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273.219 Conflict-of-interest transaction.
(1)
(2)
(3)
(4)
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 shall not be the subject of equitable relief on the ground of the director's
interest in the transaction if:
(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 duly
constituted under KRS 273.221, and the board of directors or the committee
authorized, approved, or ratified the transaction; or
(b) The transaction was fair to the corporation.
For purposes of this section, a director of the corporation has an indirect interest in a
transaction if:
(a) Another entity in which he or she has a material financial interest is a party to
the transaction; or
(b) Another entity of which he or she is a director, officer, general partner,
manager, trustee, or person in a similar position is a party to the transaction,
and the transaction is or should be considered by the board of directors of the
corporation.
For purposes of subsections (1)(a) and (2)(b) of this section, director authorization,
approval, or ratification is effective if done by a majority vote of the directors who
do not have a direct or indirect interest in the transaction within the meaning of this
section, even if the majority is less than a quorum, but a transaction may not be
authorized, approved, or ratified by a single director. Director authorization may be
delegated to a committee under KRS 273.221, provided that no director appointed
to the committee has a direct or indirect interest within the meaning of this section.
Director action under this section shall be done by a higher number than a majority,
if the articles of incorporation or bylaws so provide.
For purposes of subsection (1) of this section, a director who has a direct or indirect
interest in a transaction with the corporation shall bear the burden of proving that
the transaction was fair to the corporation.
Effective: July 14, 2018
History: Repealed and reenacted 2018 Ky. Acts ch. 193, sec. 5, effective July 14, 2018.
-- Created 1988 Ky. Acts ch. 224, sec. 13, effective July 15, 1988.
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