CHAPTER 13. STANDARDS OF CONDUCT FOR DIRECTORS
IC 23-17-13
Chapter 13. Standards of Conduct for Directors
IC 23-17-13-1
Duties; reliance on statements of and information given by others;conditions for liability; director not trustee
Sec. 1. (a) A director shall, based on facts then known to thedirector, discharge duties as a director, including the director's dutiesas a member of a committee, as follows:
(1) In good faith.
(2) With the care an ordinarily prudent person in a like positionwould exercise under similar circumstances.
(3) In a manner the director reasonably believes to be in the bestinterests of the corporation.
(b) In discharging the director's duties, a director may rely oninformation, opinions, reports, or statements, including financialstatements and other financial data, if prepared or presented by one(1) of the following:
(1) An officer or employee of the corporation whom the directorreasonably believes to be reliable and competent in the matterspresented.
(2) Legal counsel, certified public accountants, or other personsas to matters the director reasonably believes are within theperson's professional or expert competence.
(3) A committee of the board of directors of which the directoris not a member if the director reasonably believes thecommittee merits confidence.
(4) In the case of religious corporations, religious authoritiesand ministers, priests, rabbis, or other persons whose positionor duties in the religious organization the director believesjustify reliance and confidence and whom the director believesto be reliable and competent in the matters presented.
(c) A director is not acting in good faith if the director hasknowledge concerning a matter in question that makes relianceotherwise permitted by subsection (b) unwarranted.
(d) A director is not liable for an action taken as a director, orfailure to take an action, unless the:
(1) director has breached or failed to perform the duties of thedirector's office in compliance with this section; and
(2) breach or failure to perform constitutes willful misconductor recklessness.
(e) A director is not considered to be a trustee with respect to acorporation or with respect to any property held or administered bythe corporation, including property that may be subject to restrictionsimposed by the donor or transferor of the property.
As added by P.L.179-1991, SEC.1. Amended by P.L.110-2008,SEC.5.
IC 23-17-13-2
Repealed
(Repealed by P.L.110-2008, SEC.13.)
IC 23-17-13-2.5
Contracts and transactions in which member, director, officer, ormember of designated body has interest
Sec. 2.5. (a) This section applies unless the articles ofincorporation or bylaws of a corporation provide otherwise.
(b) Subject to subsection (c), a contract or transaction between:
(1) a corporation and one (1) or more of the corporation'smembers, directors, members of a designated body, or officers;or
(2) a corporation and any other corporation, partnership,association, or entity in which one (1) or more of thecorporation's members, directors, officers, or members of adesignated body:
(A) are members, directors, members of a designated body,or officers;
(B) hold a similar position; or
(C) have a financial interest;
is not void or voidable solely because of the relationship or interest,solely because the member, director, member of a designated body,or officer is present at or participates in the meeting of the board ofdirectors that authorizes the contract or transaction, or solely becausethe vote of the member, director, member of a designated body, orofficer is counted for authorizing the contract or transaction.
(c) A contract or transaction described under subsection (b) is notvoid or voidable as provided under subsection (b) if one (1) or moreof the following apply:
(1) The:
(A) material facts as to the:
(i) relationship or interest of a member, a director, amember of a designated body, or an officer; and
(ii) contract or transaction;
are disclosed or known to the board of directors; and
(B) board of directors in good faith authorizes the contractor transaction by the affirmative votes of a majority of thedisinterested directors even if the disinterested directors areless than a quorum.
(2) The:
(A) material facts as to the:
(i) relationship or interest of the member, director,member of a designated body, or officer; and
(ii) contract or transaction;
are disclosed or known to the members who are entitled tovote on the contract or transaction; and
(B) contract or transaction is specifically approved in goodfaith by a vote of the members who are entitled to vote onthe contract or transaction. (3) The contract or transaction is fair as to the corporation at thetime the contract or transaction is authorized, approved, orratified by the board of directors or the members.
(d) Common or interested directors may be counted indetermining the presence of a quorum at a meeting of the board thatauthorizes a contract or transaction described under subsection (b).
As added by P.L.110-2008, SEC.6.
IC 23-17-13-3
Loans to and guarantees of obligations of directors or officers
Sec. 3. (a) A corporation may not:
(1) lend money to; or
(2) guarantee the obligation of;
a director or an officer of the corporation.
(b) A loan or guaranty that is made in violation of this sectiondoes not affect the borrower's liability on the loan.
As added by P.L.179-1991, SEC.1.
IC 23-17-13-4
Unlawful distributions; liability
Sec. 4. (a) Subject to section 1(d) of this chapter, a director whovotes for or assents to a distribution made in violation of this articleor articles of incorporation is personally liable to the corporation forthe amount of the distribution that exceeds the amount that couldhave been distributed without violating this article or articles ofincorporation.
(b) A director who is held liable for an unlawful distributionunder subsection (a) is entitled to contribution from the following:
(1) Every other director who voted for or assented to thedistribution, subject to section 1(d) of this chapter.
(2) Each person who received an unlawful distribution for theamount of the distribution accepted whether or not the personreceiving the distribution knew the distribution was made inviolation of this article, articles of incorporation, or the bylaws.
As added by P.L.179-1991, SEC.1.