Rhode Island General Laws 7-6-26.1. Director conflicts of interest
(a) No contract or transaction between a corporation and one or more of its directors or officers, or between a corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, is void or voidable nor are the directors or officers liable regarding the contract or transaction solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee of the board that authorizes the contract or transaction, or solely because his, her, or their votes are counted for the purpose, if:
(1) The material facts as to his, her, or their interest or relationship are disclosed or are known to the board of directors or the committee, and the board of directors or committee authorizes, approves, or ratifies the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or
(2) The material facts as to his, her, or their interest or relationship are disclosed or are known to the members entitled to vote on the contract or transaction, and the contract or transaction is specifically authorized, approved, or ratified by vote of the members; or
(3) The contract or transaction is fair and reasonable to the corporation.
Terms Used In Rhode Island General Laws 7-6-26.1
- Board of directors: means the group of persons vested with the management of the affairs of the corporation (including, without being limited to, a board of trustees) regardless of the name by which the group is designated. See Rhode Island General Laws 7-6-2
- Contract: A legal written agreement that becomes binding when signed.
- 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.
- Director: means a member of a board of directors. See Rhode Island General Laws 7-6-2
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Quorum: The number of legislators that must be present to do business.
(b) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee that authorizes the contract or transaction.
History of Section.
P.L. 1989, ch. 380, § 2.