As discussed in previous sections of this report, corporate officers and directors may be held liable under a variety of circumstances. The liability may be civil or criminal, and might be based on state or federal law. The liability may be to state or federal government in the form of a fine or penalty, or it may be in the form of damages to shareholders, the corporation, or to third parties such as those who are injured by a corporation's actions.

The law authorizes two ways for directors and officers to be protected from liability under certain circumstances. One way is indemnification, in which the corporation reimburses the director or officer for expenses, settlements, and judgments they incur when they are sued for actions they took, or failed to take, as directors or officers.

The rules relating to indemnification are complicated as are the procedural requirements that may apply (CGS §33-700-779). Sometimes the law requires indemnification, sometimes it permits it, and other times it prohibits it (CGS §§33-771 and 33-772).

Because of the length of this report, we have not summarized the indemnification rules and procedures. Please let us know if you would like us to do so in a separate report.