CHAPTER 44. DISSENTERS' RIGHTS
IC 23-1-44
Chapter 44. Dissenters' Rights
IC 23-1-44-1
"Corporation" defined
Sec. 1. As used in this chapter, "corporation" means the issuer ofthe shares held by a dissenter before the corporate action, or thesurviving or acquiring corporation by merger or share exchange ofthat issuer.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-2
"Dissenter" defined
Sec. 2. As used in this chapter, "dissenter" means a shareholderwho is entitled to dissent from corporate action under section 8 ofthis chapter and who exercises that right when and in the mannerrequired by sections 10 through 18 of this chapter.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-3
"Fair value" defined
Sec. 3. As used in this chapter, "fair value", with respect to adissenter's shares, means the value of the shares immediately beforethe effectuation of the corporate action to which the dissenterobjects, excluding any appreciation or depreciation in anticipation ofthe corporate action unless exclusion would be inequitable.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-4
"Interest" defined
Sec. 4. As used in this chapter, "interest" means interest from theeffective date of the corporate action until the date of payment, at theaverage rate currently paid by the corporation on its principal bankloans or, if none, at a rate that is fair and equitable under all thecircumstances.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-4.5
"Preferred shares" defined
Sec. 4.5. As used in this chapter, "preferred shares" means a classor series of shares in which the holders of the shares have preferenceover any other class or series with respect to distributions.
As added by P.L.133-2009, SEC.38.
IC 23-1-44-5
"Record shareholder" defined
Sec. 5. As used in this chapter, "record shareholder" means theperson in whose name shares are registered in the records of acorporation or the beneficial owner of shares to the extent thattreatment as a record shareholder is provided under a recognition
procedure or a disclosure procedure established under IC 23-1-30-4.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-6
"Beneficial shareholder" defined
Sec. 6. As used in this chapter, "beneficial shareholder" means theperson who is a beneficial owner of shares held by a nominee as therecord shareholder.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-7
"Shareholder" defined
Sec. 7. As used in this chapter, "shareholder" means the recordshareholder or the beneficial shareholder.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-8
Right to dissent and obtain payment for shares
Sec. 8. (a) A shareholder is entitled to dissent from, and obtainpayment of the fair value of the shareholder's shares in the event of,any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporationis a party if:
(A) shareholder approval is required for the merger byIC 23-1-40-3 or the articles of incorporation; and
(B) the shareholder is entitled to vote on the merger.
(2) Consummation of a plan of share exchange to which thecorporation is a party as the corporation whose shares will beacquired, if the shareholder is entitled to vote on the plan.
(3) Consummation of a sale or exchange of all, or substantiallyall, of the property of the corporation other than in the usual andregular course of business, if the shareholder is entitled to voteon the sale or exchange, including a sale in dissolution, but notincluding a sale pursuant to court order or a sale for cashpursuant to a plan by which all or substantially all of the netproceeds of the sale will be distributed to the shareholderswithin one (1) year after the date of sale.
(4) The approval of a control share acquisition underIC 23-1-42.
(5) Any corporate action taken pursuant to a shareholder voteto the extent the articles of incorporation, bylaws, or aresolution of the board of directors provides that voting ornonvoting shareholders are entitled to dissent and obtainpayment for their shares.
(b) This section does not apply to the holders of shares of anyclass or series if, on the date fixed to determine the shareholdersentitled to receive notice of and vote at the meeting of shareholdersat which the merger, plan of share exchange, or sale or exchange ofproperty is to be acted on, the shares of that class or series were acovered security under Section 18(b)(1)(A) or 18(b)(1)(B) of the
Securities Act of 1933, as amended.
(c) The articles of incorporation as originally filed or anyamendment to the articles of incorporation may limit or eliminate theright to dissent and obtain payment for any class or series ofpreferred shares. However, any limitation or elimination containedin an amendment to the articles of incorporation that limits oreliminates the right to dissent and obtain payment for any shares:
(1) that are outstanding immediately before the effective date ofthe amendment; or
(2) that the corporation is or may be required to issue or sellafter the effective date of the amendment under any exchangeor other right existing immediately before the effective date ofthe amendment;
does not apply to any corporate action that becomes effective withinone (1) year of the effective date of the amendment if the actionwould otherwise afford the right to dissent and obtain payment.
(d) A shareholder:
(1) who is entitled to dissent and obtain payment for theshareholder's shares under this chapter; or
(2) who would be so entitled to dissent and obtain payment butfor the provisions of subsection (b);
may not challenge the corporate action creating (or that, but for theprovisions of subsection (b), would have created) the shareholder'sentitlement.
(e) Subsection (d) does not apply to a corporate action that wasapproved by less than unanimous consent of the voting shareholdersunder IC 23-1-29-4.5(b) if both of the following apply:
(1) The challenge to the corporate action is brought by ashareholder who did not consent and as to whom notice of theapproval of the corporate action was not effective at least ten(10) days before the corporate action was effected.
(2) The proceeding challenging the corporate action iscommenced not later than ten (10) days after notice of theapproval of the corporate action is effective as to theshareholder bringing the proceeding.
As added by P.L.149-1986, SEC.28. Amended by P.L.107-1987,SEC.19; P.L.133-2009, SEC.39.
IC 23-1-44-9
Dissenters' rights of beneficial shareholder
Sec. 9. (a) A record shareholder may assert dissenters' rights as tofewer than all the shares registered in the shareholder's name only ifthe shareholder dissents with respect to all shares beneficially ownedby any one (1) person and notifies the corporation in writing of thename and address of each person on whose behalf the shareholderasserts dissenters' rights. The rights of a partial dissenter under thissubsection are determined as if the shares as to which the shareholderdissents and the shareholder's other shares were registered in thenames of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to
shares held on the shareholder's behalf only if:
(1) the beneficial shareholder submits to the corporation therecord shareholder's written consent to the dissent not later thanthe time the beneficial shareholder asserts dissenters' rights; and
(2) the beneficial shareholder does so with respect to all thebeneficial shareholder's shares or those shares over which thebeneficial shareholder has power to direct the vote.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-10
Proposed action creating dissenters' rights; notice
Sec. 10. (a) If proposed corporate action creating dissenters' rightsunder section 8 of this chapter is submitted to a vote at ashareholders' meeting, the meeting notice must state thatshareholders are or may be entitled to assert dissenters' rights underthis chapter.
(b) If corporate action creating dissenters' rights under section 8of this chapter is taken without a vote of shareholders, thecorporation shall notify in writing all shareholders entitled to assertdissenters' rights that the action was taken and send them thedissenters' notice described in section 12 of this chapter.
As added by P.L.149-1986, SEC.28. Amended by P.L.107-1987,SEC.20.
IC 23-1-44-11
Proposed action creating dissenters' rights; assertion of dissenters'rights
Sec. 11. (a) If proposed corporate action creating dissenters' rightsunder section 8 of this chapter is submitted to a vote at ashareholders' meeting, a shareholder who wishes to assert dissenters'rights:
(1) must deliver to the corporation before the vote is takenwritten notice of the shareholder's intent to demand payment forthe shareholder's shares if the proposed action is effectuated;and
(2) must not vote the shareholder's shares in favor of theproposed action.
(b) A shareholder who does not satisfy the requirements ofsubsection (a) is not entitled to payment for the shareholder's sharesunder this chapter.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-12
Dissenters' notice; contents
Sec. 12. (a) If proposed corporate action creating dissenters' rightsunder section 8 of this chapter is authorized at a shareholders'meeting, the corporation shall deliver a written dissenters' notice toall shareholders who satisfied the requirements of section 11 of thischapter.
(b) The dissenters' notice must be sent no later than ten (10) days
after approval by the shareholders, or if corporate action is takenwithout approval by the shareholders, then ten (10) days after thecorporate action was taken. The dissenters' notice must:
(1) state where the payment demand must be sent and whereand when certificates for certificated shares must be deposited;
(2) inform holders of uncertificated shares to what extenttransfer of the shares will be restricted after the paymentdemand is received;
(3) supply a form for demanding payment that includes the dateof the first announcement to news media or to shareholders ofthe terms of the proposed corporate action and requires that theperson asserting dissenters' rights certify whether or not theperson acquired beneficial ownership of the shares before thatdate;
(4) set a date by which the corporation must receive thepayment demand, which date may not be fewer than thirty (30)nor more than sixty (60) days after the date the subsection (a)notice is delivered; and
(5) be accompanied by a copy of this chapter.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-13
Demand for payment and deposit of shares by shareholder
Sec. 13. (a) A shareholder sent a dissenters' notice described inIC 23-1-42-11 or in section 12 of this chapter must demand payment,certify whether the shareholder acquired beneficial ownership of theshares before the date required to be set forth in the dissenter's noticeunder section 12(b)(3) of this chapter, and deposit the shareholder'scertificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits theshareholder's shares under subsection (a) retains all other rights of ashareholder until these rights are cancelled or modified by the takingof the proposed corporate action.
(c) A shareholder who does not demand payment or deposit theshareholder's share certificates where required, each by the date setin the dissenters' notice, is not entitled to payment for theshareholder's shares under this chapter and is considered, forpurposes of this article, to have voted the shareholder's shares infavor of the proposed corporate action.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-14
Uncertificated shares; restriction on transfer; dissenters' rights
Sec. 14. (a) The corporation may restrict the transfer ofuncertificated shares from the date the demand for their payment isreceived until the proposed corporate action is taken or therestrictions released under section 16 of this chapter.
(b) The person for whom dissenters' rights are asserted as touncertificated shares retains all other rights of a shareholder untilthese rights are cancelled or modified by the taking of the proposed
corporate action.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-15
Payment to dissenter
Sec. 15. (a) Except as provided in section 17 of this chapter, assoon as the proposed corporate action is taken, or, if the transactiondid not need shareholder approval and has been completed, uponreceipt of a payment demand, the corporation shall pay eachdissenter who complied with section 13 of this chapter the amountthe corporation estimates to be the fair value of the dissenter's shares.
(b) The payment must be accompanied by:
(1) the corporation's balance sheet as of the end of a fiscal yearending not more than sixteen (16) months before the date ofpayment, an income statement for that year, a statement ofchanges in shareholders' equity for that year, and the latestavailable interim financial statements, if any;
(2) a statement of the corporation's estimate of the fair value ofthe shares; and
(3) a statement of the dissenter's right to demand payment undersection 18 of this chapter.
As added by P.L.149-1986, SEC.28. Amended by P.L.107-1987,SEC.21.
IC 23-1-44-16
Failure to take action; return of certificates; new action bycorporation
Sec. 16. (a) If the corporation does not take the proposed actionwithin sixty (60) days after the date set for demanding payment anddepositing share certificates, the corporation shall return thedeposited certificates and release the transfer restrictions imposed onuncertificated shares.
(b) If after returning deposited certificates and releasing transferrestrictions, the corporation takes the proposed action, it must senda new dissenters' notice under section 12 of this chapter and repeatthe payment demand procedure.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-17
Withholding payment by corporation; corporation's estimate offair value; after-acquired shares
Sec. 17. (a) A corporation may elect to withhold payment requiredby section 15 of this chapter from a dissenter unless the dissenter wasthe beneficial owner of the shares before the date set forth in thedissenters' notice as the date of the first announcement to news mediaor to shareholders of the terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment undersubsection (a), after taking the proposed corporate action, it shallestimate the fair value of the shares and shall pay this amount to eachdissenter who agrees to accept it in full satisfaction of the dissenter's
demand. The corporation shall send with its offer a statement of itsestimate of the fair value of the shares and a statement of thedissenter's right to demand payment under section 18 of this chapter.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-18
Dissenters' estimate of fair value; demand for payment; waiver
Sec. 18. (a) A dissenter may notify the corporation in writing ofthe dissenter's own estimate of the fair value of the dissenter's sharesand demand payment of the dissenter's estimate (less any paymentunder section 15 of this chapter), or reject the corporation's offerunder section 17 of this chapter and demand payment of the fairvalue of the dissenter's shares, if:
(1) the dissenter believes that the amount paid under section 15of this chapter or offered under section 17 of this chapter is lessthan the fair value of the dissenter's shares;
(2) the corporation fails to make payment under section 15 ofthis chapter within sixty (60) days after the date set fordemanding payment; or
(3) the corporation, having failed to take the proposed action,does not return the deposited certificates or release the transferrestrictions imposed on uncertificated shares within sixty (60)days after the date set for demanding payment.
(b) A dissenter waives the right to demand payment under thissection unless the dissenter notifies the corporation of the dissenter'sdemand in writing under subsection (a) within thirty (30) days afterthe corporation made or offered payment for the dissenter's shares.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-19
Court proceeding to determine fair value; judicial appraisal
Sec. 19. (a) If a demand for payment under IC 23-1-42-11 orunder section 18 of this chapter remains unsettled, the corporationshall commence a proceeding within sixty (60) days after receivingthe payment demand and petition the court to determine the fairvalue of the shares. If the corporation does not commence theproceeding within the sixty (60) day period, it shall pay eachdissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the circuitor superior court of the county where a corporation's principal office(or, if none in Indiana, its registered office) is located. If thecorporation is a foreign corporation without a registered office inIndiana, it shall commence the proceeding in the county in Indianawhere the registered office of the domestic corporation merged withor whose shares were acquired by the foreign corporation waslocated.
(c) The corporation shall make all dissenters (whether or notresidents of this state) whose demands remain unsettled parties to theproceeding as in an action against their shares and all parties must beserved with a copy of the petition. Nonresidents may be served by
registered or certified mail or by publication as provided by law.
(d) The jurisdiction of the court in which the proceeding iscommenced under subsection (b) is plenary and exclusive. The courtmay appoint one (1) or more persons as appraisers to receiveevidence and recommend decision on the question of fair value. Theappraisers have the powers described in the order appointing them orin any amendment to it. The dissenters are entitled to the samediscovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled tojudgment:
(1) for the amount, if any, by which the court finds the fairvalue of the dissenter's shares, plus interest, exceeds the amountpaid by the corporation; or
(2) for the fair value, plus accrued interest, of the dissenter'safter-acquired shares for which the corporation elected towithhold payment under section 17 of this chapter.
As added by P.L.149-1986, SEC.28.
IC 23-1-44-20
Costs; fees; attorney's fees
Sec. 20. (a) The court in an appraisal proceeding commencedunder section 19 of this chapter shall determine all costs of theproceeding, including the reasonable compensation and expenses ofappraisers appointed by the court. The court shall assess the costsagainst such parties and in such amounts as the court finds equitable.
(b) The court may also assess the fees and expenses of counseland experts for the respective parties, in amounts the court findsequitable:
(1) against the corporation and in favor of any or all dissentersif the court finds the corporation did not substantially complywith the requirements of sections 10 through 18 of this chapter;or
(2) against either the corporation or a dissenter, in favor of anyother party, if the court finds that the party against whom thefees and expenses are assessed acted arbitrarily, vexatiously, ornot in good faith with respect to the rights provided by thischapter.
(c) If the court finds that the services of counsel for any dissenterwere of substantial benefit to other dissenters similarly situated andthat the fees for those services should not be assessed against thecorporation, the court may award to these counsel reasonable fees tobe paid out of the amounts awarded the dissenters who werebenefited.
As added by P.L.149-1986, SEC.28.