Michael was a director of Dot.com Tomorrow Inc, incorporated under the Canada Business Corporations Act.He was charged with failing to ensure that the corporation maintained adequate safety standards for its workers.He was furious, claiming that he was innocent.Michael hired the most expensive lawyer he could find and rented a limousine with driver to take him to the court every day of the three-week trial.Each night of the trial, he dined out at the best restaurant in town.Eventually, he was acquitted and has asked the corporation to indemnify him for all these expenses.Which of the following is FALSE regarding the legal obligation of the corporation to indemnify Michael for these expenses?

Question

Quizplus · Accepted Answer

The statement "Dot.com has to pay for everything but the limousine" is false. Under the Canada Business Corporations Act, a corporation can indemnify directors and officers for reasonable expenses incurred in defending against legal proceedings, but only to the extent that those expenses were necessary and reasonable in the circumstances. While Michael may be entitled to indemnification for some of his expenses, it is unlikely that the cost of a limousine would be considered reasonable in this case.

Michael Was a Director of Dot