Arizona Laws 10-3862. Directors’ action; definition
A. Directors’ action respecting a transaction is effective for purposes of section 10-3861, subsection B, paragraph 1 if the transaction received the affirmative vote of a majority, but at least two, of those qualified directors on the board of directors or on a duly empowered committee of the board who voted on the transaction after either required disclosure to them, to the extent the information was not known by them, or compliance with subsection B of this section. Action by a committee is effective under this section only if both:
Terms Used In Arizona Laws 10-3862
- Action: includes any matter or proceeding in a court, civil or criminal. See Arizona Laws 1-215
- Board of directors: means the group of persons vested with the management of the affairs of the corporation irrespective of the name by which the group is designated and includes the governing body or bodies of a water users' association if the articles of incorporation of the water users' association provide for a governing body or bodies denominated other than as a board of directors. See Arizona Laws 10-140
- Person: includes an individual and entity. See Arizona Laws 10-140
- Quorum: The number of legislators that must be present to do business.
- Required disclosure: means disclosure by the director who has a conflicting interest of both:
(a) The existence and nature of the conflicting interest. See Arizona Laws 10-3860
- Vote: includes authorization by written ballot and written consent. See Arizona Laws 10-3140
1. All of its members are qualified directors.
2. Members are either all of the qualified directors on the board or are appointed by the affirmative vote of a majority of the qualified directors or the board.
B. If a director has a conflicting interest regarding a transaction but neither the director nor a related person of the director specified in section 10-3860, paragraph 3, subdivision (a) is a party to the transaction and if the director has a duty under law or professional canon or a duty of confidentiality to another person, respecting information relating to the transaction such that the director may not make the disclosure described in section 10-3860, paragraph 4, subdivision (b), disclosure is sufficient for purposes of subsection A of this section if the director both:
1. Discloses to the directors voting on the transaction the existence and nature of the conflicting interest and informs them of the character and limitations imposed by that duty before their vote on the transaction.
2. Plays no part, directly or indirectly, in their deliberations or vote.
C. A majority, but at least two, of all of the qualified directors on the board of directors or on the committee is a quorum for purposes of action that complies with this section. Directors’ action that otherwise complies with this section is not affected by the presence or vote of a director who is not a qualified director.
D. For purposes of this section, "qualified director" means, with respect to a director’s conflicting transaction, any director who does not have either:
1. A conflicting interest respecting the transaction.
2. A familial, financial, professional or employment relationship with a second director who does have a conflicting interest respecting the transaction, which relationship would, in the circumstances, reasonably be expected to exert an influence on the first director’s judgment when voting on the transaction.