Indemnification and Advancement Checklist

Document type: Checklist Practice area: Corporate — Corporate Governance Jurisdiction: Delaware, with notes on other states Last reviewed: 5 September 2026

Section 1 — Drafting review (do this before any claim)

Bylaws grant mandatory indemnification and advancement "to the fullest extent permitted by law"
"Proceeding" defined to include threatened, pending, and completed; civil, criminal, administrative, arbitrative, and investigative; formal and informal
Coverage extends to a person "otherwise involved," including as a witness
Advancement expressly not conditioned on any determination, on ability to repay, or on the company's view of the merits
Undertaking unsecured and not requiring any showing of ability to repay
Fees on fees provision, expressly covering proceedings to enforce the rights
Vesting provision: rights vest at the time of the act or omission and may not be impaired retroactively
No express reservation permitting retroactive elimination (and if there is one, remove it)
"Officer" defined to capture the intended people
Coverage for service at another entity at the corporation's request
Rights survive termination of service and change of control
Individual indemnification agreements in place for directors and senior officers
Presumption in the indemnitee's favor and a deemed-approval mechanism, where negotiated
Insurance covenant: maintain coverage including Side A; provide copies; notify of cancellation

Section 2 — Standing corporate actions

Standing board resolution designating persons who serve at other entities as serving at the corporation's request
Schedule of designations maintained and current
Written advancement administration protocol adopted in advance
Onboarding packet for new directors and officers: charter and bylaw provisions, indemnification agreement, D&O summary, designation confirmation
D&O program file: every layer, retentions, exclusions, notice addresses
Annual review of the insured-versus-insured exclusion and its carve-backs
Annual review of the conduct exclusion — confirm it requires a final, non-appealable adjudication in the underlying proceeding

Section 3 — Day one for the individual

Certificate of incorporation, both versions: as of the conduct and as of now
Bylaws, both versions
Indemnification agreement, employment agreement, separation agreement
Board resolutions of election or appointment, with dates
Subsidiary or portfolio designation documents
Underlying complaint, subpoena, or investigation notice
Full D&O program, including Side A
Notice given to every policy layer, same day
Demand delivered with executed undertaking and a proposed invoice protocol
Objection deadline calendared; escalation planned if no response

Section 4 — The four-question analysis (both sides)

Is the proceeding covered by the definition, including investigations and witness involvement?
Is it "by reason of the fact" of the corporate role — is there a nexus between the claims and the position?
Is the right mandatory or permissive — "shall" or "may"?
Is it conditioned on anything beyond an undertaking (security, affirmation, determination)?

Section 5 — Before a company refuses

Analysis run honestly and in writing
Cost of losing computed: the advancement, the individual's fees in the advancement proceeding, the company's fees, and the published decision
Argument identified from the list that works: no nexus; not a covered person; no such right; affirmative claims; genuine allocation; specific unreasonable charges
Confirmed the position does not rest on an argument that fails: bad faith allegations; the company is the plaintiff; inability to repay; expensive counsel; a post-conduct bylaw amendment; termination for cause
Board briefed on the exposure before any litigation against a former officer is authorized

Section 6 — Administration protocol

Invoice format specified, with privileged content redacted
Monthly submission
Payment within 20–30 days of submission
Specific objections within a stated period, stating the basis
Undisputed balance paid notwithstanding objections
Neutral or special master for unresolved objections
Allocation methodology agreed before the first invoice
Separate matter numbers for affirmative claims
Periodic true-ups rather than monthly disputes
Cumulative reporting of amounts advanced
Amounts tracked against insurance limits and erosion monitored

Section 7 — Insurance coordination

Notice to every layer, in the specified manner, promptly
Retention analysis: does the company indemnify (Side B) or not (Side A)?
Presumptive indemnification clause reviewed
Consent requirements for defense counsel and settlement identified and reconciled with any agreement giving the individual control
Insured-versus-insured exclusion and carve-backs reviewed where the company is the claimant
Allocation provisions between covered and uncovered claims and parties
Tower erosion modeled where multiple insureds share limits
Side A excess policy confirmed as a separate policy with its own limit

Section 8 — Transactions

Merger agreement contains a survival covenant, typically six years
Covered individuals named as third-party beneficiaries with enforcement rights
Tail policy bound before closing, with a term matching the covenant
Premium cap set at a realistic multiple
Subsidiary officers' coverage confirmed — which entity carries the obligation, and does it survive a carve-out?
Indemnitor-of-first-resort language where sponsor designees serve

Section 9 — At resolution

Determine whether the person was successful on the merits or otherwise — dismissal, acquittal, abandonment, or settlement with no payment all qualify
If successful: indemnification of expenses is mandatory; confirm the undertaking is discharged; pay any unadvanced expenses
If not: make the determination by disinterested directors, a committee, independent counsel in a written opinion, or the stockholders
Determination made on a record and minuted
Claim-by-claim analysis where outcomes differ across claims
Repayment analysis if entitlement is not established
Final insurance reconciliation and closure

Section 10 — Special situations

Insolvency or bankruptcy. Indemnification claims against a debtor are prepetition unsecured claims. Advancement is unreliable and the automatic stay complicates enforcement. Confirm Side A coverage exists as a separate policy with its own limit, and that coverage is not conditioned on the company's solvency. For a known-distressed board, consider a funded trust or letter of credit securing the obligation.

Sponsor designees. Confirm the portfolio company is the indemnitor of first resort, its obligation primary and non-contributory, with a waiver of subrogation against the sponsor and a statement that the portfolio company's insurance responds first.

Government investigations. Confirm "Proceeding" includes investigative matters and covers witnesses. Give policy notice immediately. Anticipate divergence if the company decides to cooperate: separate counsel early, joint defense agreement with a clean termination mechanism.

Multiple indemnitees, shared tower. Model erosion. Agree an allocation methodology among indemnitees at the outset. Consider whether the most-exposed individuals have a dedicated Side A limit.

Non-Delaware entities. Read the statute rather than assuming Delaware's rules. Check whether a good faith affirmation is required in addition to the undertaking, whether mandatory indemnification requires being wholly successful, and whether a summary procedure exists. Where it does not, negotiate expedited resolution and fee shifting into the agreement.

Former officers after an acquisition. Confirm the survival covenant, the third-party beneficiary language, and that the tail policy was actually bound before closing.

Section 11 — Red flags in governing documents

"May" rather than "shall"
"Proceeding" that omits investigative matters
No coverage for persons "otherwise involved," including witnesses
Advancement conditioned on a board determination
Security required for the undertaking
No fees-on-fees provision
No vesting provision, or an express reservation permitting retroactive elimination — decline to serve
"Officer" defined narrowly or not at all
No coverage for service at another entity at the corporation's request
Rights that do not expressly survive termination of service
No indemnification agreement offered
Insurance covenant absent, or silent on Side A

Section 12 — The nexus worksheet

Use this to answer the "by reason of the fact" question, which decides most contested matters.

Question	If yes	If no
Did the alleged conduct occur while the person held the position?	Nexus likely	Examine whether the conduct used information or relationships from the role
Were corporate powers, authority, or access used in the alleged conduct?	Nexus present	Weaker
Is the person named in a capacity connected to the role, or in a purely personal capacity?	Nexus present	Nexus absent
Would the claim exist if the person had never held the position?	Nexus weaker	Nexus present
Does the claim allege abuse of the position?	Nexus present — abuse of the role is covered	—
Is the claim about a personal investment, family matter, or unrelated business?	Nexus absent	—
Does the proceeding include both categories?	Allocate; where intertwined, courts lean toward advancing the whole	—

The most common company error is arguing that conduct alleged to be self-interested is therefore outside the role. It is not. The claim that an officer used their authority for personal benefit is a claim that arises by reason of the fact of the office, and the allegation of misuse does not sever the connection — it establishes it.

Section 13 — Annual program audit

Governing documents reviewed against Section 1 above; gaps identified and remediated
Indemnification agreements in place for every director and senior officer; new appointees covered
Subsidiary designation schedule reconciled against actual service
"Officer" definition compared to the current organization chart
D&O program reviewed: limits, Side A, retentions, exclusions, notice provisions
Tower adequacy modeled against a realistic multi-defendant scenario
Advancement protocol reviewed and, if any matter is active, its operation audited
Open advancement matters reported to the board with cumulative amounts
Any resolved matter closed out: determination made, minuted, undertaking discharged, insurance reconciled
Onboarding packet updated and confirmed delivered to appointees during the year