Richards Layton & Finger

No Surprises: The Mandatory Nature of Mandatory Advancement and Indemnification

November 2007

The Delaware Court of Chancery recently issued two opinions (Thompson and Levy) interpreting the nature and scope of indemnification and advancement provisions. 1 Though Thompson’s holding is interesting, almost as interesting is the subtext of the Court’s discussion—the Delaware courts will give boards of directors significant leeway in regulating advancement when the relevant bylaw or other contractual provision provides for discretion, but boards may have little chance of succeeding in a contest regarding a mandatory-advancement provision.