N.Y. Not-for-Profit Corporation Law § 726: Insurance for indemnification of directors and officers

§ 726. Insurance for indemnification of directors and officers.

(a) Subject to paragraph (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 indemnify 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 paragraph (a) may provide for any payment,

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

(1) if a judgment 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 subparagraphs of paragraph (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 paragraph (c) of section 725 (Other provisions affecting

indemnification of directors and officers), mail a statement in respect

to 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 members, paid under any

indemnification insurance contract. Notwithstanding any other provision

of law, a cemetery corporation or a religious corporation having members

which purchases or renews any insurance under this section after the

effective date of the act which added this sentence to this paragraph,

which corporation had two hundred fifty or more interments in the

calendar year preceding such purchase or renewal, shall mail the

statement required by this section to every person to whom a care notice

or solicitation for services has been sent during such calendar year and

to every person to whom a notice of annual meeting was mailed during

such calendar year, but in no event to less than ten per centum of the

lot owners of record during such calendar year. Such corporation shall

not be required to mail such statement during any subsequent year,

unless such corporation elects to mail notices of annual meeting to its

members in which event the statement shall be enclosed as provided in

clause (iii) of paragraph (c) (3) of section 725 (Other provisions

affecting indemnification of directors and officers). A corporation

having less than two hundred fifty interments in the calendar year

preceding such purchase or renewal shall not be required to mail such

statement unless such corporation elects to mail notices of annual

meeting to its members in which event the statement shall be enclosed as

provided in clause (iii) of paragraph (c) (3) of section 725 (Other

provisions affecting indemnification of directors and officers).

(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.