Sec. 33-783. Directors' action.
Sec. 33-783. Directors' action. (a) Directors' action respecting a director's conflicting interest transaction is effective for purposes of subdivision (1) of subsection (b)
of section 33-782 if the transaction has been authorized by the affirmative vote of a
majority, but no fewer than two, of the qualified directors who voted on the transaction,
after required disclosure by the conflicted director of information not already known
by such qualified directors, or after modified disclosure in compliance with subsection
(b) of this section, provided that where the action has been taken by a committee, all
members of the committee were qualified directors, and either (1) the committee was
composed of all the qualified directors on the board of directors, or (2) the members of
the committee were appointed by the affirmative vote of a majority of the qualified
directors on the board.
(b) Notwithstanding subsection (a) of this section, when a transaction is a director's
conflicting interest transaction only because a related person described in subparagraph
(E) or (F) of subdivision (5) of section 33-781 is a party to or has a material financial
interest in the transaction, the conflicted director is not obligated to make required disclosure to the extent that the director reasonably believes that doing so would violate a duty
imposed under law, a legally enforceable obligation of confidentiality or a professional
ethics rule, provided that the conflicted director discloses to the qualified directors voting
on the transaction: (1) All information required to be disclosed that is not so violative,
(2) the existence and nature of the director's conflicting interest, and (3) the nature of
the conflicted director's duty not to disclose the confidential information.
(c) A majority, but no fewer than two, of all the qualified directors on the board of
directors, or on the committee, constitutes a quorum for purposes of action that complies
with this section. Directors' action that otherwise complies with this section is not affected by the presence or vote of a director who is not a qualified director.
(d) Where directors' action under this section does not satisfy a quorum or voting
requirement applicable to the authorization of the transaction by reason of the certificate
of incorporation, the bylaws or a provision of law, independent action to satisfy those
authorization requirements must be taken by the board of directors or a committee, in
which action directors who are not qualified directors may participate.
(P.A. 94-186, S. 118, 215; P.A. 06-68, S. 11.)
History: P.A. 94-186 effective January 1, 1997; P.A. 06-68 amended Subsec. (a) by inserting "director's conflicting
interest", replacing "received" with "has been authorized by", replacing provision re qualified directors on the board or
duly empowered committee of the board with "the qualified directors" and replacing former provisions with revised
language re required disclosure, compliance with Subsec. (b) and committee action, replaced former Subsec. (b) with new
Subsec. (b) re director's conflicting interest transaction because of related person being a party to or having a material
financial interest in the transaction, and replaced former Subsec. (d) with new Subsec. (d) re satisfaction of transaction
authorization requirements.
Annotation to former section 33-46:
Contract between director and corporation; when voidable; authorization, and ratification or estoppel, by stockholders.
104 C. 683.
Annotations to former section 33-323:
Cited. 151 C. 437. Cited. 153 C. 527. Cited. 168 C. 201. Cited. 186 C. 587. Cited. 229 C. 771.
Cited. 1 CA 656.
Subsec. (a):
Director's sale of stock and loans to corporation found not improper. 180 C. 199.
Subsec. (d):
Subdiv. (3): Director's sale of stock and loans to corporation found to be prima facie fair. 180 C. 199.