House Enrolled Act No. 1187 made several subtle but significant changes to the Indiana Nonprofit Corporation Act of 1991 which became effective on July 1, 2008. Here are a few points to note:

  • The new law amended IC 23-17-10-5, expanding the means by which a corporation may provide notice of a meeting of members to include:
    • in-person communication;
    • mail (or other delivery); and
    • electronic means capable of verification.
  • IC 23-17-13-1 was amended to limit the accounting advice upon which directors may rely for statutory purposes only to information provided by “certified public accountants” (the prior language simply stated “public accountants”).
  • The General Assembly amended language in IC 23-17-13-1(d) to clarify that a director is not liable for an act or the failure to act unless both of the following are met:
    • The director breached/failed to perform duties AND
    • The breach/failure to perform constitutes willful misconduct or recklessness.
  • New IC 23-17-13-2.5 replaces repealed IC 23-17-13-2, expanding the interested party contract protections to members, members of a designated body and officers. The repealed section limited such protections to directors. A contract between a corporation and a member, director, member of a designated body or officer, or between a corporation and another entity (including partnerships) in which a member, director, member of a designated body or officer serves as a member, director, member of a designated body, officer or in a similar position, or has a financial interest, is not void or voidable simply because of the relationship or interest.
  • The new section provides that such a contract will not be void or voidable if one or more of the following apply:
    • The relationship has been disclosed to, or is known by, the board of directors, and the board in good faith approves the contract.
    • The relationship has been disclosed to, or is known by, the members who in good faith approve the contract.
    • The contract is fair to the corporation (when it is approved).
  • The new statute also amends IC 23-17-15-6 to provide that:
    • the board of directors may create committees that consist of at least one member of the board (the prior language said that such committees must consist of at least two members of the board);
    • a committee of the board does not have authority to recommend any action for required membership approval (previously, this provision listed specific actions, such as dissolution and merger);
    • the board of directors may appoint one or more directors to serve as alternate members of a committee in the event of a member’s absence or disqualification;
    • upon a unanimous vote, committee members may appoint a director to act in the place of an absent or disqualified committee member (where the board has not appointed an alternate already); and
    • corporations may form advisory committees whose members need not be directors.
  • New IC 23-17-27-1(f) now requires that each ballot of member action be retained until the earlier of (a) the date of the next annual meeting of members and (b) one year after the ballot is received.