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 a
corporation organized under or governed by this chapter and a
domestic or foreign predecessor entity of a corporation in a merger
or other transaction in which the predecessor's existence ceased upon
consummation 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 individual
who is or was a director of a corporation or an individual who, while
a director of a corporation, is or was serving at the corporation's
request as a director, an officer, a member, a manager, a partner, a
trustee, an employee, or an agent of another foreign or domestic
corporation, limited liability company, partnership, joint venture,
trust, employee benefit plan, or other enterprise, whether for profit
or not. A director is considered to be serving an employee benefit
plan at the corporation's request if the director's duties to the
corporation also impose duties on, or otherwise involve services by,
the director to the plan or to participants in or beneficiaries of the
plan.
(b) The term includes the estate or personal representative of a
director.
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's
fees.
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 to
pay a judgment, settlement, penalty, fine, including an excise tax
assessed with respect to an employee benefit plan, or reasonable
expenses 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 the
following:
(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 a
director under section 13 of this chapter, the office in a
corporation held by the officer or the employment or agency
relationship undertaken by the employee or agent on behalf of
the corporation.
(b) The term does not include service for any other foreign or
domestic 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 who
was, is, or is threatened to be made a named defendant or respondent
in 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 or
informal.
As added by P.L.179-1991, SEC.1.
IC 23-17-16-8
Grounds for indemnification; conduct with respect to employee
benefit plans; judgment, order, settlement, conviction, or nolo
contendere plea not determinative of failure to meet standard of
conduct
Sec. 8. (a) If an individual is made a party to a proceeding because
the individual is or was a director, a corporation may indemnify the
individual 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 capacity
with the corporation, that the individual's conduct was in the
corporation's best interests; and
(B) in all other cases, that the individual's conduct was at
least 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 conduct
was lawful; or
(B) had no reasonable cause to believe the individual's
conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan
for a purpose the director reasonably believed to be in the interests
of the participants in and beneficiaries of the plan is conduct that
satisfies 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 its
equivalent is not determinative that a director did not meet the
standard 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 corporation
shall indemnify a director who was wholly successful, on the merits
or otherwise, in the defense of a proceeding to which the director
was a party, because the director is or was a director of the
corporation, against reasonable expenses actually incurred by the
director 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 the
reasonable expenses incurred by a director who is a party to a
proceeding in advance of final disposition of the proceeding if the
following occur:
(1) The director furnishes the corporation a written affirmation
of the director's good faith belief that the director has met the
standard 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 an
advance if it is ultimately determined that the director did not
meet the standard of conduct.
(3) A determination is made that the facts then known to those
making the determination would not preclude indemnification
under 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 to
make repayment.
(c) Determinations and authorizations of payments under this
section shall be made in the manner specified in section 12 of this
chapter.
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 provide
otherwise, a director of the corporation who is a party to a
proceeding may apply for indemnification to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt
of an application, the court may, after giving any notice the court
considers necessary, order indemnification in the amount the court
considers proper if the court determines one (1) of the following:
(1) The director is entitled to mandatory indemnification under
section 9 of this chapter, in which case the court shall also order
the corporation to pay the director's reasonable expenses
incurred to obtain court ordered indemnification.
(2) The director is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances,
whether or not the director met the standard of conduct set forth
in 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 reasonableness
of expenses; procedures of board of directors
Sec. 12. (a) A corporation may not indemnify a director under
section 8 of this chapter unless authorized in the specific case after
a determination has been made that indemnification of the director
is permissible in the circumstances because the director has met the
standard of conduct set forth in section 8 of this chapter.
(b) The determination shall be made by one (1) of the following
procedures:
(1) By the board of directors by majority vote of a quorum
consisting of directors not at the time parties to the proceeding.
(2) If a quorum cannot be obtained under subdivision (1), by
majority vote of a committee designated by the board of
directors consisting solely of at least two (2) directors not at the
time parties to the proceeding. Directors who are parties may
participate in the designation.
(3) By special legal counsel:
(A) selected by the board of directors or a committee of the
board of directors in the manner prescribed in subdivision
(1) or (2); or
(B) if a quorum of the board of directors cannot be obtained
under subdivision (1) and a committee cannot be designated
under subdivision (2), selected by majority vote of the full
board of directors. Directors who are parties may participate
in the selection.
(4) By the members. However, memberships voted under the
control of directors who are at the time parties to the proceeding
may not be voted on the determination.
(c) Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as the
determination that indemnification is permissible. However, if the
determination is made by special legal counsel, authorization of
indemnification and evaluation as to the reasonableness of expenses
shall be made by those entitled under subsection (b)(3) to select
counsel.
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 provide
otherwise:
(1) an officer of the corporation, whether or not a director, is
entitled to:
(A) mandatory indemnification under section 9 of this
chapter; and
(B) apply for court ordered indemnification under section 11
of this chapter in each case;
to the same extent as a director;
(2) the corporation may indemnify and advance expenses under
this 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 an
officer, employee, or agent, whether or not a director, to the
extent and consistent with public policy that may be provided
by articles of incorporation, bylaws, general or specific action
of 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 on
behalf 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 the
corporation, is or was serving at the request of the corporation
as a director, an officer, a member, a manager, a partner, a
trustee, an employee, or an agent of another foreign or domestic
corporation, limited liability company, partnership, joint
venture, trust, employee benefit plan, or other enterprise;
against liability asserted against or incurred by the individual in that
capacity or arising from the individual's status as a director, an
officer, an employee, or an agent, whether or not the corporation
would have power to indemnify the individual against the same
liability 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 of
appearing as witness
Sec. 15. (a) The indemnification and advance for expenses
provided for or authorized by this chapter does not exclude other
rights to indemnification and advance for expenses that a person may
have 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, by
a 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 or
advance for expenses;
limit indemnification or advance for expenses, indemnification and
advance for expenses are valid only to the extent consistent with the
articles of incorporation, bylaws, or resolution of the board of
directors or of the members, or other duly adopted authorization of
indemnification or advance for expenses.
(c) This chapter does not limit a corporation's power to pay or
reimburse expenses incurred by a director, an officer, an employee,
or an agent in connection with the person's appearance as a witness
in a proceeding at a time when the person has not been made a
named defendant respondent to the proceeding.
As added by P.L.179-1991, SEC.1.