Iowa Code 504.854 – Advance for expenses
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1. A corporation may, before final disposition of a proceeding, advance funds to pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding because the person is a director if the person delivers all of the following to the corporation:
a. A written affirmation of the director’s good faith belief that the director has met the relevant standard of conduct described in section 504.852 or that the proceeding involved conduct for which liability has been eliminated under a provision of the articles of incorporation as authorized by section 504.202, subsection 2, paragraph “d”.
b. The director’s written undertaking to repay any funds advanced if the director is not entitled to mandatory indemnification under section 504.853 and it is ultimately determined under section 504.855 or 504.856 that the director has not met the relevant standard of conduct described in section 504.852.
Terms Used In Iowa Code 504.854
- articles: includes amended and restated articles of incorporation and articles of merger. See Iowa Code 504.141
- 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: 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.
- Corporation: means a public benefit, mutual benefit, or religious corporation. See Iowa Code 504.141
- 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
- Member: means a person who on more than one occasion, pursuant to the provisions of a corporation's articles or bylaws, has a right to vote for the election of a director or directors of a corporation, irrespective of how a member is defined in the articles or bylaws of the corporation. See Iowa Code 504.141
- 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.
- Person: includes any individual or entity. See Iowa Code 504.141
- 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.
- undertaking: means a promise or security in any form. See Iowa Code 4.1
- Vote: includes authorization by written ballot and written consent. See Iowa Code 504.141
2. The undertaking required by subsection 1, paragraph “b”, 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 according to one of the following:
a. By the board of directors as follows:
(1) If there are two or more disinterested 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.
(2) If there are fewer than two disinterested directors, by the vote necessary for action by the board in accordance with section 504.825, subsection 3, in which authorization directors who do not qualify as disinterested directors may participate.
b. By the members, but the director, who at the time does not qualify as a disinterested director, shall not vote as a member or on behalf of a member.