By Ryan Bruderer and Ladd Hirsch

Recognized by Texas Bar Today’s Top 10 Blog Posts

Just as an excessively lavish desert can ruin a fine dinner, including an overly broad indemnity provision in a private company agreement can prove to be too much of a good thing for the company.  The point of indemnity provisions is to protect company executives (e.g., officers, directors, managers) from claims made against them in the good faith performance of their duties.  To ensure the net is broad enough to include all types of claims made against executives, however, these clauses are often drafted quite broadly.  But when the provisions are so inclusive they exceed their intended scope, another truism may apply—the cure may be worse than the disease.  This post discusses the effective use of indemnity provisions in private company governance documents and reviews potential drawbacks that can result when these provisions are drafted without appropriate limits.


Continue Reading Too Much of a Good Thing: Avoiding Unwelcome Results From (Too) Broadly Drafted Indemnity Provisions in Private Company Governance Documents