2013 Indiana Code TITLE 28. FINANCIAL INSTITUTIONS ARTICLE 13. CORPORATE GOVERNANCE CHAPTER 13. INDEMNIFICATION OF DIRECTORS
Download as PDF
IC 28-13-13
Chapter 13. Indemnification of Directors
IC 28-13-13-1
"Corporation" defined
Sec. 1. As used in this chapter, "corporation" includes a domestic
or foreign predecessor entity of a corporation in a merger or other
transaction in which the predecessor's existence ceased upon
consummation of the transaction.
As added by P.L.14-1992, SEC.163.
IC 28-13-13-2
"Director" defined; scope of term
Sec. 2. As used in this chapter, "director" means an individual
who is or was a director of a corporation or an individual who, while
a director of a corporation, is or was serving at the corporation's
request as a director, an officer, a partner, a trustee, a manager, an
employee, or an agent of another foreign or domestic corporation,
partnership, joint venture, limited liability company, trust, employee
benefit plan, or other enterprise, whether for profit or not. A director
is considered to be serving an employee benefit plan at the
corporation's request if the director's duties to the corporation also
impose duties on, or otherwise involve services by, the director to the
plan or to participants in or beneficiaries of the plan. The term
includes, unless the context requires otherwise, the estate or personal
representative of a director.
As added by P.L.14-1992, SEC.163. Amended by P.L.8-1993,
SEC.457.
IC 28-13-13-3
"Expenses" defined
Sec. 3. As used in this chapter, "expenses" include attorney's fees.
As added by P.L.14-1992, SEC.163.
IC 28-13-13-4
"Liability" defined
Sec. 4. As used in this chapter, "liability" means the obligation to
pay a judgment, settlement, penalty, fine, including an excise tax
assessed with respect to an employee benefit plan, or reasonable
expenses incurred with respect to a proceeding.
As added by P.L.14-1992, SEC.163.
IC 28-13-13-5
"Official capacity" defined; scope of term
Sec. 5. (a) As used in this chapter, "official capacity" means:
(1) when used with respect to a director, the office of director
in a corporation; and
(2) when used with respect to an individual other than a
director, as contemplated in section 13 of this chapter, the office
in a corporation held by the officer or the employment or
agency relationship undertaken by the employee or agent on
behalf of the corporation.
(b) The term does not include service for any other foreign or
domestic corporation or any partnership, joint venture, limited
liability company, trust, employee benefit plan, or other enterprise,
whether for profit or not.
As added by P.L.14-1992, SEC.163. Amended by P.L.8-1993,
SEC.458.
IC 28-13-13-6
"Party" defined
Sec. 6. As used in this chapter, "party" includes an individual who
was, is, or is threatened to be made a named defendant or respondent
in a proceeding.
As added by P.L.14-1992, SEC.163.
IC 28-13-13-7
"Proceeding" defined
Sec. 7. As used in this chapter, "proceeding" means any
threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative and whether
formal or informal.
As added by P.L.14-1992, SEC.163.
IC 28-13-13-8
Conditional indemnification of director against liability
Sec. 8. (a) A corporation may indemnify an individual made a
party to a proceeding because the individual is or was a director
against liability incurred in the proceeding if:
(1) the individual's conduct was in good faith; and
(2) the individual reasonably believed:
(A) in the case of conduct in the individual's official capacity
with the corporation, that the individual's conduct was in the
corporation's best interests; and
(B) in all other cases, that the individual's conduct was at
least not opposed to the corporation's best interests; and
(3) in the case of any criminal proceeding, the individual either:
(A) had reasonable cause to believe the individual's conduct
was lawful; or
(B) had no reasonable cause to believe the individual's
conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan
for a purpose the director reasonably believed to be in the interests
of the participants in and beneficiaries of the plan is conduct that
satisfies the requirement of subsection (a)(2).
(c) The termination of a proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent is not, of itself, determinative that the director did not
meet the standard of conduct described in this section.
As added by P.L.14-1992, SEC.163.
IC 28-13-13-9
Mandatory indemnification of director for expenses of successful
defense of proceeding
Sec. 9. Unless limited by its articles of incorporation, a
corporation shall indemnify a director who was wholly successful,
on the merits or otherwise, in the defense of any proceeding to which
the director was a party because the director is or was a director of
the corporation against reasonable expenses incurred by the director
in connection with the proceeding.
As added by P.L.14-1992, SEC.163.
IC 28-13-13-10
Advancement of expenses before final disposition of proceeding;
conditions; procedure
Sec. 10. (a) A corporation may pay for or reimburse the
reasonable expenses incurred by a director who is a party to a
proceeding in advance of final disposition of the proceeding if:
(1) the director furnishes the corporation a written affirmation
of the director's good faith belief that the director has met the
standard of conduct described in section 8 of this chapter;
(2) the director furnishes the corporation a written undertaking,
executed personally or on the director's behalf, to repay the
advance if it is ultimately determined that the director did not
meet the standard of conduct; and
(3) a determination is made that the facts then known to those
making the determination would not preclude indemnification
under this chapter.
(b) The undertaking required by subsection (a)(2) must be an
unlimited general obligation of the director but need not be secured
and may be accepted without reference to financial ability to make
repayment.
(c) Determinations and authorizations of payments under this
section shall be made in the manner specified in section 12 of this
chapter.
As added by P.L.14-1992, SEC.163.
IC 28-13-13-11
Court ordered indemnification; determination
Sec. 11. Unless a corporation's articles of incorporation provide
otherwise, a director of the corporation who is a party to a
proceeding may apply for indemnification to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt
of an application, the court after giving any notice the court considers
necessary may order indemnification if the court determines:
(1) the director is entitled to mandatory indemnification under
section 9 of this chapter, in which case the court shall also order
the corporation to pay the director's reasonable expenses
incurred to obtain court-ordered indemnification; or
(2) the director is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances,
whether or not the director met the standard of conduct set forth
in section 8 of this chapter.
As added by P.L.14-1992, SEC.163.
IC 28-13-13-12
Standards for conditional determinations and authorizations;
procedure
Sec. 12. (a) A corporation may not indemnify a director under
section 8 of this chapter unless authorized in the specific case after
a determination has been made that indemnification of the director
is permissible in the circumstances because the director has met the
standard of conduct set forth in section 8 of this chapter.
(b) The determination shall be made by any one (1) of the
following procedures:
(1) By the board of directors by majority vote of a quorum
consisting of directors not at the time parties to the proceeding.
(2) If a quorum cannot be obtained under subdivision (1), by
majority vote of a committee designated by the board of
directors in which directors who are parties may participate,
consisting solely of two (2) or more directors not at the time
parties to the proceeding.
(3) By special legal counsel:
(A) selected by the board of directors or its committee in the
manner prescribed in subdivision (1) or (2); or
(B) if a quorum of the board of directors cannot be obtained
under subdivision (1) and a committee cannot be designated
under subdivision (2), selected by majority vote of the full
board of directors in which directors who are parties may
participate.
(4) By the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the proceeding
may not be voted on the determination.
(c) Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as the
determination that indemnification is permissible. However, if the
determination is made by special legal counsel, authorization of
indemnification and evaluation as to reasonableness of expenses
shall be made by those entitled under subsection (b)(3) to select
counsel.
As added by P.L.14-1992, SEC.163.
IC 28-13-13-13
Indemnification of corporate officers and employees other than
directors
Sec. 13. The following apply unless a corporation's articles of
incorporation provide otherwise:
(1) An officer of the corporation, whether or not a director, is
entitled to mandatory indemnification under section 9 of this
chapter and is entitled to apply for court-ordered
indemnification under section 11 of this chapter, in each case to
the same extent as a director.
(2) The corporation may indemnify and advance expenses under
this chapter to an officer, employee, or agent of the corporation,
whether or not a director, to the same extent as to a director.
(3) A corporation may also indemnify and advance expenses to
an officer, employee, or agent, whether or not a director, to the
extent, consistent with public policy, that may be provided by
the corporation's articles of incorporation, bylaws, general or
specific action of the corporation's board of directors, or
contract.
As added by P.L.14-1992, SEC.163.
IC 28-13-13-14
Liability insurance purchased and maintained by corporation
Sec. 14. A corporation may purchase and maintain insurance on
behalf of an individual:
(1) who is or was a director, an officer, an employee, or an
agent of the corporation; or
(2) who, while a director, an officer, an employee, or an agent
of the corporation, is or was serving at the request of the
corporation as a director, an officer, a partner, a trustee, a
manager, an employee, or an agent of another foreign or
domestic corporation, partnership, joint venture, trust, limited
liability company, employee benefit plan, or other enterprise;
against liability asserted against or incurred by the individual in the
capacity described in subdivision (1) or (2). The corporation may
purchase and maintain insurance under this section whether or not
the corporation would have power to indemnify the individual
against the same liability under section 8 or 9 of this chapter.
As added by P.L.14-1992, SEC.163. Amended by P.L.8-1993,
SEC.459.
IC 28-13-13-15
Limitation of remedies; effect of chapter
Sec. 15. (a) The indemnification and advance for expenses
provided for or authorized by this chapter does not exclude any other
rights to indemnification and advance for expenses that a person may
have under:
(1) a corporation's articles of incorporation or bylaws;
(2) a resolution of the board of directors or of the shareholders;
or
(3) any other authorization, whenever adopted, after notice, by
a majority vote of all the voting shares then issued and
outstanding.
(b) If the articles of incorporation, bylaws, resolutions of the
board of directors or of the shareholders, or other adopted
authorization of indemnification or advance for expenses limit
indemnification or advance for expenses, indemnification and
advance for expenses are valid only to the extent consistent with the
articles, bylaws, resolution of the board of directors or of the
shareholders, or other adopted authorization of indemnification or
advance for expenses.
(c) This chapter does not limit a corporation's power to pay or
reimburse expenses incurred by a director, an officer, an employee,
or an agent in connection with the person's appearance as a witness
in a proceeding at a time when the person has not been made a
named defendant or respondent to the proceeding.
As added by P.L.14-1992, SEC.163.
Disclaimer: These codes may not be the most recent version. Indiana may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
