CHAPTER 16. INDEMNIFICATION
IC 23-17-16
Chapter 16. Indemnification
IC 23-17-16-1
Corporation defined
Sec. 1. As used in this chapter, "corporation" includes acorporation organized under or governed by this chapter and adomestic or foreign predecessor entity of a corporation in a mergeror other transaction in which the predecessor's existence ceased uponconsummation of the transaction.
As added by P.L.179-1991, SEC.1.
IC 23-17-16-2
Director defined
Sec. 2. (a) As used in this chapter, "director" means an individualwho is or was a director of a corporation or an individual who, whilea director of a corporation, is or was serving at the corporation'srequest as a director, an officer, a member, a manager, a partner, atrustee, an employee, or an agent of another foreign or domesticcorporation, limited liability company, partnership, joint venture,trust, employee benefit plan, or other enterprise, whether for profitor not. A director is considered to be serving an employee benefitplan at the corporation's request if the director's duties to thecorporation also impose duties on, or otherwise involve services by,the director to the plan or to participants in or beneficiaries of theplan.
(b) The term includes the estate or personal representative of adirector.
As added by P.L.179-1991, SEC.1. Amended by P.L.8-1993,SEC.332.
IC 23-17-16-3
Expenses as including attorney's fees
Sec. 3. As used in this chapter, "expenses" includes attorney'sfees.
As added by P.L.179-1991, SEC.1.
IC 23-17-16-4
Liability defined
Sec. 4. As used in this chapter, "liability" means the obligation topay a judgment, settlement, penalty, fine, including an excise taxassessed with respect to an employee benefit plan, or reasonableexpenses actually incurred with respect to a proceeding.
As added by P.L.179-1991, SEC.1.
IC 23-17-16-5
Official capacity defined
Sec. 5. (a) As used in this chapter, "official capacity" means thefollowing:
(1) When used with respect to a director, the office of director
in a corporation.
(2) When used with respect to an individual other than adirector under section 13 of this chapter, the office in acorporation held by the officer or the employment or agencyrelationship undertaken by the employee or agent on behalf ofthe corporation.
(b) The term does not include service for any other foreign ordomestic corporation or any partnership, limited liability company,joint venture, trust, employee benefit plan, or other enterprise,whether for profit or not.
As added by P.L.179-1991, SEC.1. Amended by P.L.8-1993,SEC.333.
IC 23-17-16-6
Party defined
Sec. 6. As used in this chapter, "party" includes an individual whowas, is, or is threatened to be made a named defendant or respondentin a proceeding.
As added by P.L.179-1991, SEC.1.
IC 23-17-16-7
Proceeding defined
Sec. 7. As used in this chapter, "proceeding" means a threatened,pending, or completed action, suit, or proceeding, whether civil,criminal, administrative, or investigative and whether formal orinformal.
As added by P.L.179-1991, SEC.1.
IC 23-17-16-8
Grounds for indemnification; conduct with respect to employeebenefit plans; judgment, order, settlement, conviction, or nolocontendere plea not determinative of failure to meet standard ofconduct
Sec. 8. (a) If an individual is made a party to a proceeding becausethe individual is or was a director, a corporation may indemnify theindividual against liability incurred in the proceeding if:
(1) the individual's conduct was in good faith; and
(2) the individual reasonably believed:
(A) in the case of conduct in the individual's official capacitywith the corporation, that the individual's conduct was in thecorporation's best interests; and
(B) in all other cases, that the individual's conduct was atleast not opposed to the corporation's best interests; and
(3) in the case of any criminal proceeding, the individual:
(A) had reasonable cause to believe the individual's conductwas lawful; or
(B) had no reasonable cause to believe the individual'sconduct was unlawful.
(b) A director's conduct with respect to an employee benefit planfor a purpose the director reasonably believed to be in the interests
of the participants in and beneficiaries of the plan is conduct thatsatisfies the requirement of subsection (a)(2)(B).
(c) The termination of a proceeding by judgment, order,settlement, conviction, or upon a plea of nolo contendere or itsequivalent is not determinative that a director did not meet thestandard of conduct described in this section.
As added by P.L.179-1991, SEC.1.
IC 23-17-16-9
Director wholly successful in defense of proceeding
Sec. 9. Unless limited by articles of incorporation, a corporationshall indemnify a director who was wholly successful, on the meritsor otherwise, in the defense of a proceeding to which the directorwas a party, because the director is or was a director of thecorporation, against reasonable expenses actually incurred by thedirector in connection with the proceeding.
As added by P.L.179-1991, SEC.1.
IC 23-17-16-10
Reasonable expense payments in advance of final disposition
Sec. 10. (a) A corporation may pay for or reimburse thereasonable expenses incurred by a director who is a party to aproceeding in advance of final disposition of the proceeding if thefollowing occur:
(1) The director furnishes the corporation a written affirmationof the director's good faith belief that the director has met thestandard of conduct described in section 8 of this chapter.
(2) The director furnishes the corporation a written undertaking,executed personally or on the director's behalf, to repay anadvance if it is ultimately determined that the director did notmeet the standard of conduct.
(3) A determination is made that the facts then known to thosemaking the determination would not preclude indemnificationunder this chapter.
(b) The undertaking required by subsection (a)(2):
(1) must be an unlimited general obligation of the director;
(2) is not required to be secured; and
(3) may be accepted without reference to financial ability tomake repayment.
(c) Determinations and authorizations of payments under thissection shall be made in the manner specified in section 12 of thischapter.
As added by P.L.179-1991, SEC.1.
IC 23-17-16-11
Application to court; grounds for ordering indemnification
Sec. 11. Unless a corporation's articles of incorporation provideotherwise, a director of the corporation who is a party to aproceeding may apply for indemnification to the court conducting theproceeding or to another court of competent jurisdiction. On receipt
of an application, the court may, after giving any notice the courtconsiders necessary, order indemnification in the amount the courtconsiders proper if the court determines one (1) of the following:
(1) The director is entitled to mandatory indemnification undersection 9 of this chapter, in which case the court shall also orderthe corporation to pay the director's reasonable expensesincurred to obtain court ordered indemnification.
(2) The director is fairly and reasonably entitled toindemnification in view of all the relevant circumstances,whether or not the director met the standard of conduct set forthin section 8 of this chapter.
As added by P.L.179-1991, SEC.1.
IC 23-17-16-12
Authorization of indemnification; evaluation as to reasonablenessof expenses; procedures of board of directors
Sec. 12. (a) A corporation may not indemnify a director undersection 8 of this chapter unless authorized in the specific case aftera determination has been made that indemnification of the directoris permissible in the circumstances because the director has met thestandard of conduct set forth in section 8 of this chapter.
(b) The determination shall be made by one (1) of the followingprocedures:
(1) By the board of directors by majority vote of a quorumconsisting of directors not at the time parties to the proceeding.
(2) If a quorum cannot be obtained under subdivision (1), bymajority vote of a committee designated by the board ofdirectors consisting solely of at least two (2) directors not at thetime parties to the proceeding. Directors who are parties mayparticipate in the designation.
(3) By special legal counsel:
(A) selected by the board of directors or a committee of theboard of directors in the manner prescribed in subdivision(1) or (2); or
(B) if a quorum of the board of directors cannot be obtainedunder subdivision (1) and a committee cannot be designatedunder subdivision (2), selected by majority vote of the fullboard of directors. Directors who are parties may participatein the selection.
(4) By the members. However, memberships voted under thecontrol of directors who are at the time parties to the proceedingmay not be voted on the determination.
(c) Authorization of indemnification and evaluation as toreasonableness of expenses shall be made in the same manner as thedetermination that indemnification is permissible. However, if thedetermination is made by special legal counsel, authorization ofindemnification and evaluation as to the reasonableness of expensesshall be made by those entitled under subsection (b)(3) to selectcounsel.
As added by P.L.179-1991, SEC.1.
IC 23-17-16-13
Indemnification of officers, employees, and agents
Sec. 13. Unless a corporation's articles of incorporation provideotherwise:
(1) an officer of the corporation, whether or not a director, isentitled to:
(A) mandatory indemnification under section 9 of thischapter; and
(B) apply for court ordered indemnification under section 11of this chapter in each case;
to the same extent as a director;
(2) the corporation may indemnify and advance expenses underthis chapter to an officer, employee, or agent of the corporation,whether or not a director, to the same extent as to a director;and
(3) a corporation may indemnify and advance expenses to anofficer, employee, or agent, whether or not a director, to theextent and consistent with public policy that may be providedby articles of incorporation, bylaws, general or specific actionof the corporation's board of directors, or contract.
As added by P.L.179-1991, SEC.1.
IC 23-17-16-14
Purchase of insurance
Sec. 14. A corporation may purchase and maintain insurance onbehalf of an individual who is or was:
(1) a director;
(2) an officer;
(3) an employee or agent of the corporation; or
(4) while a director, an officer, an employee, or an agent of thecorporation, is or was serving at the request of the corporationas a director, an officer, a member, a manager, a partner, atrustee, an employee, or an agent of another foreign or domesticcorporation, limited liability company, partnership, jointventure, trust, employee benefit plan, or other enterprise;
against liability asserted against or incurred by the individual in thatcapacity or arising from the individual's status as a director, anofficer, an employee, or an agent, whether or not the corporationwould have power to indemnify the individual against the sameliability under section 8 or 9 of this chapter.
As added by P.L.179-1991, SEC.1. Amended by P.L.8-1993,SEC.334.
IC 23-17-16-15
Other rights to indemnification; reimbursement of expenses ofappearing as witness
Sec. 15. (a) The indemnification and advance for expensesprovided for or authorized by this chapter does not exclude otherrights to indemnification and advance for expenses that a person mayhave under the following: (1) A corporation's articles of incorporation or bylaws.
(2) A resolution of the board of directors or of the members.
(3) Any other authorization, whenever adopted after notice, bya majority vote of all the voting members of the corporation.
(b) If:
(1) articles of incorporation;
(2) bylaws;
(3) resolutions of the board of directors or of the members; or
(4) other duly adopted authorization of indemnification oradvance for expenses;
limit indemnification or advance for expenses, indemnification andadvance for expenses are valid only to the extent consistent with thearticles of incorporation, bylaws, or resolution of the board ofdirectors or of the members, or other duly adopted authorization ofindemnification or advance for expenses.
(c) This chapter does not limit a corporation's power to pay orreimburse expenses incurred by a director, an officer, an employee,or an agent in connection with the person's appearance as a witnessin a proceeding at a time when the person has not been made anamed defendant respondent to the proceeding.
As added by P.L.179-1991, SEC.1.