§ 7-6-26.1 — § 7-6-26.1. Director conflicts of interest.

§ 7-6-26.1. Director conflicts of interest.

(a) No contract or transaction between a corporation and one or more of its directors or officers, or between a corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, is void or voidable nor are the directors or officers liable regarding the contract or transaction solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee of the board that authorizes the contract or transaction, or solely because his, her, or their votes are counted for the purpose, if:

(1) The material facts as to his, her, or their interest or relationship are disclosed or are known to the board of directors or the committee, and the board of directors or committee authorizes, approves, or ratifies the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or

(2) The material facts as to his, her, or their interest or relationship are disclosed or are known to the members entitled to vote on the contract or transaction, and the contract or transaction is specifically authorized, approved, or ratified by vote of the members; or

(3) The contract or transaction is fair and reasonable to the corporation.

(b) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee that authorizes the contract or transaction.

Legislative History

P.L. 1989, ch. 380, § 2.