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The following is not meant to be legal advice.

On March 30, 2007, Pillsbury Winthrop Shaw Pittman, LLP sponsored a training on directors and officers liability.

The training discussed indemnification concerns.  Indemnification involves paying for court costs and defenses.  If an officer or director is sued, the indemnification is mandatory if the defendant wins the suit.  In Delaware, mandatory only applies to directors.  In California, mandatory applies to everyone including employees who are not officers.

The speakers went through the roles of directors.  The director has a duty to manage the business of a company.  This is different from an officer, who gets the authority delegated by the directors of a company.  The director should not be on competitive company boards.  When there is a corporate opportunity, a director needs to present the opportunity to the corporation.  The business judgment rule recognizes that business decisions of a director should not be overruled by a court.

One speaker went through the different types of insurance coverages, and explained differences between Sides A, B, C.  Sides B and C coverages protect the balance sheet. Side C is mostly for securities claims.  Dedicated Side A covers defenses when a company is not able to indemnify the officer or director such as in settlements for derivative lawsuits.