CHAPTER 32. DERIVATIVE PROCEEDINGS
IC 23-1-32
Chapter 32. Derivative Proceedings
IC 23-1-32-1
Right to commence or maintain proceeding
Sec. 1. A person may not commence a proceeding in the right of
a domestic or foreign corporation unless the person was a
shareholder of the corporation when the transaction complained of
occurred or unless the person became a shareholder through transfer
by operation of law from one who was a shareholder at that time.
The derivative proceeding may not be maintained if it appears that
the person commencing the proceeding does not fairly and
adequately represent the interests of the shareholders in enforcing the
right of the corporation.
As added by P.L.149-1986, SEC.16.
IC 23-1-32-2
Complaint; stay of proceeding
Sec. 2. A complaint in a proceeding brought in the right of a
corporation must be verified and allege with particularity the demand
made, if any, to obtain action by the board of directors and either that
the demand was refused or ignored or why the shareholder did not
make the demand. Whether or not a demand for action was made, if
the corporation commences an investigation of the charges made in
the demand or complaint (including an investigation commenced
under section 4 of this chapter), the court may stay any proceeding
until the investigation is completed.
As added by P.L.149-1986, SEC.16.
IC 23-1-32-3
Discontinuance or settlement of proceeding
Sec. 3. (a) A proceeding commenced under this chapter may not
be discontinued or settled without the court's approval. If the court
determines that a proposed discontinuance or settlement will
substantially affect the interest of the corporation's shareholders or
a class of shareholders, the court shall direct that notice be given the
shareholders affected.
(b) On termination of the proceeding the court may require the
plaintiff to pay any defendant's reasonable expenses (including
counsel fees) incurred in defending the proceeding if it finds that the
proceeding was commenced without reasonable cause.
As added by P.L.149-1986, SEC.16.
IC 23-1-32-4
Committee of disinterested directors or persons
Sec. 4. (a) Unless prohibited by the articles of incorporation, the
board of directors may establish a committee consisting of three (3)
or more 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 shall be
presumed to be conclusive against any shareholder making a demand
or bringing a derivative proceeding with respect to such right or
remedy, unless such shareholder can demonstrate that:
(1) the committee was not "disinterested" within the meaning of
this section; or
(2) the committee's determination was not made after an
investigation conducted in good faith.
(d) For purposes of this section, 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.
As added by P.L.149-1986, SEC.16.
IC 23-1-32-5
"Shareholder" defined
Sec. 5. For purposes of this chapter, "shareholder" includes a
beneficial owner whose shares are held in a voting trust or held by a
nominee on the owner's behalf.
As added by P.L.149-1986, SEC.16.