Iowa Code 490.853 – Advance for expenses
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1. A corporation may, before final disposition of a proceeding, advance funds to pay for or reimburse expenses incurred in connection with the proceeding by an individual who is a party to the proceeding because that individual is a director, if the director delivers to the corporation a signed written undertaking of the director to repay any funds advanced and all of the following apply:
a. The director is not entitled to mandatory indemnification under section 490.852.
b. It is ultimately determined under section 490.854 or 490.855 that the director is not entitled to indemnification.
Terms Used In Iowa Code 490.853
- 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.
- Expenses: means reasonable expenses of any kind, including reasonable fees and expenses of counsel and experts, that are incurred in connection with a matter. See Iowa Code 490.140
- 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
- Individual: means a natural person. See Iowa Code 490.140
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- 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
- undertaking: means a promise or security in any form. See Iowa Code 4.1
- written: means any information in the form of a document. See Iowa Code 490.140
2. The undertaking required by subsection 1 must be an unlimited general obligation of the director but need not be secured and may be accepted without reference to the financial ability of the director to make repayment.3. Authorizations under this section shall be made by any of the following:a. By the board of directors as follows:(1) If there are two or more qualified directors, by a majority vote of all of the qualified directors, a majority of whom shall for such purpose constitute a quorum, or by a majority of the members of a committee consisting solely of two or more qualified directors appointed by such a vote.(2) If there are fewer than two qualified directors, by the vote necessary for action by the board of directors in accordance with section 490.824, subsection 3, in which authorization directors who are not qualified directors may participate.b. 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 authorization.