(a) A director who is a party to a proceeding because he or she is a director may apply for indemnification or advances of expenses to the court conducting the proceeding or to another court of competent jurisdiction. After receipt of an application, after giving any notice it considers necessary, the court shall: (1) Order indemnification or advance for expenses if it determines that the director is entitled to indemnification under this part; or (2) Order indemnification or advance for expenses if it determines, in view of all the relevant circumstances, that it is fair and reasonable: (A) To indemnify the director; or (B) To advance expenses to the director, even if he or she has not met the relevant standard of conduct set forth in subsections (a) and (b) of Code Section 14-3-851, failed to comply with Code Section 14-3-853, or was adjudged liable in a proceeding referred to in paragraph (1) or (2) of subsection (d) of Code Section 14-3-851, but if he or she was adjudged so liable his or her indemnification shall be limited to reasonable expenses incurred in connection with the proceeding. (b) If the court determines that the director is entitled to indemnification or advance for expenses under this part, it may also order the corporation to pay the director’s reasonable expenses to obtain court ordered indemnification or advance for expenses. (Code 1981, § 14-3-854, enacted by Ga. L. 1991, p. 465, § 1; Ga. L. 1994, p. 97, § 14; Ga. L. 1997, p. 1165, § 14.) 688
While part 5 is based on the Business Code, some differences exist. Subsection (2) of this section departs from its Business Code counterpart by limiting the source of any increased exculpation beyond reasonable expenses to the articles or bylaws. The Business Code permits court-ordered indemnification beyond reasonable expenses under subsection (2) if the articles or bylaws or a contract or resolution approved by the shareholders pursuant to section 14-2-856 provides for indemnification. This Code has no counterpart to Business Code section 14-2-856. Note to 1997 Amendment Amendments were made to conform the definitions to changes made in the Business Corporation Code in 1996. Comments to the 1996 amendments to the comparable provisions of the Business Corporation Code are applicable to these provisions. 14-3-855. Determination of right and authorization for payment of indemnification required. (a) A corporation may not indemnify a director under Code Section 14-3-851 unless authorized thereunder and a determination has been made for a specific proceeding that indemnification of the director is permissible in the circumstances because the director has met the relevant standard of conduct set forth in Code Section 14-3-851. (b) The determination shall be made: (1) If there are two or more disinterested directors, by the board of 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 of two or more disinterested directors appointed by such a vote; (2) By special legal counsel: (A) Selected in the manner prescribed in paragraph (1) of this subsection; or (B) If there are fewer than two disinterested directors, selected by the board of directors, in which selection directors who do not qualify as disinterested directors may participate; or (3) By the members, but directors who do not qualify as disinterested directors may not vote as members on the determination. (c) Authorization of indemnification or an obligation to indemnify and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if there are fewer than two disinterested directors or 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 paragraph (3) of subsection (b) of this 689 14-3-855 CORPORATIONS & PARTNERSHIPS 14-3-856 Code section to select special legal counsel. (Code 1981, § 14-3-855, enacted by Ga. L. 1991, p. 465, § 1; Ga. L. 1997, p. 1165, § 14.) COMMENT Note to 1997 Amendment Amendments were made to conform the definitions to changes made in the Business Corporation Code in 1996. Comments to the 1996 amendments to the comparable provisions of the Business Corporation Code are applicable to these provisions. 14-3-856. Indemnification of officers, employees, and agents.