2005 Minnesota Statutes - 317A.255 — Director conflicts of interest.

     317A.255 Director conflicts of interest. 


    Subdivision 1.    Conflict; procedure when conflict 
 arises.  (a) A contract or other transaction between a 
 corporation and:  (1) its director or a member of the family of 
 its director; (2) a director of a related organization, or a 
 member of the family of a director of a related organization; or 
 (3) an organization in or of which the corporation's director, 
 or a member of the family of its director, is a director, 
 officer, or legal representative or has a material financial 
 interest; is not void or voidable because the director or the 
 other individual or organization are parties or because the 
 director is 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 a requirement of paragraph 
 (b) is satisfied. 


    (b) A contract or transaction described in paragraph (a) is 
 not void or voidable if:  


    (1) the contract or transaction was, and the person 
 asserting the validity of the contract or transaction has the 
 burden of establishing that the contract or transaction was, 
 fair and reasonable as to the corporation when it was 
 authorized, approved, or ratified; 


    (2) the material facts as to the contract or transaction 
 and as to the director's interest are fully disclosed or known 
 to the members and the contract or transaction is approved in 
 good faith by two-thirds of the members entitled to vote, not 
 counting any vote that the interested director might otherwise 
 have, or the unanimous affirmative vote of all members, whether 
 or not entitled to vote; 


    (3) the material facts as to the contract or transaction 
 and as to the director's 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, not counting 
 any vote that the interested director might otherwise have, and 
 not counting the director in determining the presence of a 
 quorum; or 


    (4) the contract or transaction is a merger or 
 consolidation described in section 317A.601.  


    Subd. 2.    Material financial interest.  For purposes 
 of this section:  


    (1) a director does not have a material financial interest 
 in a resolution fixing the compensation of the director or 
 fixing the compensation of another director as a director, 
 officer, employee, or agent of the corporation, even though the 
 first director is also receiving compensation from the 
 corporation; and 


    (2) a director has a material financial interest in an 
 organization in which the director, or a member of the family of 
 the director, has a material financial interest. 


    Subd. 3.    Exception.  The procedures described under 
 subdivision 1, clauses (1) to (3), are not required if the 
 contract or other transaction is between related organizations.  


    Subd. 4.    Member of the family.  For purposes of this 
 section, a member of the family of a director is a spouse, 
 parent, child, spouse of a child, brother, sister, or spouse of 
 a brother or sister. 


    HIST: 1989 c 304 s 45; 1992 c 503 s 6-8