Advancement disputes arise where a company sues, or is sued alongside, a former officer who demands that the company fund their defense.

Contractual right. Advancement is a matter of contract found in the charter, bylaws or an individual agreement. The company cannot amend it retroactively to eliminate rights for prior conduct in most jurisdictions.

By reason of the fact. The proceeding must arise by reason of the person’s service in a covered capacity. A nexus between the conduct alleged and the corporate role suffices; the claim need not depend on their official duties.

Even where the company is the plaintiff. Companies are often surprised that they must fund the defense of an officer they are suing, and courts enforce it where the documents so provide.

The undertaking to repay if indemnification is ultimately unavailable is generally required, and generally need not be secured — which is why the right matters most against officers who could not repay.

Summary proceedings. These are resolved quickly because they are contract interpretation, and fees on fees are typically recoverable.

Company protection. Draft advancement rights with the intended limits stated — excluding claims brought by the company, requiring board approval for affirmative claims, or requiring security for the undertaking — before a dispute exists, since amendments afterwards do not reach prior conduct.