§ 28-13-8-5 — Corporate committee; establishment; powers and duties; determination made independently of board; conclusive presumption on merits; disinterested director or other person

Indiana § 28-13-8-5

• Jurisdiction: Indiana
• Art. 13: CORPORATE GOVERNANCE
• Ch. 8: Derivative Proceedings

Text

(a) Unless prohibited by the articles of
incorporation, the board of directors may establish a committee
consisting of at least three (3) disinterested directors or other
disinterested persons to determine:
(1) whether the corporation has a legal or equitable right or
remedy; and
(2) whether it is in the best interests of the corporation to pursue
that right or remedy, if any, or to dismiss a proceeding that seeks
to assert that right or remedy on behalf of the corporation.
(b) In making a determination under subsection (a), the committee
is not subject to the direction or control of or termination by the board.
A vacancy on the committee may be filled by the majority of the
remaining members by selection of another disinterested director or
other disinterested person.
(c) If the committee determines that pursuit of a right or remedy
through a derivative proceeding or otherwise is not in the best interests
of the corporation, the merits of that determination are presumed to be
conclusive against any shareholder making a demand or bringing a
derivative proceeding with respect to the right or remedy, unless the
shareholder can demonstrate that:
(1) the committee was not disinterested, as described in
subsection (d); or
(2) the committee's determination was not made after an
investigation conducted in good faith.
(d) For purposes of this chapter, a director or other person is
disinterested if the director or other person:
(1) has not been made a party to a derivative proceeding seeking
to assert the right or remedy in question, or has been made a party
but only on the basis of a frivolous or insubstantial claim or for
the sole purpose of seeking to disqualify the director or other
person from serving on the committee;
(2) is able under the circumstances to render a determination in
the best interests of the corporation; and
(3) is not an officer, employee, or agent of the corporation or of a
related corporation.
However, an officer, employee, or agent of the corporation or a related
corporation who meets the standards of subdivisions (1) and (2) shall
be considered disinterested in any case in which the right or remedy
under scrutiny is not assertable against a director or officer of the
corporation or the related corporation.

Legislative History

As added by P.L.14-1992, SEC.163.