The Oklahoma Bar Journal October 2024

the captive insurance policy to provide that any determination to make a payment under a captive insurance policy must be made either by an independent claims administrator or in accordance with the statutory procedures for determining indemnification. 36 The amendments require cap tive insurance policies to provide that if any payment is to be made under the policy in connection with the dismissal or compromise of any action, suit or proceeding by or in the right of the corporation as to which notice is required to be given to shareholders under Title 12, Section 2023.1 of the Oklahoma Statutes, the corporation must include in the notice that a pay ment is proposed to be made under the captive insurance policy in connection with the dismissal or compromise. 37 This requirement affords the reviewing court and shareholders an opportunity to consider the use of assets of the captive insurance company in con nection with a compromise of such actions, suits or proceedings. 38 The amendments to Section 1031.G of the OGCA are not

provision may not protect officers 1) from any breach of their duty of loyalty to the corporation or its shareholders, 2) for acts or omis sions not in good faith or that involve intentional misconduct or a knowing violation of law or 3) for any transaction from which the officers derived improper personal benefits. 24 Officers also cannot be protected from derivative suits or claims brought by the board or shareholders on the corporation’s behalf. 25 The exculpation provision will only protect them from direct claims brought by shareholders. The director’s liability for unlaw ful dividends or share redemp tions does not apply to officers since they have no role in autho rizing dividends or redemptions. 26 SB 620 extends the indemnifi cation provisions of the OGCA. Section 1031 currently provides current and former directors and officers a right to indemnifica tion if they are successful (on the merits or otherwise) in defending claims brought against them by reason of their conduct as direc tors and/or officers. 27 The amend ment permits a corporation to indemnify other persons who are not current or former directors or officers if they are successful in defense of a proceeding referenced in subsections A and B of Section 1031. 28 Subsection F prohibits the elimination or impairment of a right to indemnification or advancement by amendment to the certificate of incorporation or the bylaws after the act or omis sion has occurred. 29 An amend ment to Subsection F clarifies that such prohibition applies in the case of any subsequent repeal or elimination of the certificate of incorporation or the bylaws. 30

Insurance. Section 1031.G of the OGCA permits a corporation to purchase and maintain insurance on behalf of its directors, officers, employees and other indemni fiable persons. 31 An amendment clarifies that the insurance may be provided through a captive insur ance company. 32 The captive insur ance may be procured under any “fronting” or other reinsurance arrangement, such as when a cor poration obtains insurance from a third-party insurer but, through a reinsurance policy, all or part of the risk of loss is transferred to a captive insurer. 33 The SB 620 amendments apply certain exclusions from coverage. 34 The captive insurer may not cover losses arising from 1) any personal profit or financial advantage to which the covered person was not legally entitled or 2) any deliberate criminal or deliberate fraudulent act if the proscribed conduct has been established in a final, nonap pealable adjudication in the under lying proceeding in respect of the claim. 35 To address possible con flicts that may arise in determining coverage, the amendments require

SB 620 amends Section 1014.3 to allow persons to use electronic signatures to document director, shareholder, member and incorporator consents and for signing and delivering those documents by electronic means. 42

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

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THE OKLAHOMA BAR JOURNAL