2018 Louisiana Laws
Revised Statutes
TITLE 6 - Banks and Banking
RS 6:286 - Indemnification of officers, directors, employees, and agents

§286. Indemnification of officers, directors, employees, and agents

A.(1) Except as provided in Paragraph (4), a state bank may indemnify an individual made a party to a proceeding because he is or was a director against liability incurred in the proceeding if:

(a) He conducted himself in good faith; and

(b) He reasonably believed:

(i) In the case of conduct in his official capacity with the state bank, that his conduct was in its best interests;

(ii) In all other cases, that his conduct was at least not opposed to its best interests; and

(c) In the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful.

(2) A director's conduct with respect to an employee benefit plan for a purpose he reasonably believed to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of Subparagraph (1)(b)(ii).

(3) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not of itself determinative that the director did not meet the standard of conduct described in this Section.

(4) A state bank may not indemnify a director under this Section:

(a) In connection with a proceeding by or in the right of the state bank in which the director was adjudged liable to the state bank; or

(b) In connection with any proceeding charging improper personal benefit to him, whether or not involving action in his official capacity, in which he was adjudged liable on the basis that personal benefit was improperly received by him.

(5) Indemnification permitted under this Section in connection with a proceeding by or in the right of the state bank is limited to reasonable expenses incurred in connection with the proceeding.

B. Unless limited by its articles of incorporation, a state bank shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he was a party because he is or was a director of the state bank against reasonable expenses incurred by him in connection with the proceeding.

C.(1) A state bank may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if:

(a) The director furnishes the state bank a written affirmation of his good faith belief that he has met the standard of conduct described in Subsection A;

(b) The director furnishes the state bank a written undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that he did not meet the standard of conduct; and

(c) A determination is made that the facts then known to those making the determination would not preclude indemnification under this Section.

(2) The undertaking required by Subparagraph (1)(b) must be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment.

(3) Determination and authorizations of payments shall be made in the manner specified in Subsection E.

D. Unless limited by a state bank's articles of incorporation, a director of the state bank who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court, after giving any notice the court considers necessary, may order indemnification if it determines that:

(1) The director is entitled to mandatory indemnification under Subsection B, in which case the court shall also order the state bank to pay the director's reasonable expenses incurred to obtain court-ordered indemnification; or

(2) The director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not he met the standard of conduct set forth in Subsection A or was adjudged liable as described in Paragraph A(4), but if he was adjudged so liable, his indemnification is limited to reasonable expenses incurred.

E.(1) A state bank may not indemnify a director under Subsection A unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because he has met the standard of conduct set forth in Subsection A.

(2) The determination shall be made:

(a) By the board of directors by a majority vote of a quorum consisting of directors not at the time parties to the proceeding;

(b) If a quorum cannot be obtained under Subparagraph (2)(a), by majority vote of a committee duly designated by the board (in which designation directors who are parties may participate), consisting solely of two or more directors not at the time parties to the proceeding;

(c) By special legal counsel selected by the board of directors or its committee in the manner prescribed in Subparagraph (2)(a) or (b) or, if a quorum of the board cannot be obtained under Subparagraph (2)(a) and a committee cannot be designated under Subparagraph (2)(b), selected by majority vote of the full board, in which selection directors who are parties may participate; or

(d) By the stockholders, but shares held by directors who are at the time parties to the proceeding may not be voted on the determination.

(3) 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 Subparagraph (2)(c) to select counsel.

F. Unless limited by a state bank's articles of incorporation:

(1) An officer of the state bank who is not a director is entitled to mandatory indemnification under Subsection B and is entitled to apply for court-ordered indemnification under Subsection D in each case to the same extent as to a director;

(2) The state bank may indemnify and advance expenses under this Section to an officer, employee, or agent of the corporation who is not a director to the same extent as to a director; and

(3) A state bank may also indemnify and advance expenses to an officer, employee, or agent who is not a director to the extent, consistent with law, that may be provided by its articles of incorporation, bylaws, general or specific action of its board of directors, or contract.

G. A state bank may purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee, or agent of the state bank or who, while a director, officer, employee, or agent of the state bank, is or was serving at the request of the state bank as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise against liability asserted against or incurred by him in that capacity or arising from his status as a director, officer, employee, or agent, whether or not the state bank would have power to indemnify him against the same liability under Subsection A or B.

H.(1) A provision treating a state bank's indemnification of or advance for expenses to directors that is contained in its articles, bylaws, a resolution of its stockholders or directors, or in a contract or otherwise is valid only if and to the extent the provision is consistent with this Section. If articles of incorporation limit indemnification or advance for expenses, indemnification and advance for expenses are valid only to the extent consistent with the articles.

(2) This Section does not limit a corporation's power to pay or reimburse expenses incurred by a director in connection with his appearance as a witness in a proceeding at a time when he has not been made a named defendant or respondent to the proceeding.

Acts 1984, No. 719, §1, eff. Jan. 1, 1985.