Originally from:
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Hardcover
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Electronic
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CHAPTER 89
INDEMNIFICATION OF OFFICERS
AND DIRECTORS
Section
§ 89.01 Indemnification and Insurance
§ 89.02 Insurance
§ 89.01 Indemnification and Insurance
Under common law, insurance and indemnity were not always
available to officers and directors as a matter of right and, indeed,
sometimes were specifically proscribed. Most states, including
Minnesota, have statutorily created a right to such coverage.
It is interesting to note that in Minnesota corporations are permitted to
maintain liability insurance on behalf of corporate personnel, whether or
not the corporation would have power to indemnify such personnel
against such liability.1 Written notice should be provided to shareholders.
In Minnesota, corporations are required to indemnify persons for
particular expenses and liabilities.2 Minnesota corporations organized
before July 1, 1981, may choose to indemnify under Minn. Stat.
§ 302A.3 Not only is this statutorily provided but also courts generally
have long held that where directors or officers are successful in
defending themselves in a derivative action they are entitled to
indemnification of their defense expenses.4 Minnesota courts look for a
vindication on the merits of any wrongdoing by the director or officer.5
Directors, officers, employees, agents, and other persons in the
corporation are entitled to indemnification if they were acting in their
"official capacity."6 One court stated that the policy behind
indemnification is to encourage innocent directors to defend against claims
by allowing them to hire counsel, which encourages responsible business
people to seek director and officer positions and discourages strike suits.7
Roger J. Magnuson is a Partner at Dorsey and Whitney, LLP, where he serves as Head of the National Strategic Litigation Group and has practiced since 1973. He has been recognized as one of the top trial lawyers in the United States by major national and international publications, including Chambers International Guide to American Lawyers, which profiles the top 500 trial lawyers in the United States, Best Lawyers in America, Who's Who in American Law, and Who's Who in America. Mr. Magnuson was also recognized by a Journal of Law and Politics' survey for Judge's Choice "Wins Most Cases."
Some high profile cases that he has litigated include representation of the Florida Senate in the Bush v. Gore election controversy in 2000; and representation of the Plaintiffs in the widely publicized and studied Mall of America case. For several years he has represented, among other persons and entities, the Minnesota Twins and Major League Baseball principals and players in litigation; and has litigated national and local cases in federal and state court venues. He has appealed before the Supreme Court in a number of cases; as well as the Minnesota Supreme Court. He has authored several articles and 7 books.
Richard A. Saliterman is a Principal in Saliternan & Siefferman P.C., a full-service firm in Minneapolis established in 1976. Mr. Saliterman is a leading expert on corporate business matters, and is the author of several publications on business start-ups, franchises, and trademarks. Mr. Saliterman is the former National Judge Advocate for the U.S. Navy League, based in Washington D.C.
Contributing Editor:
Amanda Chang
Contributing Authors:
Alecia Anderson
Seth Back
John Baker
Shannon Berg
Constatin Burachek
Benjamin Carpenter
Ryan Check
Carl Christensen
Peter Fear
Michael Frasier
Aaron Hall
Catherine Hanson
Paul Harman
Amy Ithlan
Michael Kern
Chris Kuhlman
Brett Larson
Joshua Lederman
Karen Lundquist
James Magnuson
Jennifer Mead
Rao Menier
Heidi Miller
Rachael Moxon
Oliver Nelson
Scott Peitzer
Mitchell Skinner
Jonathan Stechmann
Lael Weinberger
Jonathan Wilson
Alex Zumbulyadis