The indemnification provisions in a company's articles have limitations that expose the company's directors and officers to personal liability. They include:
all indemnification provisions establish standards of conduct that must be satisfied in order for indemnification to be available
indemnification provisions are usually unclear on issues such as the advancement of defence costs – which can put significant financial hardship on the directors and officers
even the best indemnification provisions are meaningless if the company becomes insolvent. It is therefore impossible for a company to shield its directors and officers from exposure to all personal liability, solely by virtue of the indemnification provisions contained in the charter.
