INDEMNIFICATION AND ADVANCE FOR EXPENSES

Iowa Code tit. XII, ch. 490, subch. VIII, pt. 5

in effect

Iowa Code § 490.850 Part definitions.

490.850. Part definitions. As used in this part: 1. “Corporation” includes any domestic or foreign predecessor entity of a corporation in a merger. 2. “Director” or “officer” means an individual who is or was a director or officer, respectively, of a corporation or who, while a director or officer of the corporation, is or was serving at the corporation’s request as a director, officer, manager, partner, trustee, employee, or agent of another entity or employee benefit plan. A director or officer is considered to be serving an employee benefit plan at the corporation’s request if the individual’s duties to the corporation also impose duties on, or otherwise involve services by, the individual to the plan or to participants in or beneficiaries of the plan. “Director” or “officer” includes, unless the context requires otherwise, the estate or personal representative of a director or officer. 3. “Liability” means the obligation to pay a judgment, settlement, penalty, fine, including an excise tax assessed with respect to an employee benefit plan, or expenses incurred with respect to a proceeding. 4. a. “Official capacity” means the following: (1) When used with respect to a director, the office of director in a corporation. (2) When used with respect to an officer, as contemplated in section 490.856, the office in a corporation held by the officer. b. “Official capacity” does not include service for any other domestic or foreign corporation or any joint venture, trust, employee benefit plan, or other entity. 5. “Party” means an individual who was, is, or is threatened to be made a defendant or respondent in a proceeding. 6. “Proceeding” means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative, or investigative and whether formal or informal. 89 Acts, ch 288, §98; 2002 Acts, ch 1154, §44, 125; 2005 Acts, ch 19, §72; 2013 Acts, ch 30, §116; 2013 Acts, ch 31, §33 – 35, 82; 2021 Acts, ch 165, §110, 230

Iowa Code § 490.851 Permissible indemnification.

490.851. Permissible indemnification. 1. Except as otherwise provided in this section, a corporation may indemnify an individual who is a party to a proceeding because the individual is a director against liability incurred in the proceeding if any of the following apply: a. All of the following apply: (1) The director’s conduct was in good faith. (2) The director reasonably believed: (a) In the case of conduct in an official capacity, that the director’s conduct was in the best interests of the corporation. (b) In all other cases, that the director’s conduct was at least not opposed to the best interests of the corporation. (3) In the case of any criminal proceeding, the director had no reasonable cause to believe the director’s conduct was unlawful. b. The director engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the articles of incorporation, as authorized by section 490.202, subsection 2, paragraph “e”. 2. A director’s conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in, and the beneficiaries of, the plan is conduct that satisfies the requirement of subsection 1, paragraph “a”, subparagraph (2), subparagraph division (b). 3. The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, is not, of itself, determinative that the director did not meet the relevant standard of conduct described in this section. 4. Unless ordered by a court under section 490.854, subsection 1, paragraph “c”, a corporation shall not indemnify a director in any of the following circumstances: a. In connection with a proceeding by or in the right of the corporation, except for expenses incurred in connection with the proceeding if it is determined that the director has met the relevant standard of conduct under subsection 1. b. In connection with any proceeding with respect to conduct for which the director was adjudged liable on the basis of receiving a financial benefit to which the director was not entitled, regardless of whether it involved action in the director’s official capacity. 89 Acts, ch 288, §99; 2002 Acts, ch 1154, §45, 125; 2003 Acts, ch 44, §84, 116; 2021 Acts, ch 165, §111, 230

Iowa Code § 490.852 Mandatory indemnification.

490.852. Mandatory indemnification. A corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the director was a party because the director is or was a director of the corporation against expenses incurred by the director in connection with the proceeding. 89 Acts, ch 288, §100; 2002 Acts, ch 1154, §46, 125; 2021 Acts, ch 165, §112, 230

Iowa Code § 490.853 Advance for expenses.

490.853. Advance for expenses. 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. 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. 89 Acts, ch 288, §101; 2002 Acts, ch 1154, §47, 125; 2002 Acts, ch 1175, §89; 2013 Acts, ch 31, §36, 82; 2021 Acts, ch 165, §113, 230

Iowa Code § 490.854 Court-ordered indemnification and advance for expenses.

490.854. Court-ordered indemnification and advance for expenses. 1. A person who is a party to a proceeding because the person is a director may apply for indemnification or an advance for expenses to the court conducting the proceeding or to another court of competent jurisdiction. After receipt of an application and after giving any notice it considers necessary, the court shall do any of the following: a. Order indemnification if the court determines that the director is entitled to mandatory indemnification under section 490.852. b. Order indemnification or advance for expenses if the court determines that the director is entitled to indemnification or advance for expenses pursuant to a provision authorized by section 490.858, subsection 1. c. (1) Order indemnification or advance for expenses if the court determines, in view of all the relevant circumstances, that it is fair and reasonable to do any of the following: (a) Indemnify the director. (b) Advance expenses to the director. (2) The court shall order indemnification or advance for expenses, even if in the case of subparagraph (1), subparagraph division (a) or (b), the director has not met the relevant standard of conduct set forth in section 490.851, subsection 1, failed to comply with section 490.853 or was adjudged liable in a proceeding referred to in section 490.851, subsection 4, paragraph “a” or “b”. However, if the director was adjudged so liable the director’s indemnification shall be limited to expenses incurred in connection with the proceeding. 2. If the court determines that the director is entitled to indemnification under subsection 1, paragraph “a”, or to indemnification or advance for expenses under subsection 1, paragraph “b”, it shall also order the corporation to pay the director’s expenses incurred in connection with obtaining court-ordered indemnification or advance for expenses. If the court determines that the director is entitled to indemnification or advance for expenses under subsection 1, paragraph “c”, it may also order the corporation to pay the director’s expenses to obtain court-ordered indemnification or advance for expenses. 89 Acts, ch 288, §102; 2002 Acts, ch 1154, §48, 125; 2021 Acts, ch 165, §114, 230

Iowa Code § 490.855 Determination and authorization of indemnification.

490.855. Determination and authorization of indemnification. 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. 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). 89 Acts, ch 288, §103; 2002 Acts, ch 1154, §49, 125; 2013 Acts, ch 31, §37, 82; 2021 Acts, ch 165, §115, 230

Iowa Code § 490.856 Indemnification of officers.

490.856. Indemnification of officers. 1. A corporation may indemnify and advance expenses under this part to an officer who is a party to a proceeding because the person is an officer, according to all of the following: a. To the same extent as a director. b. If the person is an officer but not a director, to such further extent as may be provided by the articles of incorporation or bylaws, or by a resolution adopted or a contract approved by the board of directors or shareholders, except for any of the following: (1) Liability in connection with a proceeding by or in the right of the corporation other than for expenses incurred in connection with the proceeding. (2) Liability arising out of conduct that constitutes any of the following: (a) Receipt by the officer of a financial benefit to which the officer is not entitled. (b) An intentional infliction of harm on the corporation or the shareholders. (c) An intentional violation of criminal law. 2. The provisions of subsection 1, paragraph “b”, shall apply to an officer who is also a director, if the officer is made a party to the proceeding based on an act or omission solely as an officer. 3. An officer who is not a director is entitled to mandatory indemnification under section 490.852, and may apply to a court under section 490.854 for indemnification or an advance for expenses, in each case to the same extent to which a director may be entitled to indemnification or advance for expenses under those sections. 89 Acts, ch 288, §104; 2002 Acts, ch 1154, §50, 125; 2003 Acts, ch 44, §85; 2021 Acts, ch 165, §116, 230

Iowa Code § 490.857 Insurance.

490.857. Insurance. A corporation may purchase and maintain insurance on behalf of an individual who is a director or officer of the corporation, or who, while a director or officer of the corporation, serves at the corporation’s request as a director, officer, partner, trustee, employee, or agent of another domestic or foreign corporation, or a joint venture, trust, employee benefit plan, or other entity, against liability asserted against or incurred by the individual in that capacity or arising from the individual’s status as a director or officer, regardless of whether the corporation would have power to indemnify or advance expenses to the individual against the same liability under this part. 89 Acts, ch 288, §105; 2002 Acts, ch 1154, §51, 125; 2021 Acts, ch 165, §117, 230

Iowa Code § 490.858 Variation by corporate action — application of part.

490.858. Variation by corporate action — application of part. 1. A corporation may, by a provision in its articles of incorporation or bylaws or in a resolution adopted or a contract approved by the board of directors or shareholders, obligate itself in advance of the act or omission giving rise to a proceeding to provide indemnification in accordance with section 490.851 or advance funds to pay for or reimburse expenses in accordance with section 490.853. Any such obligatory provision shall be deemed to satisfy the requirements for authorization referred to in section 490.853, subsection 3, and in section 490.855, subsection 3. Any such provision that obligates the corporation to provide indemnification to the fullest extent permitted by law shall be deemed to obligate the corporation to advance funds to pay for or reimburse expenses in accordance with section 490.853 to the fullest extent permitted by law, unless the provision expressly provides otherwise. 2. A right of indemnification or to advances for expenses created by this part or under subsection 1 and in effect at the time of an act or omission shall not be eliminated or impaired with respect to such act or omission by an amendment of the articles of incorporation or bylaws or a resolution of the board of directors or shareholders, adopted after the occurrence of such act or omission, unless, in the case of a right created under subsection 1, the provision creating such right and in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such act or omission has occurred. 3. Any provision pursuant to subsection 1 shall not obligate the corporation to indemnify or advance expenses to a director of a predecessor of the corporation, pertaining to conduct with respect to the predecessor, unless otherwise expressly provided. Any provision for indemnification or advance for expenses in the articles of incorporation, or bylaws, or a resolution of the board of directors or shareholders of a predecessor of the corporation in a merger or in a contract to which the predecessor is a party, existing at the time the merger takes effect, shall be governed by section 490.1107, subsection 1, paragraph “d”. 4. Subject to subsection 2, a corporation may, by a provision in its articles of incorporation, limit any of the rights to indemnification or advance for expenses created by or pursuant to this part. 5. This part does not limit a corporation’s power to pay or reimburse expenses incurred by a director or an officer in connection with appearing as a witness in a proceeding at a time when the director or officer is not a party. 6. This part does not limit a corporation’s power to indemnify, advance expenses to, or provide or maintain insurance on behalf of an employee or agent. 89 Acts, ch 288, §106; 2002 Acts, ch 1154, §52, 125; 2013 Acts, ch 31, §38, 39, 82; 2019 Acts, ch 24, §104; 2021 Acts, ch 165, §118, 230

Iowa Code § 490.859 Exclusivity of part.

490.859. Exclusivity of part. A corporation may provide indemnification or advance expenses to a director or an officer only as permitted by this part. 2002 Acts, ch 1154, §53, 125

Source: Iowa Legislature (legis.iowa.gov)URL: https://www.legis.iowa.gov/law/iowaCode/sections?codeChapter=490&year=2026Fetched: 10/20/2026