HRS §414-249
How a corporation can promise to cover legal costs in advance
A corporation can choose in its rules or by a board or shareholder vote to promise, before a lawsuit happens, that it will pay legal costs or reimburse expenses for its directors. This promise counts as the needed approval. It does not cover directors of a former company unless stated, and the corporation can limit these promises.
The statute, as written — Variation by corporate action; application of subpart
(a) A corporation, by a provision in its articles of incorporation or bylaws or in a resolution adopted or a contract approved by its board of directors or shareholders, may obligate itself in advance of the act or omission giving rise to a proceeding to provide indemnification in accordance with section 414-242 or advance funds to pay for or reimburse expenses in accordance with section 414-244. Any such obligatory provision shall be deemed to satisfy the requirements for authorization referred to in section 414-244(c) and 414-246(c). Any such provision that obligates the corporation to provide indemnification to the fullest extent permitted by law shall be deemed to obligate the corporation to advance funds to pay for or reimburse expenses in accordance with section 414-244 to the fullest extent permitted by law, unless the provision specifically provides otherwise. (b) Any provision pursuant to subsection (a) shall not obligate the corporation to indemnify or advance expenses to a director of a predecessor of the corporation, pertaining to conduct with respect to the predecessor, unless otherwise specifically provided. Any provision for indemnification or advance for expenses in the articles of incorporation, bylaws, or a resolution of the board of directors or shareholders of a predecessor of the corporation in a merger or in a contract to which the predecessor is a party, existing at the time the merger takes effect, shall be governed by section 414-316(a)(3). (c) A corporation, by a provision in its articles of incorporation, may limit any of the rights to indemnification or advance for expenses created by or pursuant to this subpart. (d) This subpart does not limit a corporation's power to pay or reimburse expenses incurred by a director or an officer in connection with the director's or officer's appearance as a witness in a proceeding at a time when the officer or director is not a party. (e) This subpart does not limit a corporation's power to indemnify, advance expenses to, or provide or maintain insurance on behalf of an employee or agent.
Sections this one refers to
§414-242 When a company can pay a director's legal costs
§414-244 When a company can pay a director's legal costs upfront
§414-316 What happens when companies merge or exchange shares
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