What must happen for permissive indemnity to be granted?

For permissive indemnity to be granted, a majority of independent directors or a committee must approve the indemnification. This ensures that the decision is made by individuals who do not have a vested interest in the outcome, maintaining the objectivity and fairness of the process. This mechanism is designed to protect both the corporation and its directors by allowing for a cautious and deliberate evaluation of the circumstances surrounding the indemnity request.

Having independent directors or a dedicated committee review the request helps to prevent potential conflicts of interest that could arise if all board members, who may be implicated in similar circumstances, were making the decision collectively. This requirement aligns with corporate governance principles aimed at protecting shareholder interests and ensuring that management acts in good faith and in the best interest of the company. Thus, the majority approval from unbiased parties is critical for granting permissive indemnity.