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Internal Affairs Doctrine Blocks Indemnity Claim

Section 78.7502 of Nevada Revised Statutes broadly authorizes, but does not require, a corporation to indemnify its directors, officers, employees or agents.  NRS 78.751 requires the corporation to indemnify directors, officers, employees or agents that successfully defend an indemnifiable. 

When Kazuo Okada sued a Japanese corporation for indemnification for expenses and attorneys' fees incurred in litigation that was voluntarily dismissed, the defendants argued that the internal affairs doctrine necessarily means that NRS 78.502 does not apply.  In a recent ruling U.S. District Court Judge Richard F. Boulware, II agreed and dismissed the claims.  Judge Boulware, however, did not dismiss the claims against a Nevada corporation from which Mr. Okada also seeks indemnification.  Universal Entertainment Corporation v. Aruze Gaming America, Inc., 2020 U.S. Dist. LEXIS 96681.  

Readers of the decision should note that it quotes the earlier version of NRS 78.7502.  The Nevada legislature substantially amended the statute last year.  2019 Nev. Stats. ch. 19, §§ 15 & 16.

© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume X, Number 171
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Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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