2007 Minnesota Code
Chapters 300 - 319B Corporations
Chapter 308B Cooperative Associations Act
Section 308B.461 DIRECTOR CONFLICTS OF INTEREST.

308B.461 DIRECTOR CONFLICTS OF INTEREST.
Subdivision 1. Conflict and procedure when conflict arises. (a) A contract or other
transaction between a cooperative and one or more of its directors, or between a cooperative and a
business entity in or of which one or more of its directors are governors, directors, managers,
officers, or legal representatives or have a material financial interest, is not void or voidable
because the director or directors or the other business entities are parties or because the director
or directors are present at the meeting of the members or the board or a committee at which the
contract or transaction is authorized, approved, or ratified, if:
(1) the contract or transaction was, and the person asserting the validity of the contract
or transaction sustains the burden of establishing that the contract or transaction was, fair and
reasonable as to the cooperative at the time it was authorized, approved, or ratified and:
(i) the material facts as to the contract or transaction and as to the director's or directors'
interest are disclosed or known to the members; and
(ii) the material facts as to the contract or transaction and as to the director's or directors'
interest are fully disclosed or known to the board or a committee, and the board or committee
authorizes, approves, or ratifies the contract or transaction in good faith by a majority of the
board or committee, but the interested director or directors are not counted in determining the
presence of a quorum and must not vote; or
(2) the contract or transaction is a distribution, contract, or transaction that is made available
to all members or patron members as part of the cooperative's business.
(b) If a committee is elected or appointed to authorize, ratify, or approve a contract or
transaction under this section, the members of the committee must not have a conflict of interest
and be charged with representing the best interests of the cooperative.
Subd. 2. Material financial interest. For purposes of this section:
(1) a resolution fixing the compensation of a director or fixing the compensation of another
director as a director, officer, employee, or agent of the cooperative, is not void or voidable or
considered to be a contract or other transaction between a cooperative and one or more of its
directors for purposes of this section even though the director receiving the compensation fixed
by the resolution is present and voting at the meeting of the board or a committee at which the
resolution is authorized, approved, or ratified or even though other directors voting upon the
resolution are also receiving compensation from the cooperative; and
(2) a director has a material financial interest in each organization in which the director or the
spouse; parents; children and spouses of children; brothers and sisters and spouses of brothers and
sisters; and the brothers and sisters of the spouse of the director or any combination of them have
a material financial interest. For purposes of this section, a contract or other transaction between a
cooperative and the spouse; parents; children and spouses of children; brothers and sisters and
spouses of brothers and sisters; and the brothers and sisters of the spouse of a director or any
combination of them, is considered to be a transaction between the cooperative and the director.
History: 2003 c 105 art 1 s 34