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IC 28-13-8
Chapter 8. Derivative Proceedings
IC 28-13-8-1
"Shareholder" defined
Sec. 1. For purposes of this chapter, "shareholder" includes a
beneficial owner whose shares are held in a voting trust or held by a
nominee on the owner's behalf.
As added by P.L.14-1992, SEC.163.
IC 28-13-8-2
Right to commence proceeding
Sec. 2. (a) A person may not commence a proceeding in the right
of a corporation unless the person was a shareholder of the
corporation when the transaction complained of occurred or unless
the person became a shareholder through transfer by operation of law
from one who was a shareholder at that time.
(b) A derivative proceeding may not be maintained if it appears
that the person commencing the proceeding does not fairly and
adequately represent the interests of the shareholders in enforcing the
right of the corporation.
As added by P.L.14-1992, SEC.163.
IC 28-13-8-3
Complaint requisites; stay pending corporate investigation
Sec. 3. (a) A complaint in a proceeding brought in the right of a
corporation must be verified and must allege with particularity:
(1) the demand made, if any, to obtain action by the board of
directors; and
(2) either that the demand was refused or ignored, or why the
shareholder did not make the demand.
(b) Whether or not a demand for action was made, if the
corporation commences an investigation of the charges made in the
demand or complaint, including an investigation commenced under
section 5 of this chapter, the court may stay any proceeding until the
investigation is completed.
As added by P.L.14-1992, SEC.163.
IC 28-13-8-4
Discontinuance or settlement of case; approval; notice; payment of
defense expenses and fees
Sec. 4. (a) A proceeding commenced under this chapter may not
be discontinued or settled without the court's approval. If the court
determines that a proposed discontinuance or settlement will
substantially affect the interest of the corporation's shareholders or
a class of shareholders, the court shall direct that notice be given the
shareholders affected.
(b) On termination of the proceeding, the court may require the
plaintiff to pay any defendant's reasonable expenses, including
attorney's fees, incurred in defending the proceeding if the court
finds that the proceeding was commenced without reasonable cause.
As added by P.L.14-1992, SEC.163.
IC 28-13-8-5
Corporate committee; establishment; powers and duties;
determination made independently of board; conclusive
presumption on merits; disinterested director or other person
Sec. 5. (a) Unless prohibited by the articles of incorporation, the
board of directors may establish a committee consisting of at least
three (3) disinterested directors or other disinterested persons to
determine:
(1) whether the corporation has a legal or equitable right or
remedy; and
(2) whether it is in the best interests of the corporation to pursue
that right or remedy, if any, or to dismiss a proceeding that
seeks to assert that right or remedy on behalf of the corporation.
(b) In making a determination under subsection (a), the committee
is not subject to the direction or control of or termination by the
board. A vacancy on the committee may be filled by the majority of
the remaining members by selection of another disinterested director
or other disinterested person.
(c) If the committee determines that pursuit of a right or remedy
through a derivative proceeding or otherwise is not in the best
interests of the corporation, the merits of that determination are
presumed to be conclusive against any shareholder making a demand
or bringing a derivative proceeding with respect to the right or
remedy, unless the shareholder can demonstrate that:
(1) the committee was not disinterested, as described in
subsection (d); or
(2) the committee's determination was not made after an
investigation conducted in good faith.
(d) For purposes of this chapter, a director or other person is
disinterested if the director or other person:
(1) has not been made a party to a derivative proceeding seeking
to assert the right or remedy in question, or has been made a
party but only on the basis of a frivolous or insubstantial claim
or for the sole purpose of seeking to disqualify the director or
other person from serving on the committee;
(2) is able under the circumstances to render a determination in
the best interests of the corporation; and
(3) is not an officer, employee, or agent of the corporation or of
a related corporation.
However, an officer, employee, or agent of the corporation or a
related corporation who meets the standards of subdivisions (1) and
(2) shall be considered disinterested in any case in which the right or
remedy under scrutiny is not assertable against a director or officer
of the corporation or the related corporation.
As added by P.L.14-1992, SEC.163.
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