Sec. 4. (a) Unless prohibited by the articles of
incorporation, the board of directors may establish a committee
consisting of three (3) or more disinterested directors or other
disinterested persons to determine:
(1) whether the corporation has a legal or equitable right or
remedy; and
(2) whether it is in the best interests of the corporation to pursue
that right or remedy, if any, or to dismiss a proceeding that seeks
to assert that right or remedy on behalf of the corporation.
(b) In making a determination under subsection (a), the committee
is not subject to the direction or control of or termination by the board.
A vacancy on the committee may be filled by the majority of the
remaining members by selection of another disinterested director or
other disinterested person.
(c) If the committee determines that pursuit of a right or remedy
through a derivative proceeding or otherwise is not in the best interests
of the corporation, the merits of that determination shall be presumed
to be conclusive against any shareholder making a demand or bringing
a derivative proceeding with respect to such right or remedy, unless
such shareholder can demonstrate that:
(1) the committee was not "disinterested" within the meaning of
this section; or
(2) the committee's determination was not made after an
investigation conducted in good faith.
(d) For purposes of this section, a director or other person is
"disinterested" if the director or other person:
(1) has not been made a party to a derivative proceeding seeking
to assert the right or remedy in question, or has been made a party
but only on the basis of a frivolous or insubstantial claim or for
the sole purpose of seeking to disqualify the director or other
person from serving on the committee;
(2) is able under the circumstances to render a determination in
the best interests of the corporation; and
(3) is not an officer, employee, or agent of the corporation or of a
related corporation. However, an officer, employee, or agent of
the corporation or a related corporation who meets the standards
of subdivisions (1) and (2) shall be considered disinterested in
any case in which the right or remedy under scrutiny is not
assertable against a director or officer of the corporation or the
related corporation.
As added by P.L.149-1986, SEC.16.
Notes of Decisions
TP Orthodontics, Inc. v. Kesling, 15 N.E.3d 985 (Ind. 2014).
· cites it 14× “Following the initiation of a derivative suit by sibling minority shareholders, TP Orthodontics’ board of directors formed a special litigation committee (the “SLC”) to investigate the derivative claims pursuant to Ind.Code § 23-1-32-4 (2007). After a year-long investigation,…”
In Re ITT Derivative Litig., 932 N.E.2d 664 (Ind. 2010).
· cites it 10× “1993)? We have accepted this certified question and now hold that the Indiana Business Corporation Law employs the same standard for showing "lack of disinterestedness" both as to the composition of special board committees under Indiana Code § 23-1-32-4 and to the requirement…”
Cutshall v. Barker, 733 N.E.2d 973 (Ind. Ct. App. 2000).
· cites it 4× “Determination of the Special Litigation Committee Following the Cutshalls’ initiation of their shareholder’s derivative action *979 against Wayne, the Board established an SLC, pursuant to Indiana Code section 23-1-32-4, to investigate the propriety of Wayne’s further…”
Barth v. Barth, 659 N.E.2d 559 (Ind. 1995).
· cites it 2× “Ind. Code § 23-1-32-4 . As such, the court in making its decision should consider whether the corporation has a disinterested board that should be permitted to consider the lawsuit's impact on the corporation.”
In Re ITT Corp. Derivative Litig., 588 F. Supp. 2d 502 (S.D.N.Y. 2008).
· cites it 3× “Defendant argues that Plaintiffs may not pursue this litigation *510 pursuant to Indiana Code § 23-1-32-4 because decisions of the SLC are presumed conclusive unless it can be shown that the SLC was not disinterested or that its determination was not made after a good faith…”
BioConvergence, LLC, & Alisa K. Wright v. Julie Menefee, 103 N.E.3d 1141 (Ind. Ct. App. 2018).
· cites it 2× “Ind. Code § 23-1-32-4 . As such, the court in making its decision should consider whether the corporation has a disinterested board that should be permitted to consider the lawsuit's impact on the corporation.”
Kesling v. Kesling, 546 F. Supp. 2d 627 (N.D. Ind. 2008).
· cites it 2× “See Ind.Code § 23-1-32-4. If the committee determines that pursuing a derivative *635 action is not in the corporation’s best interests, that determination is presumed to be conclusive.”
Chad Taylor v. Sardar Biglari, 813 F.3d 648 (7th Cir. 2016).
“The official comment to another Indiana statutory provision, Ind.Code § 23-1-32-4, states that “the decision whether and to what extent to investigate and prosecute corporate claims .”
Tp Orthodontics, Inc. v. Kesling, 995 N.E.2d 1057 (Ind. Ct. App. 2013).
· cites it 16× “I.C. § 23-1-32-4 cmt. (c). 5 A director or other committee member is “disinterested” if that person: (1) has not been made a party to a derivative proceeding seeking to assert the right or remedy in question, or has been made a party but only on the basis of a frivolous or…”
Sonkin v. Barker, 670 F. Supp. 249 (S.D. Ind. 1987).
· cites it 4× “Ind.Code § 23-1-32-4. PSI explains that PSI’s Board of Directors has appointed a special litigation committee pursuant to that provision and further points out that the new law provides that a court may stay a derivative proceeding until the committee has completed its…”
Ind. Code § 23-1-32-4(a): 1 case
TP Orthodontics, Inc. v. Kesling, 15 N.E.3d 985 (Ind. 2014).
“Following the initiation of a derivative suit by sibling minority shareholders, TP Orthodontics’ board of directors formed a special litigation committee (the “SLC”) to investigate the derivative claims pursuant to Ind.Code § 23-1-32-4 (2007). After a year-long investigation,…”
Ind. Code § 23-1-32-4(b): 4 cases
TP Orthodontics, Inc., Christopher K. Kesling, DDS, MS, Adam Kesling, & Emily Kesling, Individually & derivatively on behalf of TP Orthodontics, Inc. v. Andrew C. Kesling, No. 46A03-1207-MI-324 (Ind. Ct. App. Sept. 3, 2013).
Ind. Code § 23-1-32-4(c): 8 cases
TP Orthodontics, Inc. v. Kesling, 15 N.E.3d 985 (Ind. 2014).
“Following the initiation of a derivative suit by sibling minority shareholders, TP Orthodontics’ board of directors formed a special litigation committee (the “SLC”) to investigate the derivative claims pursuant to Ind.Code § 23-1-32-4 (2007). After a year-long investigation,…”
Cutshall v. Barker, 733 N.E.2d 973 (Ind. Ct. App. 2000).
“Determination of the Special Litigation Committee Following the Cutshalls’ initiation of their shareholder’s derivative action *979 against Wayne, the Board established an SLC, pursuant to Indiana Code section 23-1-32-4, to investigate the propriety of Wayne’s further…”
Ind. Code § 23-1-32-4(d): 1 case
In Re ITT Derivative Litig., 932 N.E.2d 664 (Ind. 2010).
“1993)? We have accepted this certified question and now hold that the Indiana Business Corporation Law employs the same standard for showing "lack of disinterestedness" both as to the composition of special board committees under Indiana Code § 23-1-32-4 and to the requirement…”
Ind. Code § 23-1-32-4(d)(1): 2 cases
Tp Orthodontics, Inc. v. Kesling, 995 N.E.2d 1057 (Ind. Ct. App. 2013).
“I.C. § 23-1-32-4 cmt. (c). 5 A director or other committee member is “disinterested” if that person: (1) has not been made a party to a derivative proceeding seeking to assert the right or remedy in question, or has been made a party but only on the basis of a frivolous or…”
TP Orthodontics, Inc., Christopher K. Kesling, DDS, MS, Adam Kesling, & Emily Kesling, Individually & derivatively on behalf of TP Orthodontics, Inc. v. Andrew C. Kesling, No. 46A03-1207-MI-324 (Ind. Ct. App. Sept. 3, 2013).
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