General Assembly: 80 (2003 Regular GA) - Chapter 66 - Business entities — miscellaneous provisions


Published: 2003-04-25

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115 LAWS OF THE EIGHTIETH G.A., 2003 SESSION CH. 66

CH. 66CH. 66

CHAPTER 66

BUSINESS ENTITIES — MISCELLANEOUS PROVISIONS

S.F. 340

ANACT relating to business entities, based on revisions related to the Iowa business corpora- tion Act, including addition of a savings clause and addition of provisions related to direc- tor and officer liability, duty, and indemnification for certain insurance companies and in- demnification for cooperative associations.

Be It Enacted by the General Assembly of the State of Iowa:

Section 1. Section 490.1701, Code 2003, is amended by adding the following new unnum- bered paragraph: NEW UNNUMBERED PARAGRAPH. A corporation organized under chapter 496C may

voluntarily elect to adopt the provisions of this chapter by complying with the provisions pre- scribed by subsection 3.

Sec. 2. Section 490.1701, subsection 3, paragraph b, Code 2003, is amended to read as fol- lows: b. The instrument shall be delivered to the secretary of state for filing and recording in the

secretary of state’s office, and. If the corporation was organized under chapter 176, 524, or 533, the instrument shall also be filed and recorded in the office of the county recorder. The corporation shall at the time it files the instrument with the secretary of state deliver also to the secretary of state for filing in the secretary of state’s office anybiennial reportwhich is then due. If the county of the initial registered office as stated in the instrument for a corporation orga-

nized under chapter 176, 524, or 533 is one which is other than the county where the principal place of business of the corporation, as designated in its articles of incorporation, was located, the corporation shall forward to the county recorder of the county in which the principal place of business of the corporation was located a copy of the instrument and the corporation shall forward to the recorder of the county in which the initial registered office of the corporation is located, in addition to a copy of the original instrument, a copy of the articles of incorpora- tion of the corporation together with all amendments to them as then on file in the secretary of state’s office. The corporation shall, through an officer or director, certify to the secretary of state that a copy has been sent to each applicable county recorder, including the date each copy was sent.

Sec. 3. Section 490.1703, subsection 1, Code 2003, is amended to read as follows: 1. Except as provided in subsection 2, the repeal of a statute by 1989 IowaActs, chapter 288,

and the amendment or repeal of a statute by 2002 Iowa Acts, chapter 1154, does not affect: a. The operation of the statute or any action taken under it before its amendment or repeal. b. Any ratification, right, remedy, privilege, obligation, or liability acquired, accrued, or in-

curred under the statute before its amendment or repeal. c. Any violation of the statute, or any penalty, forfeiture, or punishment incurred because

of the violation, before its amendment or repeal. d. Any proceeding, reorganization, or dissolution commenced under the statute before its

amendment or repeal, and the proceeding, reorganization, or dissolution may be completed in accordance with the statute as if it had not been amended or repealed.

Sec. 4. Section 490A.707, Code 2003, is amended to read as follows: 490A.707 LIMITATION OF LIABILITY OF MANAGERS. The articles of organization may contain a provision eliminating or limiting the personal li-

ability of a manager to the limited liability company or to its members or of the members with

116LAWS OF THE EIGHTIETH G.A., 2003 SESSIONCH. 66

whomthemanagement of the limited liability company is vestedpursuant to section490A.702, to the limited liability company or to its members for monetary money damages for breach of fiduciary duty for any action taken, or any failure to take action, as a manager or a member with whom management of the limited liability company is vested, if the provision does not eliminateor limit the liability of amanageror amemberwithwhommanagement of the limited liability company is vested for except for liability for any of the following: 1. Breach of the manager’s or member’s duty of loyalty to the limited liability company or

to its members The amount of a financial benefit received by a manager or member to which the manager or member is not entitled. 2. Acts or omissions not in good faith orwhich involve intentionalmisconduct or a knowing

violation of law An intentional infliction of harm on the limited liability company or its mem- bers. 3. Transaction from which the manager or member derives an improper personal benefit

or a wrongful distribution in violation of section A violation of section 490A.807. 4. An intentional violation of criminal law. Aprovision shall not eliminate or limit the liability of amanager ormemberwithwhomman-

agement of the limited liability company is vested for an act or omission occurring prior to the date when the provision in the articles of organization becomes effective.

Sec. 5. Section 491.5, subsection 8, Code 2003, is amended by striking the subsection and inserting in lieu thereof the following: 8. Any provision eliminating or limiting the personal liability of a director to the corporation

or its shareholders ormembers formoney damages as provided in section 490.202, subsection 2, paragraph “d”, except that section 490.202, subsection 2, paragraph “d”, subparagraph (3), shall have no application.

Sec. 6. Section 491.5, Code 2003, is amended by adding the following new subsection: NEWSUBSECTION. 9. Any provision permitting or making obligatory indemnification of

a director as provided in section 490.202, subsection 2, paragraph “e”, except that section 490.202, subsection 2, paragraph “e”, subparagraph (3), shall have no application.

Sec. 7. NEWSECTION. 491.16A DIRECTORSANDOFFICERS—DUTIESANDLIABIL-

ITIES.

Sections 490.830 through 490.842 apply to corporations organized under or subject to this chapter.

Sec. 8. Section 496C.14, unnumbered paragraph 7, Code 2003, is amended to read as fol- lows: Notwithstanding the foregoing provisions of this section, purchase by the corporation is not

required upon the occurrence of any event other than death of a shareholder if the corporation is dissolved or voluntarily elects to adopt the provisions of the Iowa business corporation Act, as provided in section 490.1701, subsection 2, within sixty days after the occurrence of the event. The articles of incorporation or bylawsmay provide that purchase is not required upon the death of a shareholder if the corporation is dissolvedwithin sixty days after the death. Not- withstanding the foregoing provisions of this section, purchase by the corporation is not re- quired upon the death of a shareholder, if the corporation voluntarily elects to adopt the provi- sions of the Iowa business corporation Act, as provided in section 490.1701, subsection 2, within sixty days after death.

Sec. 9. Section 496C.16, Code 2003, is amended to read as follows: 496C.16 MANAGEMENT.

All directors of a professional corporation and all officers of a professional corporation ex- cept assistant officers, shall at all times be individuals who are licensed to practice in this state

117 LAWS OF THE EIGHTIETH G.A., 2003 SESSION CH. 66

a profession which the corporation is authorized to practice. No person who is not licensed shall have any authority or duties in the management or control of the corporation. If any di- rector or any officer ceases to have this qualification, the director or officer shall immediately and automatically cease to hold the directorship or office. However, upon the occurrence of any event that requires the corporation either to be dissolved or to elect to adopt the provisions of the Iowa business corporationAct, as provided in section 496C.19, provided the corporation ceases to practice the profession that the corporation is authorized to practice, as provided in section 496C.19, then individualswhoare not licensed to practice in this state a profession that the corporation is authorized topracticemaybe appointed as officers anddirectors for the sole purpose of carrying out the dissolution of the corporation or, if applicable, the voluntary elec- tion of the corporation to adopt the provisions of the Iowa business corporation Act, as pro- vided in section 496C.19.

Sec. 10. Section 496C.19, Code 2003, is amended to read as follows: 496C.19 DISSOLUTION OR LIQUIDATION. Violation of any provision of this chapter by a professional corporation or any of its share-

holders, directors, or officers shall be cause for its involuntary dissolution, or liquidation of its assets and business by the district court, as provided in the Iowa business corporation Act, chapter 490. Upon the death of the last remaining shareholder of a professional corporation, or whenever the last remaining shareholder is not licensed or ceases to be licensed to practice in this state a professionwhich the corporation is authorized to practice, orwhenever any per- son other than the shareholder of record becomes entitled to have all shares of the last remain- ing shareholder of the corporation transferred into that person’s name or to exercise voting rights, except as a proxy, with respect to such shares, the corporation shall not practice any profession and it shall either be promptly dissolved or shall promptly elect to adopt the provi- sions of the Iowa business corporation Act, as provided in section 490.1701, subsection 2. However, if prior to such dissolution all outstanding shares of the corporation are acquired by one ormore persons licensed to practice in this state a profession which the corporation is au- thorized to practice, the corporation need not be dissolved andmay practice the profession as provided in this chapter.

Sec. 11. Section 497.33, Code 2003, is amended to read as follows: 497.33 PERSONAL LIABILITY. Except as otherwise provided in this chapter, a director, officer, employee, ormember of the

corporation is not liable on the corporation’s debts or obligations and a director, officer,mem- ber, or other volunteer is not personally liable in that capacity, for a claim based upon an act or omission of the person performed any action taken, or any failure to take action in the dis- charge of the person’s duties, except for a breach of the duty of loyalty to the corporation, for acts or omissions not in good faith or which involve the amount of a financial benefit received by theperson towhich theperson is not entitled, an intentional infliction of harmon the associ- ation or its members, or an intentional misconduct or knowing violation of the criminal law, or for a transaction from which the person derives an improper personal benefit.

Sec. 12. Section 498.35, Code 2003, is amended to read as follows: 498.35 PERSONAL LIABILITY. Except as otherwise provided in this chapter, a director, officer, employee, ormember of the

association is not liable on the association’s debts or obligations and a director, officer, mem- ber, or other volunteer is not personally liable in that capacity, for a claim based upon an act or omission of the person performed any action taken, or any failure to take action in the dis- charge of the person’s duties, except for a breach of the duty of loyalty to the association, for acts or omissions not in good faith or which involve the amount of a financial benefit received by theperson towhich theperson is not entitled, an intentional infliction of harmon the associ- ation or its members, or an intentional misconduct or knowing violation of the criminal law, or for a transaction from which the person derives an improper personal benefit.

118LAWS OF THE EIGHTIETH G.A., 2003 SESSIONCH. 66

Sec. 13. Section 499.37, Code 2003, is amended to read as follows: 499.37 OFFICERS AND EMPLOYEES. 1. The board of directors of the association shall select from their own number a president,

one or more vice presidents, a secretary-treasurer or a secretary and a treasurer the associa- tion’s officers as provided in its articles of incorporation or bylaws, and shall fill vacancies in such offices. The articles of incorporation or bylaws shall delegate to an officer the responsi- bility for all of the following: a. Preparing minutes of meetings of the directors and the shareholders. b. Authenticating the association’s records. 2. Unless the association’s articles of incorporation or bylaws otherwise provide, said the

association’s officers shall be chosen serve for annual terms beginning at the close of the first regular meeting of members in each year. The directors shall also choose and may remove such other officers and employees as they

deem proper, or as the articles or bylaws may prescribe.

Sec. 14. Section 499.59, Code 2003, is amended to read as follows: 499.59 PERSONAL LIABILITY. Except as otherwise provided in this chapter, a director, officer, employee, ormember of the

association is not liable on the association’s debts or obligations, and a director, officer, mem- ber, or other volunteer is not personally liable in that capacity, for a claim based upon an act or omission of the person performed any action taken, or any failure to take action in the dis- charge of the person’s duties, except for a breach of the duty of loyalty to the association, for acts or omissions not in good faith or which involve the amount of a financial benefit received by theperson towhich theperson is not entitled, an intentional infliction of harmon the associ- ation or its members, or an intentional misconduct or knowing violation of the criminal law, or for a transaction from which the person derives an improper personal benefit.

Sec. 15. Section 501.407, Code 2003, is amended to read as follows: 501.407 PERSONAL LIABILITY — INDEMNIFICATION. 1. The articles may contain a provision eliminating or limiting the personal liability of a di-

rector, officer, or interest holder of the cooperative for monetary money damages for breach of a fiduciary duty any action taken, or any failure to take action as a director, officer, or in- terest holder, provided that the provision does not eliminate or limit except liability for any of the following: 1. a. A breach of the duty of loyalty to the cooperative or its interest holders An intentional

infliction of harm on the cooperative or its members. 2. b. An act or omission not in good faith or which involves intentional misconduct or a

knowing An intentional violation of criminal law. 3. c. A transaction from which the director, officer, or interest holder derives an improper

personal benefit The amount of a financial benefit received by the person to which the person is not entitled. 4. d. An act or omission occurring prior to the date when the provision in the articles be-

comes effective. 2. The articles may contain a provision permitting or making obligatory indemnification of

a director or officer for liability, as defined in section 501.411, to any person for any action tak- en, or any failure to takeanyaction, as adirector orofficer, except liability for anyof the follow- ing: a. Receipt of a financial benefit to which the person is not entitled. b. An intentional infliction of harm on the corporation or its shareholders. c. An intentional violation of criminal law.

Sec. 16. Section 501.411, Code 2003, is amended to read as follows: 501.411 DEFINITIONS. As used in this part, unless the context otherwise requires: 1. “Cooperative” includes any domestic or foreign predecessor entity of a cooperative in a

119 LAWS OF THE EIGHTIETH G.A., 2003 SESSION CH. 66

merger or other transaction in which the predecessor’s existence ceased upon consummation of the transaction. 2. “Director” or “officer” means an individual who is or was a director or officer, respective-

ly, of a cooperative or an individual who, while a director or officer of a the cooperative, is or was serving at the cooperative’s request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic or foreign cooperative, corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise entity. A director or officer is consid- ered to be serving an employee benefit plan at the cooperative’s request if the director’s or offi- cer’s duties to the cooperative also impose duties on, or otherwise involve services by, that di- rector or officer 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. “Disinterested director” means a director who at the time of a vote referred to in section

501.414, subsection 3, or a vote or selection referred to in section 501.416, subsection 2 or 3, is not either of the following: a. A party to the proceeding. b. An individual having a familial, financial, professional, or employment relationship with

thedirectorwhose indemnification or advance for expenses is the subject of the decision being made, which relationship would in the circumstances, reasonably be expected to exert an in- fluence on the director’s judgment when voting on the decision being made. 3. 4. “Expenses” includes counsel fees. 4. 5. “Liability”means the obligation to pay a judgment, settlement, penalty, fine, including

an excise tax assessed with respect to an employee benefit plan, or reasonable expenses in- curred with respect to a proceeding. 5. 6. “Official capacity” means: a. When used with respect to a director, the office of director in a cooperative. b. When used with respect to an individual other than a director officer, as contemplated

in section 501.417, the office in a cooperative held by the officer or the employment or agency relationship undertaken by the employee or agent on behalf of the cooperative. “Official capacity” does not include service for any other foreign or domestic or foreign co-

operative or any corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise entity. 6. 7. “Party” includesmeans an individual whowas, is, or is threatened to bemade a named

defendant or respondent in a proceeding. 7. 8. “Proceeding” means any threatened, pending, or completed action, suit, or proceed-

ing, whether civil, criminal, administrative, or investigative and whether formal or informal.

Sec. 17. Section 501.412, Code 2003, is amended to read as follows: 501.412 AUTHORITY TO INDEMNIFY PERMISSIBLE INDEMNIFICATION.

1. Except as otherwise provided in subsection 4 this section, a cooperative may indemnify an individual made who is a party to a proceeding because the individual is or was a director against liability incurred in the proceeding if all either of the following apply: a. All of the following apply: a. (1) The individual acted in good faith. b. (2) The individual reasonably believed either of the following: (1) (a) In the case of conduct in the individual’s official capacity with the cooperative, that

the individual’s conduct was in the cooperative’s best interests of the cooperative. (2) (b) In all other cases, that the individual’s conduct was at least not opposed to the coop-

erative’s best interests of the cooperative. c. (3) In the case of any criminal proceeding, the individual had no reasonable cause to be-

lieve the individual’s conduct was unlawful. b. The individual engaged in conduct for which broader indemnification has been made

permissible or obligatoryunder a provision of the articles of organization as authorized by sec- tion 501.407, subsection 2.

120LAWS OF THE EIGHTIETH G.A., 2003 SESSIONCH. 66

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 beneficiaries of the plan is conduct that satisfies the requirement of subsection 1, paragraph “b” “a”, subparagraph (2), subparagraph subdivision (b). 3. The termination of a proceeding by judgment, order, settlement, 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. A Unless ordered by a court pursuant to section 501.415, subsection 1, paragraph “c”, a

cooperative shall not indemnify a director under this section in either of the following circum- stances: a. In connectionwith a proceeding by or in the right of the cooperative, inwhich the director

was adjudged liable to the cooperative except for reasonable expenses incurred in connection with the proceeding if it is determined that the director has met the relevant standard of con- duct under subsection 1, paragraph “a”. b. In connectionwith any other proceeding charging improper personal benefit to the direc-

tor,whether ornot involvingaction in thedirector’s official capacity, inwith respect to conduct for which the director was adjudged liable on the basis that personal the director received a financial benefit was improperly received by the director to which the director was not en- titled, whether or not involving action in the director’s official capacity. 5. Indemnification permitted under this section in connectionwith a proceeding by or in the

right of the cooperative is limited to reasonable expenses incurred in connection with the pro- ceeding.

Sec. 18. Section 501.413, Code 2003, is amended to read as follows: 501.413 MANDATORY INDEMNIFICATION. Unless limited by its articles of association, a A cooperative shall indemnify a director who

was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the directorwas a party because the director is orwas a director of the cooperative against rea- sonable expenses incurred by the director in connection with the proceeding.

Sec. 19. Section 501.414, Code 2003, is amended to read as follows: 501.414 ADVANCE FOR EXPENSES. 1. A cooperative 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 in advance of final disposition of the proceeding because the person is a director if any of the per- son delivers all of the following applies to the cooperative: a. The director furnishes the cooperative a Awritten affirmation of the director’s good faith

belief that either the director has met the relevant standard of conduct described in section 501.412 or that the proceeding involves conduct for which liability has been eliminated under a provision of the articles of organization as authorized by section 501.407, subsection 1. b. Thedirector furnishes the cooperative a director’swrittenundertaking, executedperson-

ally or on the director’s behalf, to repay the advance if any funds advanced if the director is not entitled to mandatory indemnification under section 501.413 and it is ultimately deter- mined that thedirectordidnotmeet thehasnotmet the relevant standardof conduct described in section 501.412. c. A determination is made pursuant to section 501.416 that the facts then known to those

making the determination would not preclude indemnification under this part. 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. Determinations and authorizations of payments Authorizations under this section shall

be made in the manner specified in section 501.416. according to either of the following: a. By the board of directors, according to one of the following: (1) If there are two ormore disinterested directors, by amajority vote of all the disinterested

121 LAWS OF THE EIGHTIETH G.A., 2003 SESSION CH. 66

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 a vote. (2) If there are fewer than two disinterested directors, if a quorum is present when the vote

is taken, by the affirmative vote of a majority of the directors present, unless the articles or bylaws require the vote of a greater number of directors, in which authorization directorswho do not qualify as disinterested directors may participate. b. By the members, but voting interests owned by or voted under the control of a director

who at the time does not qualify as a disinterested director shall not be voted on the authoriza- tion.

Sec. 20. Section 501.415, Code 2003, is amended to read as follows: 501.415 COURT-ORDERED INDEMNIFICATION. 1. Unless a cooperative’s articles of association provide otherwise, a A director of the co-

operative who is a party to a proceeding because the person is a directormay apply for indem- nification to the court conducting the proceeding or to another court of competent jurisdiction for indemnification or an advance for expenses. On After receipt of an application, the court and after giving any notice the court considers necessary may order, the court shall proceed according to the following: a. Order indemnification if it the court determines either of the following: that the 1. The director is entitled to mandatory indemnification under section 501.413, in which

case the court shall also order the cooperative to pay the director’s reasonable expenses in- curred to obtain court-ordered indemnification. 2. The director is fairly and reasonably entitled to indemnification in view of all the relevant

circumstances, whether or not the director met the standard of conduct set forth in section 501.412 orwas adjudged liable as described in section 501.412, subsection 4, but if the director was adjudged so liable the director’s indemnification is limited to reasonable expenses in- curred. 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 501.419, subsection 1. c. 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 one of the following: (1) To indemnify the director. (2) To advance expenses to the director, even if the director has not met the relevant stan-

dard of conduct set forth in section 501.412, subsection 1, failed to comply with section 501.414, or was adjudged liable in a proceeding referred to in subsection 501.412, subsection 4, paragraph “a” or “b”, but if the directorwas adjudged so liable the director’s indemnification shall be limited to reasonable 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”, the court shall also order the cooperative to pay the director’s reasonable expenses in- curred 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”, the court may also order the cooperative to pay the direc- tor’s reasonable expenses to obtain court-ordered indemnification or advance for expenses.

Sec. 21. Section 501.416, Code 2003, is amended to read as follows: 501.416 DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION. 1. A cooperative shall not indemnify a director under section 501.412 unless authorized in

the for a specific case proceeding after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the relevant standard of conduct set forth in section 501.412. 2. The determination shall be made by any one of the following: a. By the board of directors by majority vote of a quorum consisting of directors not at the

122LAWS OF THE EIGHTIETH G.A., 2003 SESSIONCH. 66

time parties to the proceeding If there are two or more disinterested directors, by the board of 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 a vote. b. If a quorumcannot beobtainedunderparagraph “a”, bymajority vote of a committeeduly

designated by the board of directors, in which designation directors who are parties may par- ticipate, consisting solely of two or more directors not at the time parties to the proceeding. c. b. By special legal counsel. (1) The special legal counsel shall be selected by the board of directors or its committee in

the manner prescribed described in paragraph “a” or “b”. (2) If a quorum of the board of there are fewer than two disinterested directors cannot be

obtained under paragraph “a” and a committee cannot be designated under paragraph “b”, the special legal counsel shall be selected by majority vote of the full board of directors, in which selection directors who are parties do not qualify as disinterested directors may participate. d. c. By themembers, but voting interests owned by or voted under the control of directors

adirectorwhoare at the timeparties to theproceedingdoesnotqualify asadisinteresteddirec- tor shall not be voted on the determination. 3. Authorization of indemnification and evaluation as to reasonableness of expenses shall

be made in the samemanner as the determination that indemnification is permissible, except that if there are fewer than two disinterested directors or if the determination is made by spe- cial legal counsel, authorization of indemnification and evaluation as to reasonableness of ex- penses shall be made by those entitled under subsection 2, paragraph “c” “b”, to select special legal counsel.

Sec. 22. Section 501.417, Code 2003, is amended to read as follows: 501.417 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. Unless a cooperative’s articles of association provide otherwise, all of the following apply: 1. An officer of the cooperative who is not a director is entitled to mandatory indemnifica-

tion under section 501.413, and is entitled to apply for court-ordered indemnification under section 501.415, in each case to the same extent as a director. 2. 1. The A cooperative may indemnify and advance expenses under this part to an officer,

employee, or agent of the cooperativewho is not a director to aparty to the proceedingbecause the person is an officer, according to both of the following: a. To the same extent as to a director. 3. b. A cooperative may also indemnify and advance expenses to an officer, employee, or

agent who is not a director to the extent consistent with law that If the person is an officer but not a director, to such further extent as may be provided by its the articles of association, the bylaws, general or specific action a resolution of its the board of directors, or contract, except for either of the following: (1) Liability in connection with a proceeding by or in the right of the cooperative other than

for reasonable 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 cooperative or the interest holders. (c) An intentional violation of criminal law. 2. The provisions of subsection 1, paragraph “b”, shall apply to an officerwho is also a direc-

tor if the basis on which the officer is made a party to a proceeding is an act or omission solely as an officer. 3. An officer of a cooperative who is not a director is entitled to mandatory indemnification

under section 501.413, and may apply to a court under section 501.415 for indemnification or an advance for expenses, in each case to the same extent to which a director may be entitled to indemnification or an advance for expenses under those provisions.

123 LAWS OF THE EIGHTIETH G.A., 2003 SESSION CH. 66

Sec. 23. Section 501.418, Code 2003, is amended to read as follows: 501.418 INSURANCE. A cooperativemaypurchase andmaintain insuranceonbehalf of an individualwho is orwas

a director, or officer, employee, or agent of the cooperative, orwho,while a director, or officer, employee, or agent of the cooperative, is orwas serving serves at the request of the cooperative cooperative’s request as a director, officer, partner, trustee, employee, or agent of another for- eign or domestic or foreign cooperative, corporation, partnership, joint venture, trust, employ- ee benefit plan, or other enterprise entity, against liability asserted against or incurred by that individual in that capacity or arising from the individual’s status as a director, or officer, em- ployee, or agent, whether or not the cooperative would have power to indemnify or advance expenses to that individual against the same liability under section 501.412 or 501.413 this part.

Sec. 24. Section 501.419, Code 2003, is amended to read as follows: 501.419 VARIATION BY CORPORATE ACTION — APPLICATION OF THIS PART. Except as limited in section 501.412, subsection 4, paragraph “a”, and subsection 5 with re-

spect to proceedings by or in the right of the cooperative, the indemnification and advance-

ment of expenses provided by, or granted pursuant to, sections 501.411 through 501.418 are

not exclusive of any other rights to which persons seeking indemnification or advancement

of expenses are entitled under a provision in the articles of association or bylaws, agreements,

vote of the members or disinterested directors, or otherwise, both as to action in a person’s

official capacity and as to action in another capacity while holding the office. However, such

provisions, agreements, votes, or other actions shall not provide indemnification for a breach

of a director’s duty of loyalty to the cooperative or its interest holders, for acts or omissions

not in good faith or which involve intentional misconduct or knowing violation of the law, or

for a transaction fromwhich theperson seeking indemnification derives an improper personal

benefit.

1. A cooperative may, by a provision in its articles of organization or bylaws or in a resolu-

tion adopted or a contract approved by its board of directors ormembers, obligate itself in ad-

vance of the act or omission giving rise to a proceeding to provide indemnification in accor-

dance with section 501.412 or advance funds to pay for or reimburse expenses in accordance

with section 501.414. Any such obligatory provision shall be deemed to satisfy the require-

ments for authorization referred to in section 501.414, subsection 3, and in section 501.416,

subsection 3. Any such provision that obligates the cooperative to provide indemnification to

the fullest extent permitted by law shall be deemed to obligate the cooperative to advance

funds to pay for or reimburse expenses in accordancewith section 501.414 to the fullest extent

permitted by law, unless the provision specifically provides otherwise.

2. Any provision pursuant to subsection 1 shall not obligate the cooperative to indemnify

or advance expenses to a director of a predecessor of the cooperative, pertaining to conduct

with respect to the predecessor, unless otherwise specifically provided. Any provision for in-

demnification or advance for expenses in the articles of organization, bylaws, or a resolution

of the board of directors or members of a predecessor of the cooperative 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 501.618, subsection 3.

3. A cooperative may, by a provision in its articles of organization, limit any of the rights to

indemnification or advance for expenses created by or pursuant to this part.

4. This part does not limit a cooperative’s power to pay or reimburse expenses incurred by

a director or an officer in connection with the director’s or officer’s appearance as a witness

in a proceeding at a time when the director or officer is not a party.

5. This part does not limit a cooperative’s power to indemnify, advance expenses to, or pro-

vide or maintain insurance on behalf of an employee or agent.

124LAWS OF THE EIGHTIETH G.A., 2003 SESSIONCH. 66

Sec. 25. NEW SECTION. 501.420 EXCLUSIVITY. A cooperative may provide indemnification or advance expenses to a director or an officer

only as permitted by this chapter.

Approved April 25, 2003

_________________________

CH. 67CH. 67

CHAPTER 67

CERTIFIED LAW ENFORCEMENT OFFICER TRAINING — APPLICANTS

S.F. 352

AN ACT relating to the training of an individual who intends to become certified as a law en- forcement officer.

Be It Enacted by the General Assembly of the State of Iowa:

Section 1. NEW SECTION. 80B.11D TRAINING. 1. An individual who is not a certified law enforcement officer may apply for attendance at

a short course of study at an approved law enforcement training program if such individual is sponsored by a law enforcement agency. Such individual may be sponsored by a law en- forcement agency that either intends to hire or has hired the individual as a law enforcement officer. 2. An individual who submits an application pursuant to subsection 1 shall, at a minimum,

meet all minimum hiring standards as established by academy rules, including the successful completion of certain psychological and physical testing examinations. In addition, such indi- vidual shall be of goodmoral character as determinedby a thoroughbackground investigation by the hiring law enforcement agency. The academy shall conduct the requisite testing and background investigation for a fee if the law enforcement agency does not do so, and for such purposes, the academy shall be defined as a law enforcement agency and shall have the au- thority to conduct a background investigation includinga fingerprint searchof local, state, and national fingerprint files. 3. An individual who submits an application pursuant to subsection 1 shall, at a minimum,

submit proof of successful completion of a two-year or four-year police science or criminal jus- tice program at an accredited educational institution in this state approved by the academy. 4. An individual shall not be granted permission to attend an approved law enforcement

training program pursuant to subsection 1 if such acceptance would result in the nonaccept- ance of another qualifying applicant who is a law enforcement officer. 5. This section applies only to individuals who apply for certification through a short course

of study as established by rule. 6. An individual who has not been hired by a law enforcement agency must be hired by a

law enforcement agency within eighteen months of completing the short course of study in order to obtain certification pursuant to this section.

Approved April 25, 2003