Effective - 01 Jul 1995
355.416. Director's conflict of interest. — 1. A conflict of interest transaction is a transaction with the corporation in which a director of the corporation has a material interest. A conflict of interest transaction is not voidable or the basis for imposing liability on a noncompensated director if the transaction was not unfair to the corporation at the time it was entered into or is approved as provided in subsection 2 or 3 of this section.
2. A transaction in which a noncompensated director of a public benefit or religious corporation has a conflict of interest may be approved:
(1) In advance by the vote of the board of directors or a committee of the board if:
(a) The material facts of the transaction and the director's interest are disclosed or known to the board or committee of the board; and
(b) The directors approving the transaction in good faith reasonably believe that the transaction is not unfair to the corporation; or
(2) Before or after it is consummated by obtaining approval of the:
(a) Attorney general; or
(b) The circuit court in an action in which the attorney general is joined as a party.
3. A transaction in which a director of a mutual benefit corporation has a conflict of interest may be approved if:
(1) The material facts of the transaction and the director's interest were disclosed or known to the board of directors or a committee of the board and the board or committee of the board authorized, approved, or ratified the transaction; or
(2) The material facts of the transaction and the director's interest were disclosed or known to the members and they authorized, approved, or ratified the transaction.
4. For purposes of subsections 2 and 3 of this section, a conflict of interest transaction is authorized, approved, or ratified if it receives the affirmative vote of a majority of the directors on the board or on the committee, who have no direct or indirect interest in the transaction, but a transaction may not be authorized, approved, or ratified under this section by a single director. If a majority of the directors on the board who have no direct or indirect interest in the transaction vote to authorize, approve or ratify the transaction, a quorum is present for the purpose of taking action under this section. The presence of, or a vote cast by, a director with a material interest in the transaction does not affect the validity of any action taken under subdivision (1) of subsection 2 of this section or subdivision (1) of subsection 3 of this section if the transaction is otherwise approved as provided in subsection 2 of this section or subsection 3 of this section.
5. For purposes of subdivision (2) of subsection 3 of this section, a conflict of interest transaction is authorized, approved or ratified by the members if it receives a majority of the votes entitled to be counted under this subsection. Votes cast by a director who has a material interest in the transaction may not be counted in a vote of members to determine whether to authorize, approve or ratify a conflict of interest transaction under subdivision (2) of subsection 3 of this section. The vote of these members, however, is counted in determining whether the transaction is approved under other sections of this chapter. A majority of the voting power, whether or not present, that is entitled to be counted in a vote on the transaction under this subsection constitutes a quorum for the purpose of taking action under this section.
6. The articles, bylaws, or a resolution of the board may impose additional requirements on conflict of interest transactions.
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(L. 1994 H.B. 1095)
Effective 7-01-95