Virginia Code 13.1-699: Advance for expenses.
A. A corporation may, before final disposition of a proceeding, advance funds to pay for or reimburse the expenses incurred in connection with the proceeding by a director who is a party to a proceeding because the individual is a director if the director delivers to the corporation a signed written undertaking to repay any funds advanced if (i) the director is not entitled to mandatory indemnification under § 13.1-698 and (ii) it is ultimately determined under § 13.1-700.1 or 13.1-701 that the director is not entitled to indemnification.
Terms Used In Virginia Code 13.1-699
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Corporation: includes any corporation and any domestic or foreign predecessor entity of a corporation in a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction. See Virginia Code 13.1-696
- Disinterested director: means , except with respect to Article 14 (§ Virginia Code 13.1-603
- Expenses: means reasonable expenses of any kind that are incurred in connection with a matter. See Virginia Code 13.1-603
- Indemnification: In general, a collateral contract or assurance under which one person agrees to secure another person against either anticipated financial losses or potential adverse legal consequences. Source: FDIC
- Individual: means a natural person. See Virginia Code 13.1-603
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Party: means an individual who was, is, or is threatened to be made a defendant or respondent in a proceeding. See Virginia Code 13.1-696
- Proceeding: means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative, or investigative and whether formal or informal. See Virginia Code 13.1-696
- Quorum: The number of legislators that must be present to do business.
- Shares: means the units into which the proprietary interests in a corporation are divided. See Virginia Code 13.1-603
- written: means any information in the form of a document. See Virginia Code 13.1-603
B. The undertaking required by subsection A shall be an unlimited general obligation of the director but need not be secured and may be accepted without reference to the financial ability of the director to make repayment.
C. Authorizations under this section shall be made by:
1. The board of directors:
a. If there are two or more disinterested directors, by a majority vote of all the disinterested directors, a majority of whom shall for such purpose constitute a quorum, or by a majority of the members of a committee consisting solely of two or more disinterested directors appointed by such a vote; or
b. If there are fewer than two disinterested directors, by the vote necessary for action by the board of directors in accordance with subsection C of § 13.1-688, in which authorization directors who do not qualify as disinterested directors may participate; or
2. By the shareholders, but shares owned by or voted under the control of a director who at the time does not qualify as a disinterested director may not be voted on the authorization.
Code 1950, § 13.1-3.1; 1968, c. 570; 1975, c. 500; 1979, c. 99; 1985, c. 522; 2005, c. 765; 2010, c. 782; 2015, c. 611; 2019, c. 734.