Does A California Corporation Have The Power To Indemnify Corporate Employee Benefit Plan Fiduciaries?

Section 317 of the California Corporations Code authorizes, limits and  in one circumstance even mandates the indemnification of a person by reason of the fact that the person is, or was, an "agent" of the corporation.   The statute defines "agent" as "any person who is or was a director, officer, employee or other agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a director, officer, employee or agent of a foreign or domestic corporation which was a predecessor corporation of the corporation or of another enterprise at the request of the predecessor corporation".  

Corporate executives and employees often serve as fiduciaries under a corporation's employee benefit plan.  From the above description, it is not clear that Section 317 governs indemnification of these persons when serving as such.  In fact, Section 317 does not apply.  Subdivision (j) of the statute makes this clear: "This section [317] does not apply to any proceeding against any trustee, investment manager, or other fiduciary of an employee benefit plan in that person’s capacity as such, even though the person may also be an agent as defined in subdivision (a) of the employer corporation".  

This does not mean that the California General Corporation Law prohibits indemnification of persons serving as fiduciaries under a corporation's employee benefit plans.   Subdivision (j) also provides "A corporation shall have power to indemnify such a trustee, investment manager, or other fiduciary to the extent permitted by subdivision (f) of Section 207".   Section 207(f) provides that a corporation's include, but are not limited to, the power to:

Pay pensions, and establish and carry out pension, profit-sharing, share bonus, share purchase, share option, savings, thrift, and other retirement, incentive, and benefit plans, trusts, and provisions for any or all of the directors, officers, and employees of the corporation or any of its subsidiary or affiliated corporations, and to indemnify and purchase and maintain insurance on behalf of any fiduciary of such plans, trusts, or provisions.

The only limitations imposed by Section 207 are limitations imposed by the articles of incorporation and compliance with other provisions of the GCL and "other applicable law".  One of the other applicable laws is likely to be the Employee Retirement Income Security Act of 1974 (ERISA).  Therefore questions regarding the indemnification employee benefit plan fiduciaries may require the advice of a practitioner who is a familiar with ERISA.