LLC Reimbursement, Indemnification, Advancement, and Insurance Requirements in New Hampshire

At a glance

Requirements one by one

Proceeding indemnity

N.H. Rev. Stat. § 304-C:116(I) permits, but does not require, an LLC to cover a judgment, settlement, penalty, fine or reasonable proceeding expense for a member, manager or other person made a party or threatened as a named defendant or respondent because the person acted for the company. The person must have acted with contractual good faith under § 304-C:116(I)(a) and reasonably believed the conduct was not opposed to the LLC's best interest under § 304-C:116(I)(b). Indemnity is prohibited when the person is adjudged liable to the company in a company or derivative proceeding under § 304-C:116(II)(a), or adjudged liable for a charged loyalty breach in another proceeding under § 304-C:116(II)(b).

Defense-cost advances

Section 304-C:117 permits advances of costs, including legal fees, to members, managers and other people defending relationship-linked claims, subject to any agreement standards. It requires either an agreement provision or a majority vote of disinterested members. The provision itself does not require a repayment promise; the agreement may set standards and restrictions.

Agreement and general powers

Section 304-C:22(I) grants an LLC necessary-or-convenient business and internal-affairs powers unless its agreement says otherwise. Sections 304-C:107 and § 304-C:115 allow broad agreement changes to duties and liability while preserving the implied contractual covenant of good faith and fair dealing. Section 304-C:91(I)(a) excludes certain non-member-capacity payments to a member from the distribution definition, and § 304-C:91(I)(c) does the same for indemnity and expense-advance payments; classification alone does not create a standalone reimbursement entitlement.

What trips people up

The advancement vote in § 304-C:117 belongs to disinterested members and is an alternative to authorization in the operating agreement. Section 304-C:116 does not state a separate indemnity approval vote or court application. Neither section states that a former member or manager remains covered after departure. The general power in § 304-C:22(I) does not spell out insurance against liability the LLC cannot indemnify, nor does it determine any policy's coverage.

Common questions

Does the company have to indemnify a successful defense? Section 304-C:116 uses “may” and makes the stated conditions and exclusions controlling; it does not create a separate mandatory successful-defense rule.

Can the LLC advance legal fees before final liability is decided? Yes, if § 304-C:117's agreement or disinterested-member vote route applies. That interim advance is distinct from final indemnity under § 304-C:116.

Statutes and sources

• N.H. Rev. Stat. § 304-C:22(I): the LLC has power “to do all things necessary or convenient to carry out its activities, business, and internal affairs” unless its agreement provides otherwise. Official current chapter, accessed 2026-09-23.
• N.H. Rev. Stat. § 304-C:91(I)(a), (c): certain member payments, indemnity payments and expense advances are outside the definition of a distribution. Official current chapter, accessed 2026-09-23.
• N.H. Rev. Stat. §§ 304-C:107, :115: the agreement may change duties or liabilities but cannot eliminate the implied contractual covenant of good faith and fair dealing. Official current chapter, accessed 2026-09-23.
• N.H. Rev. Stat. § 304-C:116(I)–(II): “a limited liability company may, and shall have the power to, indemnify” the covered person, subject to the statutory conditions and exclusions. Official current chapter, accessed 2026-09-23.
• N.H. Rev. Stat. § 304-C:117: the company “may advance” defense costs if the agreement so provides or a majority of disinterested members vote for it. Official current chapter, accessed 2026-09-23.