Title 10 - Corporations and Associations

Chapter 31, Directors and Officers - Nonprofit Corporations, Sec. 10-3801-10-3864

Determination and authorization of indemnification

Article 5, Indemnification, § 10-3855

Source: Arizona Revised Statutes

  1. A corporation may not indemnify a director under section 10-3851 unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standard of conduct set forth in section 10-3851.
  2. The determination shall be made either:
    1. By the board of directors by a majority vote of the directors not at the time parties to the proceeding.
    2. By special legal counsel:
      1. Selected by majority vote of the disinterested directors.
      2. If there are no disinterested directors, selected by majority vote of the board of directors.
    3. By the members, but directors who are at the time parties to the proceeding may not vote on the determination.
  3. Neither special legal counsel nor any member has any liability whatsoever for a determination made pursuant to this section. In voting pursuant to subsection B of this section, directors shall discharge their duty in accordance with section 10-3830.
  4. Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subsection B, paragraph 2 of this section to select counsel.

Also in: Chapter 31, Sec. 10-3801-10-3864

View all Nonprofit Corporation Act statutes.

Source: This content is sourced from the online version of the Arizona Revised Statutes located at www.azleg.gov.

Disclaimer: These statutes are provided as a courtesy by CHDB Law LLP. CHDB Law cannot guarantee that the statutes set forth on the website or in our published guide will not be found to be defective by a court or other tribunal after the date the books or online material are published. The HOA Knowledge Base does not attempt to include every statute that could apply to a community association issue. There may be other statutes or applicable laws that have a bearing on a particular legal issue confronted by a community association. These statutes are provided as a reference only. If a particular legal issue is confronted by a community association, the association should seek legal advice from competent attorneys.

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