Iowa Code 504.856 – Determination and authorization of indemnification
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1. A corporation shall not indemnify a director under section 504.852 unless authorized for a specific proceeding after a determination has been made that indemnification of the director is permissible because the director has met the standard of conduct set forth in section 504.852.
Terms Used In Iowa Code 504.856
- board of directors: means the board of directors of a corporation except that no person or group of persons are the board of directors because of powers delegated to that person or group pursuant to section 504. See Iowa Code 504.141
- Corporation: means a public benefit, mutual benefit, or religious corporation. See Iowa Code 504.141
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Directors: means individuals, designated in the articles or bylaws or elected by the incorporators, and their successors and individuals elected or appointed by any other name or title to act as members of the board. See Iowa Code 504.141
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Indemnification: In general, a collateral contract or assurance under which one person agrees to secure another person against either anticipated financial losses or potential adverse legal consequences. Source: FDIC
- Proceeding: includes a civil suit and criminal, administrative, or investigatory actions. See Iowa Code 504.141
- Quorum: The number of legislators that must be present to do business.
- Vote: includes authorization by written ballot and written consent. See Iowa Code 504.141
2. The determination shall be made by any of the following:
a. If there are two or more disinterested directors, by the board of directors by a majority vote of all the disinterested directors, a majority of whom shall for such purpose constitute a quorum, or by a majority of the members of a committee of two or more disinterested directors appointed by such vote.
b. By special legal counsel under one of the following circumstances:
(1) Selected in the manner prescribed in paragraph “a”.
(2) If there are fewer than two disinterested directors, selected by the board in which selection directors who do not qualify as disinterested directors may participate.
c. By the members of a corporation, but directors who are at the time parties to the proceeding shall not vote on the determination.
3. Authorization of indemnification shall be made in the same manner as the determination that indemnification is permissible, except that if there are fewer than two disinterested directors or if the determination is made by special legal counsel, authorization of indemnification shall be made by those entitled under subsection 2, paragraph “b”, to select special legal counsel.