271B.8-310 Director conflict of interest.
(1) A conflict of interest transaction shall be a transaction with the corporation in which
a director of the corporation has a direct or indirect interest. A conflict of interest <br>transaction shall not be voidable by the corporation solely because of the director's <br>interest in the transaction if any one (1) of the following is true: <br>(a) 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 <br>and the board of directors or committee authorized, approved, or ratified the <br>transaction;
(b) 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, <br>or ratified the transaction; or
(c) The transaction was fair to the corporation.
(2) For purposes of this section, a director of the corporation shall have an indirect
interest in a transaction if: <br>(a) Another entity in which he has a material financial interest or in which he is a
general partner is a party to the transaction; or
(b) Another entity of which he is a director, officer, or trustee is a party to the
transaction and the transaction is or should be considered by the board of <br>directors of the corporation.
(3) For purposes of subsection (1)(a) of this section, a conflict of interest transaction
shall be considered authorized, approved, or ratified if it receives the affirmative <br>vote of a majority of the directors on the board of directors (or on the committee) <br>who have no direct or indirect interest in the transaction, but a transaction shall not <br>be authorized, approved, or ratified under this section by a single director. If a <br>majority of the directors who have no direct or indirect interest in the transaction <br>vote to authorize, approve, or ratify the transaction, a quorum shall be present for <br>the purpose of taking action under this section. The presence of, or a vote cast by, a <br>director with a direct or indirect interest in the transaction shall not affect the <br>validity of any action taken under subsection (1)(a) of this section if the transaction <br>is otherwise authorized, approved, or ratified as provided in that subsection.
(4) For purposes of subsection (1)(b) of this section, a conflict of interest transaction
shall be considered authorized, approved, or ratified if it receives the vote of a <br>majority of the shares entitled to be counted under this subsection. Shares owned by <br>or voted under the control of a director who has a direct or indirect interest in the <br>transaction, and shares owned by or voted under the control of an entity described in <br>subsection (2)(a) of this section, may not be counted in a vote of shareholders to <br>determine whether to authorize, approve, or ratify a conflict of interest transaction <br>under subsection (1)(b) of this section. The vote of those shares, however, shall be <br>counted in determining whether the transaction is approved under other sections of <br>this chapter. A majority of the shares that are entitled to be counted in a vote on the <br>transaction under this subsection shall constitute a quorum for the purpose of taking <br>action under this section.
Effective: July 15, 1988 <br>History: Created 1988 Ky. Acts ch. 23, sec. 86, effective January 1, 1989; and ch. 224,
sec. 9, effective July 15, 1988.
Formerly codified as KRS 271A.206.
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