§414D-150  Director conflict of interest. (a)  A conflict of interest transaction is a transaction with the corporationin which a director of the corporation has a direct or indirect interest.  Aconflict of interest transaction is not voidable or the basis for imposingliability on the director if the transaction was fair at the time it wasentered into or is approved as provided in subsection (b).

(b)  A transaction in which a director has aconflict of interest may be approved if:

(1)  In the case of a public benefit corporation, thetransaction is approved by the attorney general, before or after thetransaction is consummated;

(2)  The material facts of the transaction and thedirector's interest were disclosed or known to the board of directors or acommittee of the board and the transaction was authorized, approved, orratified by the board or committee of the board; or

(3)  The material facts of the transaction and thedirector's interest were disclosed or known to the members and they authorized,approved, or ratified the transaction.

(c)  For purposes of this section, a directorof the corporation has an indirect interest in a transaction if:

(1)  Another entity in which the director has amaterial interest or in which the director is a general partner is a party tothe transaction; or

(2)  Another entity of which the director is adirector, officer, or trustee is a party to the transaction.

(d)  For purposes of subsection (b), a conflictof interest transaction is authorized, approved, or ratified if it receives theaffirmative vote of a majority of the directors either on the board or on thecommittee, who have no direct or indirect interest in the transaction; providedthat a transaction may not be authorized, approved, or ratified under this sectionby a single director.  If a majority of the directors on the board who have nodirect or indirect interest in the transaction vote to authorize, approve, orratify the transaction, a quorum is present for the purpose of taking actionunder this section.  The presence of or a vote cast by a director with a director indirect interest in the transaction does not affect the validity of anyaction taken under subsection [(b)(2)]; provided the transaction is otherwiseapproved as provided in subsection (b).

(e)  For purposes of subsection [(b)(3)], aconflict of interest transaction is authorized, approved, or ratified by themembers if it receives a majority of the votes entitled to be counted underthis subsection.  Votes cast by or voted under the control of a director whohas a direct or indirect interest in the transaction, and votes cast by orvoted under the control of an entity described in subsection (c)(1), may not becounted in a vote of members to determine whether to authorize, approve, or ratifya conflict of interest transaction under subsection [(b)(3)].  The vote ofthese members, however, is counted in determining whether the transaction isapproved under other sections of this chapter.  A majority of the voting power,whether or not present, that are entitled to be counted in a vote on thetransaction under this subsection constitutes a quorum for the purpose oftaking action under this section.

(f)  The articles, the bylaws, or a resolutionof the board may impose additional requirements on conflict of interesttransactions. [L 2001, c 105, pt of §1; am L 2004, c 171, §8]