CHAPTER 12. DIRECTORS
IC 23-17-12
Chapter 12. Directors
IC 23-17-12-1
Necessity of having board of directors; exercise of corporatepowers; management of corporate business; delegation of powers
Sec. 1. (a) A corporation must have a board of directors.
(b) Except as otherwise provided in this article:
(1) corporate powers shall be exercised by or under theauthority of; and
(2) the business and affairs of the corporation managed underthe direction of;
the corporation's board of directors.
(c) Articles of incorporation may authorize a person or a group ofpersons or the manner of designating a person or a group of personsto exercise some or all of the powers that would otherwise beexercised by a board of directors. To the extent authorized:
(1) the person or group of persons has the duties andresponsibilities of the directors;
(2) the directors are relieved to that extent from the duties andresponsibilities; and
(3) the person or group of persons should be considered adirector or directors for purposes of IC 23-17-13 andIC 23-17-16.
As added by P.L.179-1991, SEC.1. Amended by P.L.96-1993, SEC.8.
IC 23-17-12-2
Qualifications
Sec. 2. (a) A director must be an individual.
(b) Articles of incorporation or bylaws may prescribequalifications for directors.
As added by P.L.179-1991, SEC.1.
IC 23-17-12-3
Number of directors; increase or decrease in number
Sec. 3. (a) A board of directors must consist of at least three (3)individuals, with the number specified in or fixed in accordance witharticles of incorporation or bylaws.
(b) The number of directors may be increased or decreased, but tonot less than three (3), by an amendment to or in a manner prescribedin articles of incorporation or bylaws.
As added by P.L.179-1991, SEC.1.
IC 23-17-12-4
Time and method of election
Sec. 4. (a) If a corporation has members, all the directors exceptthe initial directors shall be elected at the first annual meeting ofmembers and at each annual meeting after the first annual meeting,unless articles of incorporation or bylaws provide:
(1) another time or method of election; or (2) that some of the directors are designated or appointed byanother person.
(b) If a corporation does not have members, all the directorsexcept the initial directors shall be elected, designated, or appointedas provided in articles of incorporation or bylaws. If a method ofelection, designation, or appointment is not set forth in articles ofincorporation or bylaws, the directors other than the initial directorsshall be elected by the board of directors.
As added by P.L.179-1991, SEC.1.
IC 23-17-12-5
Term
Sec. 5. (a) Articles of incorporation or bylaws must specify theterms of directors. Except for designated or appointed directors, theterm of a director may not exceed five (5) years. In the absence of aterm specified in articles of incorporation or bylaws, the term of adirector is one (1) year. Directors may be elected for successiveterms.
(b) Subject to sections 8 through 11 of this chapter, a decrease inthe number of directors or term of office does not shorten anincumbent director's term.
(c) Except as provided in articles of incorporation or bylaws:
(1) the term of a director filling a vacancy in the office of adirector elected by members expires at the next election ofdirectors by members; and
(2) the term of a director filling any other vacancy expires at theend of the unexpired term that the director is filling.
(d) Despite the expiration of a director's term, the directorcontinues to serve until:
(1) a successor is elected, designated, or appointed andqualifies; or
(2) there is a decrease in the number of directors.
As added by P.L.179-1991, SEC.1.
IC 23-17-12-6
Staggered terms
Sec. 6. Articles of incorporation or bylaws may provide forstaggering the terms of directors by dividing the total number ofdirectors into groups. The terms of office of groups is not requiredto be uniform.
As added by P.L.179-1991, SEC.1.
IC 23-17-12-7
Resignation
Sec. 7. (a) A director may resign at any time by delivering writtennotice to one (1) of the following:
(1) The board of directors.
(2) The presiding officer of the board of directors.
(3) The president or secretary of the corporation.
(b) A resignation is effective when the notice is effective under
IC 23-17-28 unless the notice specifies a later effective date. If aresignation is made effective at a later date, the board of directorsmay fill the pending vacancy before the effective date if the board ofdirectors provides that the successor does not take office until theeffective date.
As added by P.L.179-1991, SEC.1.
IC 23-17-12-8
Removal of director by vote of members
Sec. 8. (a) Members may remove a director elected by themembers with or without cause unless articles of incorporationprovide otherwise.
(b) Except when otherwise provided in the articles ofincorporation, if a director is elected by:
(1) a class, chapter, or other organizational unit; or
(2) region or other geographic grouping;
the director may be removed only by the members of the class,chapter, unit, or grouping entitled to vote.
(c) Except as provided in section 10 of this chapter, a director maybe removed under subsection (a) or (b) only if the number of votescast to remove the director would be sufficient to elect the directorat a meeting to elect directors.
(d) If cumulative voting is authorized, a director may not beremoved if:
(1) the number of votes; or
(2) the director was elected by a class, chapter, unit, or groupingof members, the number of votes of the class, chapter, unit, orgrouping;
sufficient to elect the director under cumulative voting is votedagainst the director's removal.
(e) A director elected by members may be removed by themembers only at a meeting called for the purpose of removing thedirector. The meeting notice must state that the purpose of themeeting is the removal of the director.
(f) In determining if a director is protected from removal undersubsection (b), (c), or (d), it is assumed that the votes against removalare cast in an election for the number of directors of the class towhich the director to be removed belonged on the date of thedirector's election.
(g) An entire board of directors may be removed undersubsections (a) through (e).
As added by P.L.179-1991, SEC.1. Amended by P.L.96-1993, SEC.9.
IC 23-17-12-9
Removal of director by vote of directors
Sec. 9. A director elected by the board of directors may beremoved with or without cause by the vote of a majority of thedirectors then in office, unless a greater number is set forth in articlesof incorporation or bylaws.
However, a director elected by the board of directors to fill the
vacancy of a director elected by the members may be removedwithout cause by the members but not by the board of directors.
As added by P.L.179-1991, SEC.1. Amended by P.L.1-1992,SEC.118.
IC 23-17-12-10
Removal of director by vote of directors; reasons set forth inarticles of incorporation or in bylaws
Sec. 10. If at the beginning of a director's term on the board ofdirectors articles of incorporation or bylaws provide that the directormay be removed for reasons set forth in the articles of incorporationor bylaws, the board of directors may remove the director for thereasons. The director may be removed only if a majority of thedirectors then in office votes for the removal.
As added by P.L.179-1991, SEC.1.
IC 23-17-12-11
Religious corporations; removal of directors
Sec. 11. The articles of incorporation or bylaws of a religiouscorporation may do the following:
(1) Limit the application of this section.
(2) Set forth the vote and procedures by which the board ofdirectors or a person may remove with or without cause adirector elected by the members or the board of directors.
As added by P.L.179-1991, SEC.1.
IC 23-17-12-12
Removal of designated or appointed directors
Sec. 12. (a) A designated director may be removed by anamendment to articles of incorporation or bylaws deleting orchanging the designation.
(b) Except as provided in articles of incorporation or bylaws, anappointed director may be removed with or without cause by theperson appointing the director. The person removing the directormust do so by giving written notice of the removal to the following:
(1) The director.
(2) The presiding officer of the board of directors or thecorporation's president or secretary.
A removal is effective when the notice is effective under this articleunless the notice specifies a future effective date.
As added by P.L.179-1991, SEC.1.
IC 23-17-12-13
Removal by court order
Sec. 13. (a) The circuit court or superior court of the county wherea corporation's principal office is located may remove a director ofthe corporation from office in a proceeding commenced by thecorporation or at least ten percent (10%) of the members of a classentitled to vote for directors, if the following conditions exist:
(1) The court finds that: (A) the director engaged in:
(i) fraudulent or dishonest conduct; or
(ii) gross abuse of authority or discretion;
with respect to the corporation; or
(B) a final judgment has been entered finding that thedirector has violated a duty under IC 23-17-13.
(2) Removal is in the best interests of the corporation.
(b) The court that removes a director may bar the director fromserving on the board of directors for a period prescribed by the court.
(c) If members commence a proceeding under subsection (a), thecorporation shall be made a party defendant.
(d) The articles of incorporation or bylaws of a religiouscorporation may limit or prohibit the application of this section.
As added by P.L.179-1991, SEC.1.
IC 23-17-12-14
Filling vacancies
Sec. 14. (a) Unless the articles of incorporation or bylaws provideotherwise and except as provided in subsections (b) and (c), if avacancy occurs on a board of directors, including a vacancy resultingfrom an increase in the number of directors, one (1) of the followingmay occur:
(1) The members entitled to vote for directors, if any, may fillthe vacancy. If the vacant office was held by a director electedby a class, chapter, other organizational unit, or by region orother geographic grouping, only members of the class, chapter,unit, or grouping are entitled to vote to fill the vacancy if it isfilled by the members.
(2) The board of directors may fill the vacancy.
(3) If the directors remaining in office constitute fewer than aquorum of the board of directors, the remaining directors mayfill the vacancy by the affirmative vote of a majority of thedirectors remaining in office.
(b) Unless articles of incorporation or bylaws provide otherwise,if a vacant office was held by an appointed director, only the personwho appointed the director may fill the vacancy.
(c) If a vacant office was held by a designated director, thevacancy must be filled as provided in articles of incorporation orbylaws. In the absence of an applicable article of incorporation orbylaw, the vacancy may not be filled by the board of directors.
(d) A vacancy that will occur at a specific later date because of aresignation effective at a later date under section 7(b) of this chapteror otherwise may be filled before the vacancy occurs. However, thenew director may not take office until the vacancy occurs.
As added by P.L.179-1991, SEC.1.
IC 23-17-12-15
Compensation
Sec. 15. Unless articles of incorporation or bylaws provideotherwise, a board of directors may fix the compensation of
directors.
As added by P.L.179-1991, SEC.1.