(a) 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 is not voidable or the basis for imposing liability on the director if the transaction was fair at the time it was entered into or is approved as provided in subsection (b).
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Terms Used In Hawaii Revised Statutes 414D-150

  • articles: includes amended and restated articles of incorporation, and articles of merger. See Hawaii Revised Statutes 414D-14
  • board of directors: means the board of directors of a corporation except that no person or group of persons are the board of directors because of powers delegated to that person or group pursuant to § 414D-131. See Hawaii Revised Statutes 414D-14
  • Bylaws: means the code or codes of rules (other than the articles) adopted pursuant to this chapter for the regulation or management of the affairs of the corporation irrespective of the name or names by which the rules are designated. See Hawaii Revised Statutes 414D-14
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Corporation: means a nonprofit corporation unless otherwise specified. See Hawaii Revised Statutes 414D-14
  • Directors: means individuals, designated in the articles or bylaws or elected by the incorporators, and their successors and individuals elected or appointed by any other name or title, to act as members of the board. See Hawaii Revised Statutes 414D-14
  • Entity: includes domestic and foreign corporations, domestic professional corporations, domestic and foreign limited liability companies, domestic and foreign nonprofit corporations, domestic and foreign business trusts, estates, domestic and foreign partnerships, domestic and foreign limited partnerships, domestic and foreign limited liability partnerships, trusts, two or more persons having a joint or common economic interest, associations and cooperative associations, and state, federal, and foreign governments. See Hawaii Revised Statutes 414D-14
  • Public benefit corporation: means any corporation designated by statute as a public benefit corporation, or any corporation that is recognized as exempt under section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or that is organized for public or charitable purposes and upon dissolution must distribute its assets to a public benefit corporation, the United States, a state, or a person recognized as exempt under section 501(c)(3) of the Internal Revenue Code of 1986, as amended. See Hawaii Revised Statutes 414D-14
  • Quorum: The number of legislators that must be present to do business.
  • Trustee: A person or institution holding and administering property in trust.
  • Vote: includes authorization by ballot and written consent. See Hawaii Revised Statutes 414D-14
  • Voting power: means the total number of votes entitled to be cast for the election of directors at the time the determination of voting power is made, excluding a vote which is contingent upon the happening of a condition or event that has not occurred at the time. See Hawaii Revised Statutes 414D-14
(b) A transaction in which a director has a conflict of interest may be approved if:

(1) In the case of a public benefit corporation, the transaction is approved by the attorney general, before or after the transaction is consummated;
(2) 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 and the transaction was authorized, approved, or ratified by the board or committee of the board; or
(3) The material facts of the transaction and the director’s interest were disclosed or known to the members and they authorized, approved, or ratified the transaction.
(c) For purposes of this section, a director of the corporation has an indirect interest in a transaction if:

(1) Another entity in which the director has a material interest or in which the director is a general partner is a party to the transaction; or
(2) Another entity of which the director is a director, officer, or trustee is a party to the transaction.
(d) For purposes of subsection (b), a conflict of interest transaction is authorized, approved, or ratified if it receives the affirmative vote of a majority of the directors either on the board or on the committee, who have no direct or indirect interest in the transaction; provided that a transaction may not be authorized, approved, or ratified under this section by a single director. If a majority of the directors on the board who have no direct or indirect interest in the transaction vote to authorize, approve, or ratify the transaction, a quorum is present for the purpose of taking action under this section. The presence of or a vote cast by a director with a direct or indirect interest in the transaction does not affect the validity of any action taken under subsection [(b)(2)]; provided the transaction is otherwise approved as provided in subsection (b).
(e) For purposes of subsection [(b)(3)], a conflict of interest transaction is authorized, approved, or ratified by the members if it receives a majority of the votes entitled to be counted under this subsection. Votes cast by or voted under the control of a director who has a direct or indirect interest in the transaction, and votes cast by or voted under the control of an entity described in subsection (c)(1), may not be counted in a vote of members to determine whether to authorize, approve, or ratify a conflict of interest transaction under subsection [(b)(3)]. The vote of these members, however, is counted in determining whether the transaction is approved under other sections of this chapter. A majority of the voting power, whether or not present, that are entitled to be counted in a vote on the transaction under this subsection constitutes a quorum for the purpose of taking action under this section.
(f) The articles, the bylaws, or a resolution of the board may impose additional requirements on conflict of interest transactions.

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