February 22, 2008
ENGROSSED
HOUSE BILL No. 1187
_____
DIGEST OF HB 1187
(Updated February 19, 2008 1:57 pm - DI 106)
Citations Affected: IC 23-17.
Synopsis: Nonprofit corporations. Provides that notice given by a
nonprofit corporation (corporation) is fair and reasonable if the
corporation provides notice by: (1) communicating in person; (2) mail
or other method of delivery; or (3) telephone, voice mail, or other
electronic means. Provides that a corporation, other than a veteran's
corporation, that has more than 1,000 members may give notice by
radio, television, or other form of public broadcast communication.
(Current law allows for notice by publication in a newspaper.) Requires
a corporation to maintain a notice in a record unless oral notice is
reasonable under the circumstances. Establishes when notice is
effective. Requires a corporation to retain ballots for a certain period.
Establishes circumstances under which contracts or transactions that
involve conflicting interests of members, directors, members of a
designated body, or officers are not void or voidable. (Current law
establishes the circumstances under which contracts or transactions
that involve conflicting interests of directors are not void or voidable.)
Amends provisions that restrict certain actions by committees of
directors. Allows: (1) boards of directors; and (2) members present at
a committee meeting; to appoint alternate members of a committee.
Allows corporations to create or authorize the creation of advisory
committees. Repeals a provision that is replaced concerning conflicting
interest contracts or transactions.
Effective: July 1, 2008.
Lawson L, Thomas
, Koch
(SENATE SPONSORS _ LAWSON C, BRAY, ARNOLD)
January 10, 2008, read first time and referred to Committee on Judiciary.
January 24, 2008, amended, reported _ Do Pass.
January 29, 2008, read second time, ordered engrossed. Engrossed.
January 30, 2008, read third time, passed. Yeas 93, nays 0.
SENATE ACTION
February 5, 2008, read first time and referred to Committee on Corrections, Criminal, and
Civil Matters.
February 21, 2008, amended, reported favorably _ Do Pass.
February 22, 2008
Second Regular Session 115th General Assembly (2008)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in
this style type, and deletions will appear in
this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in
this style type. Also, the
word
NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in
this style type or
this style type reconciles conflicts
between statutes enacted by the 2007 Regular Session of the General Assembly.
ENGROSSED
HOUSE BILL No. 1187
A BILL FOR AN ACT to amend the Indiana Code concerning
business and other associations.
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 23-17-2-11.5; (08)EH1187.1.1. -->
SECTION 1. IC 23-17-2-11.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2008]: Sec. 11.5. "Electronic transmission"
or "electronically transmitted" means any process of
communication not directly involving the physical transfer of
paper that is suitable for the retention, retrieval, and reproduction
of information by the recipient of the information.
SOURCE: IC 23-17-2-15.5; (08)EH1187.1.2. -->
SECTION 2. IC 23-17-2-15.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2008]: Sec. 15.5. (a) "In writing" includes
any form or recorded message capable of comprehension by
ordinary visual means.
(b) The term includes a message electronically transmitted.
SOURCE: IC 23-17-2-26.5; (08)EH1187.1.3. -->
SECTION 3. IC 23-17-2-26.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2008]: Sec. 26.5. "Sign" or "signature"
includes:
(1) a manual, a facsimile, a conformed, or an electronic
signature; or
(2) any other manifestation of an intention to execute a
document or record.
SOURCE: IC 23-17-2-27; (08)EH1187.1.4. -->
SECTION 4. IC 23-17-2-27 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 27. (a) "Vote", includes
authorization by written ballot and "voting", or "casting a vote"
includes the giving of written consent.
(b) Even if a person entitled to vote characterizes the conduct as
voting or casting a vote, the term does not include:
(1) recording the fact of abstention or failing to vote for a
candidate; or
(2) approving or disapproving of a matter.
SOURCE: IC 23-17-10-5; (08)EH1187.1.5. -->
SECTION 5. IC 23-17-10-5 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 5. (a) A corporation
shall give notice
consistent with the corporation's bylaws of meetings
of members in a fair and reasonable manner.
(b) A notice that conforms to the requirements of subsection (c) is
fair and reasonable. However, other means of giving notice may also
be fair and reasonable when all the circumstances are considered if
notice of matters referred to in subsection (c)(2) is given as provided
in subsection (c).
(c)
Unless fair and reasonable notice is otherwise specified in a
corporation's bylaws, notice is fair and reasonable if the following
occur:
(1) The corporation notifies the corporation's members of the
place, date, and time of each annual, regular, and special meeting
of members not less than ten (10) days, or, if notice is mailed by
other than first class or registered mail, thirty (30) days to sixty
(60) days, before the meeting date.
(2) Notice of an annual or a regular meeting includes a
description of any matter or matters to be considered at the
meeting that must be approved by the members under
IC 23-17-13-2, IC 23-17-13-2.5, IC 23-17-16-13, IC 23-17-17-5,
IC 23-17-19-4, IC 23-17-20-2, or IC 23-17-22-2.
(3) Notice of a special meeting includes a description of the
purpose for which the meeting is called.
(4) A corporation provides notice by:
(A) communicating in person;
(B) mail or other method of delivery; or
(C) telephone, voice mail, or other electronic means.
(4) (5) For a corporation, other than a veteran's organization,
having more than one thousand (1,000) members, notice of the
place, date, and time of an annual, a regular, or a special meeting,
and in the case of a special meeting, the purpose of the special
meeting, may be given by:
(A) one (1) publication in a newspaper of general circulation,
printed in English, in the county in which the corporation has
the corporation's principal office; or
(B) radio, television, or other form of public broadcast
communication;
if the publication or broadcast is made not less than ten (10) days
and not more than thirty (30) days before the meeting date.
(d) Unless the bylaws require otherwise, if an annual, a regular, or
a special meeting of members is adjourned to a different date, time, or
place, notice is not required to be given of the new date, time, or place
if the new date, time, or place is announced at the meeting before
adjournment. If a new record date for the adjourned meeting is or must
be fixed under section 7 of this chapter, however, notice of the
adjourned meeting must be given under this section to persons who are
members as of the new record date.
SOURCE: IC 23-17-10-5.5; (08)EH1187.1.6. -->
SECTION 6. IC 23-17-10-5.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2008]: Sec. 5.5. (a) A corporation shall
maintain a notice provided under this article in a record unless
oral notice is reasonable under the circumstances.
(b) A notice is effective at the earliest of the following:
(1) If electronically transmitted, the date the notice was
received by a member when electronically transmitted in a
manner authorized by the member.
(2) If the notice was mailed postpaid and correctly addressed,
five (5) days after the notice was deposited in the United
States mail.
(3) The date shown on the return receipt if the:
(A) notice was sent by registered or certified mail, return
receipt requested; and
(B) return receipt is signed by or on behalf of the
addressee.
SOURCE: IC 23-17-10-8; (08)EH1187.1.7. -->
SECTION 7. IC 23-17-10-8 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 8. (a) Unless prohibited
or limited by articles of incorporation or bylaws, an action that may be
taken at an annual, a regular, or a special meeting of members may be
taken without a meeting if the corporation delivers a written ballot to
every member entitled to vote on the matter.
(b) A written ballot must do the following:
(1) Set forth each proposed action.
(2) Provide an opportunity to vote for or against each proposed
action.
(c) Approval by written ballot under this section is valid only when
the following occur:
(1) The number of votes cast by ballot equals or exceeds the
quorum required to be present at a meeting authorizing the action.
(2) The number of approvals equals or exceeds the number of
votes that would be required to approve the matter at a meeting at
which the total number of votes cast was the same as the number
of votes cast by ballot.
(d) A solicitation for votes by written ballot must do the following:
(1) Indicate the number of responses needed to meet the quorum
requirements.
(2) State the percentage of approvals necessary to approve each
matter other than the election of directors.
(3) Specify the time by which a ballot must be received by the
corporation to be counted.
(e) Except as otherwise provided in articles of incorporation or
bylaws, a written ballot may not be revoked.
(f) Except as otherwise provided in articles of incorporation or
bylaws, ballots must be retained by a corporation until the earlier
of the following:
(1) The date of the next annual meeting.
(2) One (1) year after the date the ballot was received.
SOURCE: IC 23-17-13-1; (08)EH1187.1.8. -->
SECTION 8. IC 23-17-13-1 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 1. (a) A director shall,
based on facts then known to the director, discharge duties as a
director, including the director's duties as a member of a committee, as
follows:
(1) In good faith.
(2) With the care an ordinarily prudent person in a like position
would exercise under similar circumstances.
(3) In a manner the director reasonably believes to be in the best
interests of the corporation.
(b) In discharging the director's duties, a director may rely on
information, opinions, reports, or statements, including financial
statements and other financial data, if prepared or presented by one (1)
of the following:
(1) An officer or employee of the corporation whom the director
reasonably believes to be reliable and competent in the matters
presented.
(2) Legal counsel, certified public accountants, or other persons
as to matters the director reasonably believes are within the
person's professional or expert competence.
(3) A committee of the board of directors of which the director is
not a member if the director reasonably believes the committee
merits confidence.
(4) In the case of religious corporations, religious authorities and
ministers, priests, rabbis, or other persons whose position or
duties in the religious organization the director believes justify
reliance and confidence and whom the director believes to be
reliable and competent in the matters presented.
(c) A director is not acting in good faith if the director has
knowledge concerning a matter in question that makes reliance
otherwise permitted by subsection (b) unwarranted.
(d) A director is not liable for an action taken as a director, or failure
to take an action, unless the: following conditions exist:
(1) The director has breached or failed to perform the duties of the
director's office in compliance with this section; and
(2) The breach or failure to perform constitutes willful
misconduct or recklessness.
(e) A director is not considered to be a trustee with respect to a
corporation or with respect to any property held or administered by the
corporation, including property that may be subject to restrictions
imposed by the donor or transferor of the property.
SOURCE: IC 23-17-13-2.5; (08)EH1187.1.9. -->
SECTION 9. IC 23-17-13-2.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2008]: Sec. 2.5. (a) This section applies unless
the articles of incorporation or bylaws of a corporation provide
otherwise.
(b) Subject to subsection (c), a contract or transaction between:
(1) a corporation and one (1) or more of the corporation's
members, directors, members of a designated body, or
officers; or
(2) a corporation and any other corporation, partnership,
association, or entity in which one (1) or more of the
corporation's members, directors, officers, or members of a
designated body:
(A) are members, directors, members of a designated body,
or officers;
(B) hold a similar position; or
(C) have a financial interest;
is not void or voidable solely because of the relationship or interest,
solely because the member, director, member of a designated body,
or officer is present at or participates in the meeting of the board
of directors that authorizes the contract or transaction, or solely
because the vote of the member, director, member of a designated
body, or officer is counted for authorizing the contract or
transaction.
(c) A contract or transaction described under subsection (b) is
not void or voidable as provided under subsection (b) if one (1) or
more of the following apply:
(1) The:
(A) material facts as to the:
(i) relationship or interest of a member, a director, a
member of a designated body, or an officer; and
(ii) contract or transaction;
are disclosed or known to the board of directors; and
(B) board of directors in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the
disinterested directors even if the disinterested directors
are less than a quorum.
(2) The:
(A) material facts as to the:
(i) relationship or interest of the member, director,
member of a designated body, or officer; and
(ii) contract or transaction;
are disclosed or known to the members who are entitled to
vote on the contract or transaction; and
(B) contract or transaction is specifically approved in good
faith by a vote of the members who are entitled to vote on
the contract or transaction.
(3) The contract or transaction is fair as to the corporation at
the time the contract or transaction is authorized, approved,
or ratified by the board of directors or the members.
(d) Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board
that authorizes a contract or transaction described under
subsection (b).
SOURCE: IC 23-17-15-6; (08)EH1187.1.10. -->
SECTION 10. IC 23-17-15-6 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 6. (a) Unless
this
article, the articles of incorporation, or bylaws provide otherwise, a
board of directors may create
at least one (1)
committee and appoint at
least two (2) or more committees that consist of one (1) or more
members of the board of directors. to serve on the committees.
(b) Unless otherwise provided under this article, the creation of
a committee and appointment of members to the committee must be
approved by the greater of: the following:
(1) a majority of all the directors in office when the action is
taken; or
(2) the number of directors required by articles of incorporation
or bylaws to take action under section 5 of this chapter.
(c) Sections 1 through 5 of this chapter apply to committees of the
board of directors and the members of committees.
(d) To the extent specified by the board of directors or in articles of
incorporation or bylaws, a committee may exercise the authority of the
board of directors under IC 23-17-12-1.
(e) A committee may not do the following:
(1) Authorize distributions.
(2) Approve or recommend to members action required to be
approved by members under this article.
(A) dissolution;
(B) merger;
(C) sale;
(D) pledge; or
(E) transfer;
of all or substantially all of a corporation's assets.
(3) Elect, appoint, or remove directors or Subject to subsection
(g), fill vacancies on the board of directors or on a committee.
(4) Adopt, amend, or repeal articles of incorporation or bylaws.
(f) The creation of, delegation of authority to, or action by a
committee does not alone constitute compliance by a director with the
standards of conduct described under IC 23-17-13-1.
(g) The board of directors may appoint one (1) or more
directors as alternate members of a committee to replace an absent
or a disqualified member during the member's absence or
disqualification. Unless the articles of incorporation, bylaws, or the
resolution creating the committee provides otherwise, in the event
of the absence or disqualification of a member of a committee, the
members present at a meeting and not disqualified from voting
may unanimously appoint another director to act in place of the
absent or disqualified member.
(h) A corporation may create or authorize the creation of one
(1) or more advisory committees whose members need not be
directors.
SOURCE: IC 23-17-13-2; (08)EH1187.1.11. -->
SECTION 11. IC 23-17-13-2 IS REPEALED [EFFECTIVE JULY
1, 2008].