A Neglected Policy Option: Indemnification of Directors for Amounts Paid to Settle Derivative Suits - Looking Past 'Circularity' to Context and Reform

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Permitting corporations to indemnify directors for amounts directors pay to settle derivative litigation may have merit, despite the consensus against it. It yields more cheaply the same corporate recovery - zero - as a court dismissal. Thus, notwithstanding risks, it is not patently worse than current termination options. Moreover, a board's considering it may pose sharply the question whether no-recovery termination is defensible.


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