Director And Officer Indemnification Agreements

In the ongoing effort to attract highly qualified individuals to act as directors and officers, indemnification agreements have increasingly become a common way for Canadian public companies to supplement the protections typically afforded to their directors and officers by director and officer liability insurance (D&O insurance) and bylaw indemnification rights. Generally, indemnification agreements provide the director or officer with a stand-alone, contractual indemnity against liabilities incurred as a result of serving in that capacity, together with expense advancement and certain other rights.

Indemnification agreements offer several advantages over simply including indemnification provisions in the company's bylaws or other organizational documents. Unlike a company's bylaws, which may be unilaterally amended by the directors (subject to confirmation by the company's shareholders at a later date), an indemnification agreement is a bilateral agreement between