Organize a director's legal-expense advancement request before payment

Obtain the director's written request, the relevant proceeding information and the documents the requester relies on. Collect the charter, bylaws, indemnification agreement and any applicable corporate decisions, including the versions in effect at relevant dates. Give counsel the complete history rather than only today's policy.

Record whether the request seeks payment of expenses before the proceeding ends or reimbursement after its outcome. Advancement and final indemnification present different questions. This guide concerns the corporate administration of a Delaware advancement request; counsel must determine entitlement, coverage and any dispute.

Delaware section 145(e) addresses advancement of defense expenses for officers and directors upon receipt of an undertaking to repay if indemnification entitlement is ultimately absent. It separately addresses former officials and other covered persons. Section 145(f) recognizes that other rights can arise through bylaws, agreements and other sources.

Ask counsel to identify the applicable conditions, decision process and response timetable for this person and proceeding. The statute's permission to advance expenses does not by itself settle every contractual entitlement. Staff should not reject a request merely because the underlying allegations are serious, or approve it solely because the requester once held a director title.

Use the undertaking and supporting materials counsel determines are required. Confirm the signer's identity and retain the executed document. Do not add collateral, admissions or other conditions simply because an accounts-payable workflow contains those fields; proposed changes belong in the legal review.

Establish how invoices will identify covered work, mixed matters and requested amounts while protecting sensitive legal information. Counsel should direct any privilege review and allocation method. Keep the administrative reviewer focused on the authorized scope rather than making an independent judgment about litigation strategy or the merits of the defense.

Preserve the decision, the governing provisions considered and any conditions or limits. Where the request involves a current decision-maker's own expenses, counsel should address the appropriate approval process. A routine expense-manager approval should not be substituted for the legal decision required by the company's documents.

Give the payment team the approved payee, amount or review process, reference and required evidence. Keep disputed portions and unanswered requests separately identified. Establish who monitors later invoices and changes in the proceeding so a single initial approval is not assumed to cover every future expense without review.

Track advanced amounts against the request and undertaking with access limited to the appropriate people. Counsel should assess the final disposition, indemnification entitlement and any repayment obligation when the relevant facts are established. Accounting treatment and insurance recovery remain separate professional workstreams.

Retain the request, controlling documents, undertaking, decisions and final resolution together. The completed file should explain why the company advanced particular expenses and what later determined their treatment, without describing an interim payment as a final conclusion about liability or indemnification.