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August 06, 2020

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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


About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...