Companies that modify their corporate charter to preclude certain indemnification claims can only apply the changes to lawsuits filed against executives after the new provisions are ratified and not lawsuits initiated prior to the new amendments’ final approval, the Delaware Court of Chancery has ruled.
The court issued the opinion in Branin v. Stein Roe Investment Counsel when it denied a defendant’s argument that a second indemnification amendment, adopted after the plaintiff was sued in New York, prohibited the plaintiff from recouping his legal expenses. Vice Chancellor John W. Noble held that the plaintiff’s right to recover should be controlled under the first indemnification amendment that was in place when the lawsuit was initiated.
