§ 725 — Other provisions affecting indemnification of directors and officers

New York § 725

• Jurisdiction: New York
• Law NPC: Not-for-Profit Corporation
• Art. 7: Directors and Officers

Text

§ 725. Other provisions affecting indemnification of directors and\n officers.\n (a) All expenses incurred in defending a civil or criminal action or\nproceeding which are advanced by the corporation under paragraph (c) of\nsection 723 (Payment of indemnification other than by court award) or\nallowed by a court under paragraph (c) of section 724 (Indemnification\nof directors and officers by a court) shall be repaid in case the person\nreceiving such advancement or allowance is ultimately found, under the\nprocedure set forth in this article, not to be entitled to\nindemnification or, where indemnification is granted, to the extent the\nexpenses so advanced by the corporation or allowed by the court exceed\nthe indemnification to which he is entitled.\n (b) No indemnification, advancement or allowance shall be made under\nthis article in any circumstance where it appears:\n (1) That the indemnification would be inconsistent with the law of the\njurisdiction of incorporation of a foreign corporation which prohibits\nor otherwise limits such indemnification; or\n (2) That the indemnification would be inconsistent with a provision of\nthe certificate of incorporation, a by-law, a resolution of the board or\nof the members, an agreement or other proper corporate action, in effect\nat the time of the accrual of the alleged cause of action asserted in\nthe threatened or pending action or proceeding in which the expenses\nwere incurred or other amounts were paid, which prohibits or otherwise\nlimits indemnification; or\n (3) If there has been a settlement approved by the court, that the\nindemnification would be inconsistent with any condition with respect to\nindemnification expressly imposed by the court in approving the\nsettlement.\n (c) If any expenses or other amounts are paid by way of\nindemnification, otherwise than by court order or action by the members,\nthe corporation shall prepare a statement specifying the persons paid,\nthe amounts paid, and the nature and status at the time of such payment\nof the litigation or threatened litigation, and\n (1) Not later than the next annual meeting of members, unless such\nmeeting is held within three months from the date of such payment, and,\nin any event, within fifteen months of the date of such payment, shall\nmail the statement to its members of record entitled at the time to vote\nfor the election of directors; or\n (2) If the corporation has no members, shall include the statement in\nthe records of the corporation open to public inspection, or\n (3) If the corporation is a cemetery corporation, as defined in\nparagraph (a) of section 1502 (Definitions), which term, for the\npurposes of this section, shall include a religious corporation having\nmembers, (i) by including the statement required by this paragraph or\nparagraph (d) of section 726 (Insurance for indemnification of directors\nand officers), as the case may be in the records of the corporation open\nto public inspection; (ii) by including the information required by the\nstatement in any notice published pursuant to the provisions of section\n605 (Notice of meeting of members), except as otherwise provided by law;\n(iii) by enclosing the statement with the notice of annual meeting if\nsuch notice is in fact mailed to the members; and (iv) by raising the\nissue for approval at the next annual meeting of the members.\n (d) If any action with respect to indemnification of directors and\nofficers is taken by way of amendment of the by-laws, resolution of\ndirectors, or by agreement, then the corporation shall, not later than\nthe next annual meeting of members, unless such meeting is held within\nthree months from the date of such action, and, in any event, within\nfifteen months from the date of such action, mail to its members of\nrecord at the time entitled to vote for the election of directors a\nstatement specifying the action taken. If the corporation has no\nmembers, the statement shall be included in the records of the\ncorporation open to public inspection.\n (e) The provisions of this article relating to indemnification of\ndirectors and officers and insurance therefor shall apply to domestic\ncorporations and foreign corporations conducting activities in this\nstate, except as provided in section 1321 (Exemption from certain\nprovisions).\n