A.R.S. § 10-3854 — Court ordered indemnification

Court ordered indemnification

Planned Communities & Condominiums · Text verified 2026-07-25

In plain English: Unless the articles provide otherwise, a director who is a party to a proceeding may ask the court handling the case, or another proper court, to order indemnification or an advance for expenses. The court may order it if it finds the director is entitled to mandatory indemnification, in which case the association must also pay the director's reasonable expenses of seeking the order, or if it finds the director is fairly and reasonably entitled to indemnification given all the circumstances. If the director was adjudged liable in the situations described in the indemnification statute, any indemnification is limited to reasonable expenses.

10-3854. Court ordered indemnification

Unless a corporation's articles of incorporation provide otherwise, a director of the corporation who is a party to a proceeding may apply for indemnification or an advance for expenses to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court after giving any notice the court considers necessary may order indemnification advances for expenses if it determines either:

1. The director is entitled to mandatory indemnification under section 10-3852, in which case the court shall also order the corporation to pay the director's reasonable expenses incurred to obtain court ordered indemnification.

2. The director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director met the standard of conduct set forth in section 10-3851 or was adjudged liable as described in section 10-3851, subsection D, but if the director was adjudged liable under section 10-3851, subsection D, indemnification is limited to reasonable expenses incurred.

Source: A.R.S. § 10-3854 — Arizona State Legislature