Montana Code 35-2-418. Director conflict of interest
35-2-418. Director conflict of interest. (1) 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 (2) or (3).
Terms Used In Montana Code 35-2-418
- articles: include amended and restated articles of incorporation and articles of merger. See Montana Code 35-2-114
- board of directors: means the board of directors except that a person or group of persons is not the board of directors because of powers delegated to that person or group pursuant to 35-2-414. See Montana Code 35-2-114
- Bylaws: means the code, codes, or rules, other than the articles, adopted pursuant to this chapter for the regulation or management of the affairs of the corporation, regardless of the name or names by which the code, codes, or rules are designated. See Montana Code 35-2-114
- 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 public benefit corporation, mutual benefit corporation, or religious corporation. See Montana Code 35-2-114
- Directors: means individuals:
(a)designated in the articles or bylaws or elected by the incorporators and their successors; and
(b)elected or appointed by any other name or title to act as members of the board. See Montana Code 35-2-114
- Entity: includes :
(a)a corporation and foreign corporation;
(b)a business corporation and foreign business corporation;
(c)a profit and nonprofit unincorporated association;
(d)a corporation sole;
(e)a business trust, an estate, a partnership, a trust, and two or more persons having a joint or common economic interest; and
(f)a state, the United States, and a foreign government. See Montana Code 35-2-114
- Mutual benefit corporation: means a domestic corporation designated as a mutual benefit corporation. See Montana Code 35-2-114
- presence: includes any form of electronic, virtual, or digital presence authorized by a corporation's articles or bylaws. See Montana Code 35-2-114
- Public benefit corporation: means a domestic corporation designated as a public benefit corporation. See Montana Code 35-2-114
- Quorum: The number of legislators that must be present to do business.
- Religious corporation: means a domestic corporation designated as a religious corporation. See Montana Code 35-2-114
- State: when applied to the different parts of the United States, includes the District of Columbia and the territories. See Montana Code 1-1-201
- Trustee: A person or institution holding and administering property in trust.
- voting: includes but is not limited to the giving of consent in the form of a record provided electronically or by written ballot and written consent. See Montana Code 35-2-114
(2)A transaction in which a director of a public benefit corporation or religious corporation has a conflict of interest may be approved:
(a)in advance by the vote of the board of directors or a committee of the board if:
(i)the material facts of the transaction and the director’s interest are disclosed or known to the board or committee of the board; and
(ii)the directors approving the transaction in good faith reasonably believe that the transaction is fair to the corporation; or
(b)before or after it is consummated by obtaining approval of:
(i)the attorney general; or
(ii)a state district court in an action in which the attorney general is joined as a party.
(3)A transaction in which a director of a mutual benefit corporation has a conflict of interest may be approved 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 and the board or committee of the board authorized, approved, or ratified the transaction; or
(b)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.
(4)For purposes of this section, a director of the corporation has an indirect interest in a transaction if:
(a)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
(b)another entity of which the director is a director, officer, or trustee is a party to the transaction.
(5)For purposes of subsections (2) and (3), a conflict of interest transaction is authorized, approved, or ratified, if it receives the affirmative vote of a majority of the directors on the board or on the committee who have no direct or indirect interest in the transaction. However, 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 (2)(a) or (3)(a) if the transaction is otherwise approved as provided in subsection (2) or (3).
(6)For purposes of subsection (3)(b), 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 (4)(a) may not be counted in a vote of members to determine whether to authorize, approve, or ratify a conflict of interest transaction under subsection (3)(b). 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 is 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.
(7)The articles, bylaws, or a resolution of the board may impose additional requirements on conflict of interest transactions.