Subsection (d) imposes limits on the authority of a corporation to indemnify a director under Section 14-2-851

These provisions forbid indemnification under Section 14-2-851 where the director is adjudged liable to the corporation, preserving the rule of former § 14-2-156(b) as to derivative actions. Subsection (d) also prohibits indemnification under Section 14-2-851 if the director was adjudged liable for an improper personal benefit, which was not found in former Georgia law. This parallels limits on exculpation found in Code Section 14-2-202(b)(4)(iv). Subsection (e) limits indemnification under Section 14-2-851 in actions brought by the corporation, and in derivative actions, to expenses incurred in connection with the proceeding. This avoids circularity, since otherwise the director would be able to seek indemnification where the director had settled a claim brought by or for the corporation. This preserves the approach of former § 14-2-156(b). However, Section 14-2-856 permits indemnification as to certain actions by the corporation or derivative actions, with shareholder approval. Provisions added to former § 14-2-156(j) by § 3, Act 657, Ga. Laws 1987, to the effect that advance of expenses and indemnification granted shall inure to the benefit of heirs, executors and administrators are not repeated in the Code because ‘‘director’’ is defined in Section 14-2-850 to include the estate of a deceased individual. Note to 1996 Amendment Changes were made to conform to 1994 amendments to the Revised Model Business Corporation Act. See 49 Bus. Law. 741 (Feb. 1994) and 49 Bus. Law. 1823 (August, 1994). Readers are referred to the official comments to the Revised Model Business Corporation Act for more extensive discussions of the text of this section. Subsection (a) has been substantially revised. Subsection (a)(1) distinguishes between conduct performed in a director’s official capacity and that outside of such capacity. Former subsection (e), limiting indemnification to reasonable expenses incurred in connection with a derivative proceeding, has been repealed, and its language moved to subsection (d)(1). But subsection (d)(1) authorizes such indemnification only if it is determined that the director has met the relevant standard of conduct under subsection (a). This eliminates the possibility that a director could be found liable for conduct that he did not believe was in the best interests of the corporation, and then obtain indemnification for those expenses. Cross-References Advance of expenses, see § 14-2-853. Determination and authorization of indemnification, see § 14-2-855. Court-ordered indemnification, see § 14-2-854. Derivative proceedings, see § 14-2-740 et seq. Director standards of conduct, see §§ 14-2-830 and 14-2-831. ‘‘Expenses’’ defined, see § 14-2-850. ‘‘Liability’’ defined, see § 14-2-850. Mandatory indemnification, see § 14-2-852. ‘‘Official capacity’’ defined, see § 14-2-850. ‘‘Proceeding’’ defined, see § 14-2-850. Report to shareholders on indemnification, see § 14-2-1621.