Editorial Note on Part 750
Editorial Note: Nomenclature changes to part 750 appear at 84 FR 1609, Feb. 5, 2019.

§ 750.5 Permissible indemnification payments. ( a ) A federally insured credit union may make or agree to make reasonable indemnification payments to an IAP, including advanced funds to pay or reimburse reasonable legal fees or other professional expenses incurred by an IAP in an administrative proceeding or civil action initiated by NCUA or a state regulatory authority if: ( 1 ) The federally insured credit union's board of directors, in good faith, determines in writing after due investigation and consideration that: ( i ) The IAP acted in good faith and in a manner he or she believed to be consistent with his or her fiduciary duty;
( ii ) The advancement or payment of the expenses will not materially adversely affect the credit union's safety and soundness; and
( iii ) The IAP has the financial capability or has otherwise made appropriate financial arrangements sufficient to repay the advance if required in accordance with this rule; and
( 2 ) The IAP provides: ( i ) A written affirmation of his or her reasonable good faith belief that he or she acted in a manner believed to be consistent with his or her fiduciary duty; and
( ii ) An agreement in writing to reimburse the federally insured credit union, to the extent not covered by payments from insurance or bonds purchased pursuant to § 750.1(j)(2)(i), for that portion of any advanced indemnification payments which ultimately become prohibited indemnification payments as defined in § 750.1(j); and
( 3 ) The indemnification payments do not ultimately constitute prohibited indemnification payments as defined in § 750.1(j).
( b ) An IAP seeking indemnification payments must not participate in any way in the board of director's discussion and approval of such payments; however, the IAP may present his or her request to the board and respond to any inquiries from the board concerning his or her involvement in the circumstances giving rise to the administrative proceeding or civil action.
( c ) In the event a majority of the members of the board of directors are named as respondents in an administrative proceeding or civil action and request indemnification, the remaining members of the board may authorize independent legal counsel to review the indemnification request and provide the remaining members of the board with a written opinion of counsel as to whether the conditions in paragraph (a)(1) through (3) of this section have been met. If independent legal counsel concludes that the conditions have been met, the remaining members of the board of directors may rely on the opinion in authorizing the requested indemnification.
( d ) In the event all of the members of the board of directors are named as respondents in an administrative proceeding or civil action and request indemnification, the board will authorize independent legal counsel to review the indemnification request and provide the board with a written opinion of counsel as to whether the conditions in paragraph (a)(1) through (3) of this section have been met. If independent legal counsel concludes the conditions have been met, the board of directors may rely on the opinion in authorizing the requested indemnification.
[76 FR 30517, May 26, 2011; 79 FR 12658, Mar. 6, 2014, as amended at 85 FR 62214, Oct. 2, 2020]