§ 23-1-35-2 — Conflict of interest transaction

(a) A conflict of interest transaction is a
transaction with the corporation in which a director of the corporation
has a direct or indirect interest. A conflict of interest transaction is not
voidable by the corporation solely because of the director's interest in
the transaction if any one (1) of the following is true:
(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 of directors and the board of directors or committee
authorized, approved, or ratified the transaction.
(2) The material facts of the transaction and the director's interest
were disclosed or known to the shareholders entitled to vote and
they authorized, approved, or ratified the transaction.
(3) The transaction was fair to the corporation.
(b) For purposes of this section, a director of the corporation has an
indirect interest in a transaction if:
(1) another entity in which the director has a material financial
interest or in which the director is a general partner is a party to
the transaction; or
(2) another entity of which the director is a director, officer, or
trustee is a party to the transaction and the transaction is, or is
required to be, considered by the board of directors of the
corporation.
(c) For purposes of subsection (a)(1), 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 of directors
(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 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 direct or indirect interest in the
transaction does not affect the validity of any action taken under
subsection (a)(1) if the transaction is otherwise authorized, approved,
or ratified as provided in that subsection.
(d) For purposes of subsection (a)(2), shares owned by or voted
under the control of a director who has a direct or indirect interest in
the transaction, and shares owned by or voted under the control of an
entity described in subsection (b), may be counted in a vote of
shareholders to determine whether to authorize, approve, or ratify a
conflict of interest transaction.

Legislative History

As added by P.L.149-1986, SEC.19. Amended by P.L.107-1987, SEC.12.