indemnification under section 5241 or 5242 for a portion of expenses including attorneys' fees, judgments, penalties, fines, and amounts paid in settlement, but not for the total amount thereof, the corporation may indemnify the person for the portion of the expenses, judgments, penalties, fines, or amounts paid in settlement for which the person is entitled to be indemnified.

History: Add. 1988, Act 290, Eff. Jan. 1, 1989

Popular Name: Act 218