Legal Duties and Liabilities of Directors and Officers of Charities and Not-for-Profits and Risk Management

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d) What Does Indemnification Involve?

•Corporate indemnification generally provides compensation for the following

–Legal fees

–Fines that were paid under a statute

–A financial settlement that results from a lawsuit

–Any other obligation that a director was required to fulfill

•Corporate indemnification should always be implemented but may be of limited practical benefit

•Indemnification is only as good as the financial security of the corporation and its insurance

•Indemnification is therefore tied to the strength of the insurance coverage of the corporation

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