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 the
director, discharge duties as a director, including the director's duties
as a member of a committee, as follows:
(1) In good faith.
(2) With the care an ordinarily prudent person in a like position
would exercise under similar circumstances.
(3) In a manner the director reasonably believes to be in the best
interests of the corporation.
(b) In discharging the director's duties, a director may rely on
information, opinions, reports, or statements, including financial
statements and other financial data, if prepared or presented by one
(1) of the following:
(1) An officer or employee of the corporation whom the director
reasonably believes to be reliable and competent in the matters
presented.
(2) Legal counsel, certified public accountants, or other persons
as to matters the director reasonably believes are within the
person's professional or expert competence.
(3) A committee of the board of directors of which the director
is not a member if the director reasonably believes the
committee merits confidence.
(4) In the case of religious corporations, religious authorities
and ministers, priests, rabbis, or other persons whose position
or duties in the religious organization the director believes
justify reliance and confidence and whom the director believes
to be reliable and competent in the matters presented.
(c) A director is not acting in good faith if the director has
knowledge concerning a matter in question that makes reliance
otherwise permitted by subsection (b) unwarranted.
(d) A director is not liable for an action taken as a director, or
failure to take an action, unless the:
(1) director has breached or failed to perform the duties of the
director's office in compliance with this section; and
(2) breach or failure to perform constitutes willful misconduct
or recklessness.
(e) A director is not considered to be a trustee with respect to a
corporation or with respect to any property held or administered by
the corporation, including property that may be subject to restrictions
imposed 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IC 23-17-13-2 Repealed
(Repealed by P.L.110-2008, SEC.13.)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, or
member of designated body has interest
Sec. 2.5. (a) This section applies unless the articles of
incorporation 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's
members, 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 the
corporation's members, directors, officers, or members of a
designated 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 of
directors that authorizes the contract or transaction, or solely because
the vote of the member, director, member of a designated body, or
officer is counted for authorizing the contract or transaction.
(c) A contract or transaction described under subsection (b) is not
void or voidable as provided under subsection (b) if one (1) or more
of the following apply:
(1) The:
(A) material facts as to the:
(i) relationship or interest of a member, a director, a
member 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 contract
or transaction by the affirmative votes of a majority of the
disinterested directors even if the disinterested directors are
less 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 to
vote on the contract or transaction; and
(B) contract or transaction is specifically approved in good
faith by a vote of the members who are entitled to vote on
the contract or transaction.
(3) The contract or transaction is fair as to the corporation at the
time the contract or transaction is authorized, approved, or
ratified by the board of directors or the members.
(d) Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board that
authorizes 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 section
does 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 who
votes for or assents to a distribution made in violation of this article
or articles of incorporation is personally liable to the corporation for
the amount of the distribution that exceeds the amount that could
have been distributed without violating this article or articles of
incorporation.
(b) A director who is held liable for an unlawful distribution
under subsection (a) is entitled to contribution from the following:
(1) Every other director who voted for or assented to the
distribution, subject to section 1(d) of this chapter.
(2) Each person who received an unlawful distribution for the
amount of the distribution accepted whether or not the person
receiving the distribution knew the distribution was made in
violation of this article, articles of incorporation, or the bylaws. As added by P.L.179-1991, SEC.1.
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 the
director, discharge duties as a director, including the director's duties
as a member of a committee, as follows:
(1) In good faith.
(2) With the care an ordinarily prudent person in a like position
would exercise under similar circumstances.
(3) In a manner the director reasonably believes to be in the best
interests of the corporation.
(b) In discharging the director's duties, a director may rely on
information, opinions, reports, or statements, including financial
statements and other financial data, if prepared or presented by one
(1) of the following:
(1) An officer or employee of the corporation whom the director
reasonably believes to be reliable and competent in the matters
presented.
(2) Legal counsel, certified public accountants, or other persons
as to matters the director reasonably believes are within the
person's professional or expert competence.
(3) A committee of the board of directors of which the director
is not a member if the director reasonably believes the
committee merits confidence.
(4) In the case of religious corporations, religious authorities
and ministers, priests, rabbis, or other persons whose position
or duties in the religious organization the director believes
justify reliance and confidence and whom the director believes
to be reliable and competent in the matters presented.
(c) A director is not acting in good faith if the director has
knowledge concerning a matter in question that makes reliance
otherwise permitted by subsection (b) unwarranted.
(d) A director is not liable for an action taken as a director, or
failure to take an action, unless the:
(1) director has breached or failed to perform the duties of the
director's office in compliance with this section; and
(2) breach or failure to perform constitutes willful misconduct
or recklessness.
(e) A director is not considered to be a trustee with respect to a
corporation or with respect to any property held or administered by
the corporation, including property that may be subject to restrictions
imposed 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, or
member of designated body has interest
Sec. 2.5. (a) This section applies unless the articles of
incorporation 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's
members, 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 the
corporation's members, directors, officers, or members of a
designated 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 of
directors that authorizes the contract or transaction, or solely because
the vote of the member, director, member of a designated body, or
officer is counted for authorizing the contract or transaction.
(c) A contract or transaction described under subsection (b) is not
void or voidable as provided under subsection (b) if one (1) or more
of the following apply:
(1) The:
(A) material facts as to the:
(i) relationship or interest of a member, a director, a
member 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 contract
or transaction by the affirmative votes of a majority of the
disinterested directors even if the disinterested directors are
less 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 to
vote on the contract or transaction; and
(B) contract or transaction is specifically approved in good
faith by a vote of the members who are entitled to vote on
the contract or transaction.
(3) The contract or transaction is fair as to the corporation at the
time the contract or transaction is authorized, approved, or
ratified by the board of directors or the members.
(d) Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board that
authorizes 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 section
does 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 who
votes for or assents to a distribution made in violation of this article
or articles of incorporation is personally liable to the corporation for
the amount of the distribution that exceeds the amount that could
have been distributed without violating this article or articles of
incorporation.
(b) A director who is held liable for an unlawful distribution
under subsection (a) is entitled to contribution from the following:
(1) Every other director who voted for or assented to the
distribution, subject to section 1(d) of this chapter.
(2) Each person who received an unlawful distribution for the
amount of the distribution accepted whether or not the person
receiving the distribution knew the distribution was made in
violation of this article, articles of incorporation, or the bylaws. As added by P.L.179-1991, SEC.1.
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 the
director, discharge duties as a director, including the director's duties
as a member of a committee, as follows:
(1) In good faith.
(2) With the care an ordinarily prudent person in a like position
would exercise under similar circumstances.
(3) In a manner the director reasonably believes to be in the best
interests of the corporation.
(b) In discharging the director's duties, a director may rely on
information, opinions, reports, or statements, including financial
statements and other financial data, if prepared or presented by one
(1) of the following:
(1) An officer or employee of the corporation whom the director
reasonably believes to be reliable and competent in the matters
presented.
(2) Legal counsel, certified public accountants, or other persons
as to matters the director reasonably believes are within the
person's professional or expert competence.
(3) A committee of the board of directors of which the director
is not a member if the director reasonably believes the
committee merits confidence.
(4) In the case of religious corporations, religious authorities
and ministers, priests, rabbis, or other persons whose position
or duties in the religious organization the director believes
justify reliance and confidence and whom the director believes
to be reliable and competent in the matters presented.
(c) A director is not acting in good faith if the director has
knowledge concerning a matter in question that makes reliance
otherwise permitted by subsection (b) unwarranted.
(d) A director is not liable for an action taken as a director, or
failure to take an action, unless the:
(1) director has breached or failed to perform the duties of the
director's office in compliance with this section; and
(2) breach or failure to perform constitutes willful misconduct
or recklessness.
(e) A director is not considered to be a trustee with respect to a
corporation or with respect to any property held or administered by
the corporation, including property that may be subject to restrictions
imposed 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, or
member of designated body has interest
Sec. 2.5. (a) This section applies unless the articles of
incorporation 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's
members, 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 the
corporation's members, directors, officers, or members of a
designated 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 of
directors that authorizes the contract or transaction, or solely because
the vote of the member, director, member of a designated body, or
officer is counted for authorizing the contract or transaction.
(c) A contract or transaction described under subsection (b) is not
void or voidable as provided under subsection (b) if one (1) or more
of the following apply:
(1) The:
(A) material facts as to the:
(i) relationship or interest of a member, a director, a
member 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 contract
or transaction by the affirmative votes of a majority of the
disinterested directors even if the disinterested directors are
less 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 to
vote on the contract or transaction; and
(B) contract or transaction is specifically approved in good
faith by a vote of the members who are entitled to vote on
the contract or transaction.
(3) The contract or transaction is fair as to the corporation at the
time the contract or transaction is authorized, approved, or
ratified by the board of directors or the members.
(d) Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board that
authorizes 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 section
does 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 who
votes for or assents to a distribution made in violation of this article
or articles of incorporation is personally liable to the corporation for
the amount of the distribution that exceeds the amount that could
have been distributed without violating this article or articles of
incorporation.
(b) A director who is held liable for an unlawful distribution
under subsection (a) is entitled to contribution from the following:
(1) Every other director who voted for or assented to the
distribution, subject to section 1(d) of this chapter.
(2) Each person who received an unlawful distribution for the
amount of the distribution accepted whether or not the person
receiving the distribution knew the distribution was made in
violation of this article, articles of incorporation, or the bylaws. As added by P.L.179-1991, SEC.1.
