§ 17-19-831 — Director conflict of interest

(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 if the transaction was fair at the
time it was entered into or is approved as provided in
subsection (b) or (c) of this section.
(b) A transaction in which a director of a public benefit
or religious corporation has a conflict of interest may be
approved:
(i) 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 fair to
the corporation; or
(ii) Before or after it is consummated by obtaining
approval of the:
(A) Attorney general; or
(B) District court in an action in which the
attorney general is joined as a party.
(c) A transaction in which a director of a mutual benefit
corporation has a conflict of interest may be approved if:
(i) 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
(ii) 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.
(d) For purposes of this section, a director of the
corporation has an indirect interest in a transaction if:
(i) Another entity in which the director has a
material interest or in which the director is a general partner
is a party to the transaction; or
(ii) Another entity of which the director is a
director, officer or trustee is a party to the transaction.
(e) For purposes of subsections (b) and (c) 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 shall 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 direct or indirect interest in the transaction
does not affect the validity of any action taken under paragraph
(b)(i) or (c)(i) of this section if the transaction is otherwise
approved as provided in subsection (b) or (c) of this section.
(f) For purposes of paragraph (c)(ii) 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 or
voted under the control of a director who has a direct or
indirect interest in the transaction, and votes cast by or voted
under the control of an entity described in paragraph (d)(i) of
this section, shall not be counted in a vote of members to
determine whether to authorize, approve or ratify a conflict of
interest transaction under paragraph (c)(ii) of this section.
The vote of these members, however, is counted in determining
whether the transaction is approved under other sections of this
act. A majority of the voting power, whether or not present,
that are 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.
(g) The articles, bylaws or a resolution of the board may
impose additional requirements on conflict of interest
transactions.