§ 7023 — Insurance for idemnification of directors and officers

New York § 7023

• Jurisdiction: New York
• Law BNK: Banking
• Title 7: Directors and Officers
• Art. 15: General Provisions Applicable to Banking Stock Corporations, Limited Liability Investment Companies, and Limited Liability Trust Companies

Text

§ 7023. Insurance for idemnification of directors and officers. (a)\nSubject to subdivision (b), a corporation shall have power to purchase\nand maintain insurance:\n (1) To indemnify the corporation for any obligation which it incurs as\na result of the indemnification of directors and officers under the\nprovisions of this article, and\n (2) To indemnify directors and officers in instances in which they may\nbe indemnified by the corporation under the provisions of this article,\nand\n (3) To idemnify directors and officers in instances in which they may\nnot otherwise be indemnified by the corporation under the provisions of\nthis article provided the contract of insurance covering such directors\nand officers provides, in a manner acceptable to the superintendent of\nfinancial services, for a retention amount and for co-insurance.\n (b) No insurance under subdivision (a) may provide for any payment,\nother than cost of defense, to or on behalf of any director or officer:\n (1) if a judgement or other final adjudication adverse to the insured\ndirector or officer establishes that his acts of active and deliberate\ndishonesty were material to the cause of action so adjudicated, or that\nhe personally gained in fact a financial profit or other advantage to\nwhich he was not legally entitled, or\n (2) in relation to any risk the insurance of which is prohibited under\nthe insurance law of this state.\n (c) Insurance under any or all paragraphs of subdivision (a) may be\nincluded in a single contract or supplement thereto. Retrospective rated\ncontracts are prohibited.\n (d) The corporation shall, within the time and to the persons provided\nin subdivision three of section seven thousand twenty-two, mail a\nstatement in respect of any insurance it has purchased or renewed under\nthis section, specifying the insurance carrier, date of the contract,\ncost of the insurance, corporate positions insured, and a statement\nexplaining all sums, not previously reported in a statement to\nshareholders, paid under any indemnification insurance contract.\n (e) This section is the public policy of this state to spread the risk\nof corporate management, notwithstanding any other general or special\nlaw of this state or of any other jurisdiction including the federal\ngovernment.\n