(1) (a) As used in this section, "conflicting interest transaction" means, with respect to a director of the corporation, any of the following:
A loan or other assistance by a corporation to a director of the corporation or to anentity in which the director is a director or officer or has a financial interest that is known to, and material to, the director;
A guaranty by a corporation of an obligation of the director or of an obligation of anentity in which the director is a director or officer or has a financial interest that is known to, and material to, the director;
A contract or transaction between the corporation and the director or between thecorporation and an entity in which the director is a director or officer or has a financial interest that is known to, and material to, the director; or
The director's taking a corporate opportunity, except to the extent permitted pursuant to a provision of the articles of incorporation adopted under section 7-102-102 (2)(e).
(b) "Conflicting interest transaction" does not include any transaction between:
A corporation and another entity if the other entity owns, directly or indirectly, all ofthe outstanding shares of the corporation; or
The corporation and another entity if the corporation owns, directly or indirectly, allof the outstanding shares or other equity interests of the other entity.
(2) A conflicting interest transaction is not void or voidable, shall not be enjoined or set aside, and does not give rise to an award of damages or other sanctions in a proceeding by a shareholder or by or in the right of the corporation, solely because it is a conflicting interest transaction or because the director is present at or participates in the meeting of the corporation's board of directors or of the committee of the board of directors that authorizes, approves, or ratifies the conflicting interest transaction or because the director's vote is counted for that purpose if:
The material facts as to the director's relationship or interest and as to the conflictinginterest transaction are disclosed or are known to the board of directors or the committee, and the board of directors or committee in good faith authorizes, approves, or ratifies the conflicting interest transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or
The material facts as to the director's relationship or interest and as to the conflictinginterest transaction are disclosed or are known to the shareholders entitled to vote on the conflicting interest transaction, and:
The conflicting interest transaction is specifically authorized, approved, or ratified bya vote of the disinterested shareholders in which the votes cast in favor of authorizing, approving, or ratifying the conflicting interest transaction exceed the votes cast in opposition; or
If the articles of incorporation provide for voting on the matter by the disinterestedshareholders in two or more voting groups, the conflicting interest transaction is specifically authorized, approved, or ratified by a vote of each voting group in which the votes cast within the voting group in favor of authorizing, approving, or ratifying the conflicting interest
transaction exceed the votes cast within the voting group in opposition; or
(c) The conflicting interest transaction is fair as to the corporation.
(3) A director's taking advantage, directly or indirectly, of a corporate opportunity shall not be enjoined or set aside and does not give rise to an award of damages or other sanctions in a proceeding by a shareholder or by or in the right of the corporation, because the director took such advantage, if:
The material facts as to the director's relationship or interest and as to the corporateopportunity are disclosed to or are known to the board of directors or the committee, and the board of directors or committee authorizes, approves, or ratifies the taking of the corporate opportunity by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or
The material facts as to the director's relationship or interest and as to the corporateopportunity are disclosed to or are known to the shareholders entitled to vote on the corporate opportunity, and either:
The taking of the corporate opportunity is specifically authorized, approved, or ratified by a vote of the disinterested shareholders in which the votes cast in favor of authorizing, approving, or ratifying the taking of the corporate opportunity exceed the votes cast in opposition; or
If the articles of incorporation provide for voting on the matter by the disinterestedshareholders in two or more voting groups, the taking of the corporate opportunity is specifically authorized, approved, or ratified by a vote of each such voting group in which the votes cast within the voting group in favor of authorizing, approving, or ratifying the taking of the corporate opportunity exceed the votes cast within the voting group in opposition.
Common or interested directors may be counted in determining the presence of aquorum at a meeting of the board of directors or of a committee that authorizes, approves, or ratifies a conflicting interest transaction or the taking of a corporate opportunity.
Unless otherwise provided in the articles of incorporation, a majority of the votes ofdisinterested shareholders entitled to be cast on the matter of authorizing, approving, or ratifying a conflicting interest transaction pursuant to subsection (2)(b) of this section or a taking of a corporate opportunity pursuant to subsection (3)(b) of this section constitutes a quorum of that voting group for action on that matter, but a quorum must not consist of fewer than one-third of the votes of disinterested shareholders entitled to be cast on the matter by the voting group.
Source: L. 93: Entire article added, p. 788, § 1, effective July 1, 1994. L. 96: (1) and (2)(c) amended, p. 1319, § 24, effective June 1. L. 2003: (4) amended, p. 2527, § 1, effective August 6. L. 2004: (4)(a) amended, p. 1500, § 263, effective July 1. L. 2019: Entire section amended, (SB 19-086), ch. 166, p. 1933, § 36, effective July 1, 2020. L. 2020: (1)(a)(IV) amended, (HB 20-1402), ch. 216, p. 1041, § 8, effective June 30.