N.Y. Banking Law § 7023: Insurance for idemnification of directors and officers

§ 7023. Insurance for idemnification of directors and officers. (a)

Subject to subdivision (b), a corporation shall have power to purchase

and maintain insurance:

(1) To indemnify the corporation for any obligation which it incurs as

a result of the indemnification of directors and officers under the

provisions of this article, and

(2) To indemnify directors and officers in instances in which they may

be indemnified by the corporation under the provisions of this article,

and

(3) To idemnify directors and officers in instances in which they may

not otherwise be indemnified by the corporation under the provisions of

this article provided the contract of insurance covering such directors

and officers provides, in a manner acceptable to the superintendent of

financial services, for a retention amount and for co-insurance.

(b) No insurance under subdivision (a) may provide for any payment,

other than cost of defense, to or on behalf of any director or officer:

(1) if a judgement or other final adjudication adverse to the insured

director or officer establishes that his acts of active and deliberate

dishonesty were material to the cause of action so adjudicated, or that

he personally gained in fact a financial profit or other advantage to

which he was not legally entitled, or

(2) in relation to any risk the insurance of which is prohibited under

the insurance law of this state.

(c) Insurance under any or all paragraphs of subdivision (a) may be

included in a single contract or supplement thereto. Retrospective rated

contracts are prohibited.

(d) The corporation shall, within the time and to the persons provided

in subdivision three of section seven thousand twenty-two, mail a

statement in respect of any insurance it has purchased or renewed under

this section, specifying the insurance carrier, date of the contract,

cost of the insurance, corporate positions insured, and a statement

explaining all sums, not previously reported in a statement to

shareholders, paid under any indemnification insurance contract.

(e) This section is the public policy of this state to spread the risk

of corporate management, notwithstanding any other general or special

law of this state or of any other jurisdiction including the federal

government.