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Director Indemnification Agreement

Director Indemnification Agreement Template for Malaysia

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Key Requirements PROMPT example:

Director Indemnification Agreement

"I need a Director Indemnification Agreement for our newly appointed independent director of a private Malaysian manufacturing company, incorporating standard protections and D&O insurance requirements effective from January 2025."

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Document background
The Director Indemnification Agreement is essential for companies operating in Malaysia seeking to attract and retain qualified directors by providing them with comprehensive protection against personal liability. This document is typically implemented upon a director's appointment or as part of a company's corporate governance update, ensuring compliance with the Malaysian Companies Act 2016 and other relevant legislation. The agreement details the scope of indemnification, procedures for claiming indemnification, and the company's obligations regarding directors' and officers' insurance. It balances the need to protect directors while respecting statutory limitations on indemnification. The document is particularly important given Malaysia's evolving corporate governance landscape and increasing focus on directors' duties and responsibilities.
Suggested Sections

1. Parties: Identification of the company and the director entering into the indemnification agreement

2. Background: Context of the agreement, director's appointment, and company's desire to provide indemnification

3. Definitions: Key terms including 'Indemnified Events', 'Proceedings', 'Expenses', 'Claims', and other relevant definitions

4. Scope of Indemnification: Detailed description of events, actions, and circumstances covered by the indemnification

5. Limitations on Indemnification: Statutory limitations and exclusions as per Companies Act 2016 and other applicable laws

6. Advancement of Expenses: Terms and conditions for advancing legal and other expenses to the director

7. Claims Procedure: Process for making indemnification claims and company's response obligations

8. Directors' and Officers' Insurance: Company's obligations regarding maintaining D&O insurance coverage

9. Duration and Survival: Term of the agreement and survival of indemnification rights after directorship ends

10. Notice Provisions: Requirements for giving notices under the agreement

11. General Provisions: Standard clauses including governing law, jurisdiction, amendment, and assignment

Optional Sections

1. Multiple Directorships: Additional provisions for directors serving on boards of subsidiaries or related companies

2. Listed Company Provisions: Additional requirements for listed companies under Capital Markets and Services Act

3. Regulatory Compliance: Specific provisions for regulated industries (e.g., financial services sector)

4. Tax Indemnity: Specific provisions dealing with tax implications of indemnification payments

5. Third Party Claims: Detailed procedures for handling claims brought by third parties

6. Contribution: Provisions for cases where multiple parties may be liable to provide indemnification

Suggested Schedules

1. Schedule 1: Insurance Details: Specific details of D&O insurance coverage, including limits and key terms

2. Schedule 2: Claim Notice Requirements: Detailed procedures and requirements for submitting indemnification claims

3. Schedule 3: Excluded Events: Specific list of events or circumstances excluded from indemnification

4. Appendix A: Form of Claim Notice: Standard form for director to submit indemnification claims

5. Appendix B: Form of Undertaking: Standard form of director's undertaking for expense advancement

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant Industries

Financial Services

Manufacturing

Technology

Healthcare

Retail

Energy

Telecommunications

Real Estate

Mining

Construction

Education

Professional Services

Transportation

Agriculture

Media and Entertainment

Relevant Teams

Legal

Corporate Secretariat

Compliance

Risk Management

Board of Directors

Executive Management

Corporate Governance

Internal Audit

Relevant Roles

Director

Executive Director

Non-Executive Director

Independent Director

Managing Director

CEO

Company Secretary

Chief Legal Officer

Chief Risk Officer

Chief Financial Officer

Head of Compliance

Board Chairman

Audit Committee Chairman

Corporate Governance Officer

Industries
Companies Act 2016: The primary legislation governing companies in Malaysia, including provisions on directors' duties, responsibilities, and the scope of permitted indemnification (particularly Sections 288 and 289 regarding directors' indemnification)
Capital Markets and Services Act 2007: Relevant for listed companies, containing provisions affecting directors' liabilities and disclosure obligations in the context of capital markets
Financial Services Act 2013: Contains specific provisions relating to directors' duties and indemnification in financial institutions and regulated entities
Income Tax Act 1967: Governs the tax treatment of indemnification payments and insurance premiums paid for directors' and officers' liability insurance
Malaysian Code on Corporate Governance: While not legislation per se, provides important guidelines on corporate governance practices and directors' roles that should be considered in indemnification arrangements
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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