CHAPTER 32. DERIVATIVE PROCEEDINGS

IC 23-1-32
    Chapter 32. Derivative Proceedings

IC 23-1-32-1
Right to commence or maintain proceeding
    Sec. 1. A person may not commence a proceeding in the right ofa domestic or foreign corporation unless the person was ashareholder of the corporation when the transaction complained ofoccurred or unless the person became a shareholder through transferby operation of law from one who was a shareholder at that time.The derivative proceeding may not be maintained if it appears thatthe person commencing the proceeding does not fairly andadequately represent the interests of the shareholders in enforcing theright of the corporation.
As added by P.L.149-1986, SEC.16.

IC 23-1-32-2
Complaint; stay of proceeding
    Sec. 2. A complaint in a proceeding brought in the right of acorporation must be verified and allege with particularity the demandmade, if any, to obtain action by the board of directors and either thatthe demand was refused or ignored or why the shareholder did notmake the demand. Whether or not a demand for action was made, ifthe corporation commences an investigation of the charges made inthe demand or complaint (including an investigation commencedunder section 4 of this chapter), the court may stay any proceedinguntil the investigation is completed.
As added by P.L.149-1986, SEC.16.

IC 23-1-32-3
Discontinuance or settlement of proceeding
    Sec. 3. (a) A proceeding commenced under this chapter may notbe discontinued or settled without the court's approval. If the courtdetermines that a proposed discontinuance or settlement willsubstantially affect the interest of the corporation's shareholders ora class of shareholders, the court shall direct that notice be given theshareholders affected.
    (b) On termination of the proceeding the court may require theplaintiff to pay any defendant's reasonable expenses (includingcounsel fees) incurred in defending the proceeding if it finds that theproceeding was commenced without reasonable cause.
As added by P.L.149-1986, SEC.16.

IC 23-1-32-4
Committee of disinterested directors or persons
    Sec. 4. (a) Unless prohibited by the articles of incorporation, theboard of directors may establish a committee consisting of three (3)or more disinterested directors or other disinterested persons todetermine:
        (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 pursuethat right or remedy, if any, or to dismiss a proceeding thatseeks to assert that right or remedy on behalf of the corporation.
    (b) In making a determination under subsection (a), the committeeis not subject to the direction or control of or termination by theboard. A vacancy on the committee may be filled by the majority ofthe remaining members by selection of another disinterested directoror other disinterested person.
    (c) If the committee determines that pursuit of a right or remedythrough a derivative proceeding or otherwise is not in the bestinterests of the corporation, the merits of that determination shall bepresumed to be conclusive against any shareholder making a demandor bringing a derivative proceeding with respect to such right orremedy, unless such shareholder can demonstrate that:
        (1) the committee was not "disinterested" within the meaning ofthis section; or
        (2) the committee's determination was not made after aninvestigation conducted in good faith.
    (d) For purposes of this section, a director or other person is"disinterested" if the director or other person:
        (1) has not been made a party to a derivative proceeding seekingto assert the right or remedy in question, or has been made aparty but only on the basis of a frivolous or insubstantial claimor for the sole purpose of seeking to disqualify the director orother person from serving on the committee;
        (2) is able under the circumstances to render a determination inthe best interests of the corporation; and
        (3) is not an officer, employee, or agent of the corporation or ofa related corporation. However, an officer, employee, or agentof the corporation or a related corporation who meets thestandards of subdivisions (1) and (2) shall be considereddisinterested in any case in which the right or remedy underscrutiny is not assertable against a director or officer of thecorporation or the related corporation.
As added by P.L.149-1986, SEC.16.

IC 23-1-32-5
"Shareholder" defined
    Sec. 5. For purposes of this chapter, "shareholder" includes abeneficial owner whose shares are held in a voting trust or held by anominee on the owner's behalf.
As added by P.L.149-1986, SEC.16.