The Stockholder Approval of Indemnification Agreement is one of a group of documents that allows the stockholders of your startup to formally sanction or approve a “resolution” of your startup’s board of directors. A resolution is a decision or objective that has been voted on (and was agreed to) by your board members. A formal sanctioning or approval from your startup’s stockholders is generally reserved for important or significant board resolutions – examples of this sort are the approval of an Equity Incentive Plan, and the indemnification of a given individual or entity by your startup. Many less-impactful decisions involving your startup will be discussed and voted on by board members (replacing a non-critical vendor or changing the appearance of your employees’ uniforms might qualify), however those votes should not require formal sanction from stockholders.
The Stockholder Approval of Indemnification Agreement allows participating stockholders to sanction the indemnification of one of your startup’s officers or directors, or an entity (such as a venture firm which has appointed one or more of its own directors to your startup’s board) against personal liability if your startup is the defendant in a legal action. Discretion as to the individuals or entities to indemnify resides primarily with your startup’s president and/or its vice president(s). You might say that the role of the stockholders (via the document Stockholder Approval of Indemnification Agreement) is (first) to endorse those decisions, and (second) to authorize their execution.