A Delaware corporation may impose additional restrictions or conditions upon permissive advancement rights.  However, a Delaware corporation’s board of directors may not change the terms of contractually mandatory advancement after advancement has been sought by the director or officer.  See Havens v. Attar, 1997 Del. Ch. LEXIS 12, at *43 (Jan. 30, 1997).

For example, a board may not condition advancement upon a showing of financial responsibility after advancement has been sought.  Further, a right to advancement may not be eliminated retroactively.

This is set forth in Section 145(f) of the Delaware General Corporation Law (“DGCL”), which provides that a right to advancement or indemnification in a charter or bylaws cannot be altered or eliminated after the act or omission to which such rights relate, unless explicitly authorized by charter or bylaw provision.  8 Del. C. § 145(f).

If you would like to speak to a litigator in Fox Rothschild’s Delaware office, please reach out to Sid Liebesman (302) 622-4237 or Seth Niederman (302) 622-4238.