Oregon Statutes 65.361 – 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 is fair to the corporation at the time the corporation enters into the transaction. A transaction is presumed to be fair if the transaction is approved as provided in subsection (2) or (3) of this section.
Terms Used In Oregon Statutes 65.361
- Articles of incorporation: means the articles of incorporation described in ORS § 65. See Oregon Statutes 65.001
- Board of directors: means the individual or individuals who are vested with overall management of the affairs of a domestic corporation or foreign corporation, irrespective of the name that designates the individual or individuals. See Oregon Statutes 65.001
- Bylaws: means a set of provisions for managing and regulating a corporation's affairs that the corporation must adopt under ORS § 65. See Oregon Statutes 65.001
- 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 domestic corporation or a foreign corporation. See Oregon Statutes 65.001
- Director: means an individual who acts as a member of the board of directors, who has a right to vote on questions concerning the management and regulation of a corporation's affairs and who is:
(a) An appointed director;
(b) A designated director; or
(c) A director elected by the incorporators, directors or members. See Oregon Statutes 65.001
- Entity: means a domestic corporation, foreign corporation, business corporation and foreign business corporation, profit and nonprofit unincorporated association, corporation sole, business trust, partnership, two or more persons that have a joint or common economic interest, any state, the United States, a federally recognized Native American or American Indian tribal government and any foreign government. See Oregon Statutes 65.001
- Mutual benefit corporation: means a domestic corporation that is organized to serve and operates primarily to serve the mutual interests of a group of persons, but is not a public benefit corporation or religious corporation. See Oregon Statutes 65.001
- Person: means an individual or an entity. See Oregon Statutes 65.001
- Public benefit corporation: means a domestic corporation that:
(a) Is formed as a public benefit corporation under ORS § 65. See Oregon Statutes 65.001
- Quorum: The number of legislators that must be present to do business.
- Religious corporation: means a domestic corporation that is formed as a religious corporation under ORS § 65. See Oregon Statutes 65.001
- Trustee: A person or institution holding and administering property in trust.
- Vote: means an authorization by written ballot or written consent, where permitted, or by another method that a corporation specifies as an authorization. See Oregon Statutes 65.001
(2) A transaction in which a director of a public benefit corporation or religious corporation has a conflict of interest may be approved:
(a) By the vote of the board of directors or a committee of the board of directors if the material facts of the transaction and the director’s interest are disclosed or known to the board of directors or committee of the board of directors; or
(b) By obtaining approval of:
(A) The Attorney General; or
(B) The circuit 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:
(a) In advance by the vote of the board of directors or a committee of the board of directors if 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 of directors; or
(b) If the material facts of the transaction and the director’s interest were disclosed or known to the members and the members authorized, approved or ratified the transaction.
(4) For the 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;
(b) Another entity of which the director is a director, officer or trustee is a party to the transaction, and the transaction is or should be considered by the board of directors of the corporation; or
(c) A person who is related to the director or a business associate of the director is a party to the transaction.
(5) For purposes of subsections (2) and (3) of this section, a conflict of interest transaction is authorized, approved or ratified if the transaction receives the affirmative vote of a majority of the directors on the board of directors or on the committee who have no direct or indirect interest in the transaction. A transaction may not be authorized, approved or ratified under this section by a single director. If a majority of the directors who have no direct or indirect interest in the transaction votes 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) of this section if the transaction is otherwise approved as provided in subsection (2) or (3) of this section.
(6) For purposes of subsection (3)(b) of this section, a conflict of interest transaction is authorized, approved or ratified by the members if the transaction 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) of this section may be counted in a vote of members to determine whether to authorize, approve or ratify a conflict of interest transaction under subsection (3)(b) of this section. A majority of the members, 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.
(7) The articles of incorporation, bylaws or a resolution of the board may impose additional requirements on conflict of interest transactions. [1989 c.1010 § 89; 2019 c.174 § 67]