2009 Iowa Code
Title 12 - Business Entities
Subtitle 2 - Business and Professional Corporations and Companies
CHAPTER 490 - BUSINESS CORPORATIONS
490.744 - DISMISSAL.

        490.744  DISMISSAL.
         1.  A derivative proceeding shall be dismissed by the court on
      motion by the corporation if one of the groups specified in
      subsection 2 or 6 has determined in good faith after conducting a
      reasonable inquiry upon which its conclusions are based that the
      maintenance of the derivative proceeding is not in the best interests
      of the corporation.  A corporation moving to dismiss on this basis
      shall submit in support of the motion a short and concise statement
      of the reasons for its determination.
         2.  Unless a panel is appointed pursuant to subsection 6, the
      determination in subsection 1 shall be made by one of the following:
         a.  A majority vote of independent directors present at a
      meeting of the board of directors if the independent directors
      constitute a quorum.
         b.  A majority vote of a committee consisting of two or more
      independent directors appointed by majority vote of independent
      directors present at a meeting of the board of directors, whether or
      not such independent directors constitute a quorum.
         3.  None of the following shall by itself cause a director to be
      considered not independent for purposes of this section:
         a.  The nomination or election of the director by persons who
      are defendants in the derivative proceeding or against whom action is
      demanded.
         b.  The naming of the director as a defendant in the
      derivative proceeding or as a person against whom action is demanded.

         c.  The approval by the director of the act being challenged
      in the derivative proceeding or demand if the act resulted in no
      personal benefit to the director.
         4.  If a derivative proceeding is commenced after a determination
      has been made rejecting a demand by a shareholder, the complaint
      shall allege with particularity facts establishing one of the
      following:
         a.  That a majority of the board of directors did not consist
      of independent directors at the time the determination was made.
         b.  That the requirements of subsection 1 have not been met.
         All discovery and other proceedings shall be stayed during the
      pendency of any motion to dismiss unless the court finds upon the
      motion of any party that particularized discovery is necessary to
      preserve evidence or prevent undue prejudice to that party.
         5.  If a majority of the board of directors does not consist of
      independent directors at the time the determination is made, the
      corporation shall have the burden of proving that the requirements of
      subsection 1 have been met.  If a majority of the board of directors
      consists of independent directors at the time the determination is
      made, the plaintiff shall have the burden of proving that the
      requirements of subsection 1 have not been met.
         6.  The court may appoint a panel of one or more independent
      persons upon motion by the corporation to make a determination
      whether the maintenance of the derivative proceeding is in the best
      interests of the corporation.  In such case, the plaintiff shall have
      the burden of proving that the requirements of subsection 1 have not
      been met.  

         2002 Acts, ch 1154, §27, 125