(1) As used in this section, "conflicting interest transaction" means: A contract, transaction, or other financial relationship between a nonprofit corporation and a director of the nonprofit corporation, or between the nonprofit corporation and a party related to a director, or between the nonprofit corporation and an entity in which a director of the nonprofit corporation is a director or officer or has a financial interest.
No loans shall be made by a corporation to its directors or officers. Any director orofficer who assents to or participates in the making of any such loan shall be liable to the corporation for the amount of such loan until the repayment thereof.
No conflicting interest transaction shall be void or voidable or be enjoined, set aside,or give rise to an award of damages or other sanctions in a proceeding by a member or by or in the right of the nonprofit corporation, solely because the conflicting interest transaction involves a director of the nonprofit corporation or a party related to a director or an entity in which a director of the nonprofit corporation is a director or officer or has a financial interest or solely because the director is present at or participates in the meeting of the nonprofit corporation's board of directors or of the committee of the board of directors that authorizes, approves, or ratifies the conflicting interest transaction or solely because the director's vote is counted for such 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 members entitled to vote thereon, and the conflicting interest transaction is specifically authorized, approved, or ratified in good faith by a vote of the members entitled to vote thereon; or
The conflicting interest transaction is fair as to the nonprofit corporation.
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 which authorizes, approves, or ratifies the conflicting interest transaction.
For purposes of this section, a "party related to a director" shall mean a spouse, adescendent, an ancestor, a sibling, the spouse or descendent of a sibling, an estate or trust in which the director or a party related to a director has a beneficial interest, or an entity in which a party related to a director is a director, officer, or has a financial interest.
Source: L. 97: Entire article added, p. 700, § 3, effective July 1, 1998. L. 98: (3)(b) amended, p. 624, § 31, effective July 1.