What is the test for indemnification of a director who has been found to have breached the terms of an indemnity agreement?
British Columbia, Canada
The following excerpt is from Enliven Holdings Inc. v Qureshi, 2020 BCSC 473 (CanLII):
The purpose of indemnity is to provide assurance to persons who are prepared to become directors that they will be compensated for the consequences of the responsibilities they take on the company’s behalf, so long as they act in good faith in the best interests of the company. Indemnity cannot be grounded on conduct which is in bad faith. Indemnification is decided on the basis of the circumstances existing at the time of the director’s conduct and belief to avoid a determination based upon a “hindsight application of perfection”: Bennett v. Bennett Environmental Inc., 2009 ONCA 198 at paras. 23-27.
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