Bill > A05795

This bill modifies the not-for-profit corporation law to provide comprehensive guidelines for indemnifying directors, officers, and key persons in legal proceedings. The bill establishes that a corporation may protect these individuals from expenses incurred during legal actions arising from their service, including judgments, fines, settlement costs, and legal fees, provided they acted in good faith and met certain standards of conduct. The legislation ensures that indemnification rights survive even if a corporation undergoes a merger or consolidation, and crucially, these protections continue to benefit the individual and their heirs even after they are no longer serving in their official capacity. The bill allows corporations to advance legal expenses before a case's final disposition and to purchase insurance to cover potential liabilities. It also specifies that termination of a legal proceeding or a conviction does not automatically mean the individual failed to meet proper conduct standards. Additionally, the bill provides mechanisms for determining when indemnification is appropriate, such as through director votes, independent legal counsel, or member approval, and clarifies that pre-existing indemnification rights can be determined under either the old or new law at the individual's election.

Government Affairs

https://www.nysenate.gov/legislation/bills/2025/A5795