Sample Checklist for Approval of Transactions with Interested Directors/Officers

 Before board meeting:

  • Identify interested director’s material financial interest and ascertain whether the transaction falls within any exceptions.
  • Gather material facts for disclosure to the board about the proposed transaction and the director’s interest.
  • Appoint disinterested person or committee to investigate possible reasonable alternatives for report to board.

At board meeting:

  • Disclose all material facts about the proposed transaction and the director’s interest.
  • Hear report by disinterested person or committee on possible alternatives.
  • Have board find and resolve the following, by vote of majority of directors then in office, without counting vote of interested director (each director’s vote or abstention should be recorded):
  • That the proposed transaction is in the corporation’s best interests and for the corporation’s own benefit or for the benefit of the affiliated religious organization;
  • That the proposed transaction is fair and reasonable to the corporation or furthers the corporation’s religious purposes; and
  • That, after reasonable investigation, the board has found that the corporation cannot obtain a more advantageous arrangement with reasonable efforts under the circumstances or that the transaction furthers the corporation’s religious purposes.
  • Have board approve proposed transaction, by vote of majority of directors then in office, excluding vote of interested director (record each director’s vote or abstention).

After board meeting:

  • Prepare minutes of meeting, reflecting:
  • Full disclosure to the board;
  • Investigation and report to the board;
  • Findings of the board; and
  • Board approval of the transaction, including vote of each director.
2014-05-31T17:10:01+00:00 Checklists, FAQs, Nonprofit FAQs|0 Comments

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