Iowa Code 490.855 – Determination and authorization of indemnification
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1. A corporation shall not indemnify a director under section 490.851 unless authorized for a specific proceeding after a determination has been made that indemnification is permissible because the director has met the relevant standard of conduct set forth in section 490.851.
Terms Used In Iowa Code 490.855
- 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.
- 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, and investigatory action. See Iowa Code 490.140
- qualified director: means a director who takes action, if at the time action is to be taken any of the following applies:a. See Iowa Code 490.143
- Quorum: The number of legislators that must be present to do business.
- Shares: means the units into which the proprietary interests in a domestic or foreign corporation are divided. See Iowa Code 490.140
2. The determination shall be made by any of the following:a. If there are two or more qualified directors, by the board of directors by a majority vote of all the qualified 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 qualified directors appointed by such a vote.b. By special legal counsel selected in one of the following manners:(1) In the manner prescribed in paragraph “a”.(2) If there are fewer than two qualified directors, selected by the board of directors, in which selection directors who are not qualified directors may participate.c. By the shareholders, but shares owned by or voted under the control of a director who at the time is not a qualified director shall not be voted 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 qualified directors or if the determination is made by special legal counsel, authorization of indemnification shall be made by those entitled to select special legal counsel under subsection 2, paragraph “b”, subparagraph (2).