Governor Signs Bill Concerning Indemnification of Corporate Officers

In the February 2011 issue of the New Jersey eAuthority, we reported that the Assembly and the Senate each had passed a bill (S2493 and A3254) intended to strengthen the right of corporate directors and officers to receive indemnification for costs incurred during civil, criminal, administrative or investigative actions, suits or proceedings, arising from their activities on behalf of their corporations. On March 1, 2011, Governor Chris Christie signed the bill into law as P.L.2011, c.31. The statute, which went into effect immediately upon signing, provides that a director’s or officer’s right to indemnification or advancement of expenses, as set forth in a corporation’s certificate of incorporation or bylaws, may not be eliminated or weakened by amendments to the certificate of incorporation or bylaws after the occurrence of an act or omission, unless there is an explicit authorization at the time of the act or omission of the corporation’s right to retroactively eliminate or limit the applicable indemnification or advancement.