All Indiana corporations are created for the general purpose of engaging in any lawful business unless the corporation specifies a more limited purpose in its articles of incorporation. In making decisions on behalf of the corporation, managers are given wide discretion in their choices. This is referred to as the business judgment rule. Indiana has adopted a strong pro-management version of this rule, which means that a manager will not be held liable for actions taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes. As stated by the Supreme Court of Indiana, this rule “includes a presumption that in making a business decision, the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.” G&N Aircraft, Inc. v. Boehm, 743 N.E.2d 227, 238 (Ind. 2001).

However, all decisions are not protected. Managers of a corporation owe certain fiduciary roles to the corporation and its shareholders, such as the general duties of loyalty and care. In other words, a manager shall not engage in activities that can be seen as self-dealing, corporate waste, or use of the corporate office to achieve personal objectives. Should a manager breach these duties and cause damage to the corporation and/or individual shareholders, the shareholders generally have two bases to challenge the manager’s actions: direct and derivative lawsuits.

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