LLC Reimbursement, Indemnification, Advancement, and Insurance Requirements in Louisiana

At a glance

Requirements one by one

Written indemnification terms

La. R.S. 12:1315(A)(2) lets the articles of organization or a written operating agreement provide indemnification of someone who “is or was” a member or manager for judgments, settlements, penalties, fines, or expenses incurred because of that status. The word “may” authorizes a term; the section does not promise automatic payment to every member or manager. The requirement that the expense or liability be incurred because of the role still needs a factual check.

Section 12:1315(B) bars a provision permitted by subsection A from limiting or eliminating liability for a financial benefit to which the person is not entitled or for an intentional criminal-law violation. The text speaks to liability; do not assume that it resolves the separate question of who ultimately pays under a particular indemnity clause or policy.

Decisions and general powers

La. R.S. 12:1318(A) defaults member decisions to a majority vote unless the articles or written agreement says otherwise. If an indemnity contract or other arrangement is a transaction involving a member or manager's financial interest, subsection (C) describes alternatives that prevent it from being void or voidable solely because of that interest: disclosure and a majority vote excluding the interested member, or fairness when authorized, approved, or ratified. Apply that safeguard when the arrangement is an interested contract or transaction.

Section 12:1303 gives LLCs powers provided to a corporation under the Business Corporation Law. The imported general powers in § 12:1-302(7) include making contracts; subsection (15) includes lawful payments that further the business. These can support a reimbursement arrangement or policy purchase. The LLC-specific indemnity rule remains § 12:1315, and the insurance policy still decides actual coverage.

What trips people up

An incurred defense expense under § 12:1315(A)(2), a company expense paid by a person, and money paid before litigation ends are different requests. Section 12:1315 lists incurred expenses as possible indemnity but does not give an interim defense-advance timetable or repayment-undertaking procedure. Look for any advance terms in the articles, written agreement, and other applicable arrangements.

The statutory former-status wording covers a person who was a member or manager, provided the written indemnity term reaches the liability and its capacity connection. A change in status does not by itself prove entitlement or erase a qualifying written term.

Common questions

Can an oral operating agreement supply the indemnity term in § 12:1315?

That subsection specifies the articles or a written operating agreement. An oral arrangement does not satisfy that stated route; other contractual questions require their own legal basis.

Does the statute require the LLC to buy insurance for a manager?

No. The general powers permit an authorized policy purchase, but the cited LLC indemnity section does not impose an insurance-purchase duty. The company's governing terms and any actual policy matter.

Statutes and sources

• La. R.S. 12:1303: Gives an LLC the powers, rights, and privileges provided for a corporation under the Business Corporation Law. Official text (accessed September 23, 2026).
• La. R.S. 12:1315: Permits written indemnity terms for present or former members and managers and preserves the stated liability floor. Official text (accessed September 23, 2026).
• La. R.S. 12:1318(A), (C): Gives the member-vote default and the conditional interested-transaction safeguard. Official text (accessed September 23, 2026).
• La. R.S. 12:1-302(7), (15): General contract and lawful business-payment powers incorporated for LLCs through § 12:1303. Official text (accessed September 23, 2026).