2006 Minnesota Statutes

302A.255 DIRECTOR CONFLICTS OF INTEREST.
    Subdivision 1. Conflict; procedure when conflict arises. A contract or other transaction
between a corporation and one or more of its directors, or between a corporation and an
organization in or of which one or more of its directors are directors, officers, or legal
representatives or have a material financial interest, is not void or voidable because the director or
directors or the other organizations are parties or because the director or directors are present at
the meeting of the shareholders or the board or a committee at which the contract or transaction is
authorized, approved, or ratified, if:
(a) The contract or transaction was, and the person asserting the validity of the contract
or transaction sustains the burden of establishing that the contract or transaction was, fair and
reasonable as to the corporation at the time it was authorized, approved, or ratified;
(b) The material facts as to the contract or transaction and as to the director's or directors'
interest are fully disclosed or known to the holders of all outstanding shares, whether or not
entitled to vote, and the contract or transaction is approved in good faith by (1) the holders of
two-thirds of the voting power of the shares entitled to vote which are owned by persons other
than the interested director or directors, or (2) the unanimous affirmative vote of the holders of all
outstanding shares, whether or not entitled to vote;
(c) The material facts as to the contract or transaction and as to the director's or directors'
interest are fully disclosed or known to the board or a committee, and the board or committee
authorizes, approves, or ratifies the contract or transaction in good faith by a majority of the board
or committee, but the interested director or directors shall not be counted in determining the
presence of a quorum and shall not vote; or
(d) The contract or transaction is a distribution described in section 302A.551, subdivision 1,
or a merger or exchange described in section 302A.601, subdivision 1 or 2.
    Subd. 2. Material financial interest. For purposes of this section:
(a) A resolution fixing the compensation of a director or fixing the compensation of another
director as a director, officer, employee, or agent of the corporation, is not void or voidable or
considered to be a contract or other transaction between a corporation and one or more of its
directors for purposes of this section even though the director receiving the compensation fixed
by the resolution is present and voting at the meeting of the board or a committee at which the
resolution is authorized, approved, or ratified or even though other directors voting upon the
resolution are also receiving compensation from the corporation; and
(b) A director has a material financial interest in each organization in which the director, or
the spouse, parents, children and spouses of children, brothers and sisters and spouses of brothers
and sisters, and the brothers and sisters of the spouse of the director, or any combination of them
have a material financial interest. For purposes of this section, a contract or other transaction
between a corporation and the spouse, parents, children and spouses of children, brothers and
sisters, spouses of brothers and sisters, and the brothers and sisters of the spouse of a director,
or any combination of them, is considered to be a transaction between the corporation and the
director.
    Subd. 3. Compensation agreements. During any tender offer or request or invitation for
tenders of any class or series of shares of a publicly held corporation, other than an offer, request,
or invitation by the publicly held corporation, the publicly held corporation shall not enter into or
amend, directly or indirectly, agreements containing provisions, whether or not dependent on the
occurrence of any event or contingency, that increase, directly or indirectly, the current or future
compensation of any officer or director of the publicly held corporation. This subdivision does not
prohibit routine increases in compensation, or other routine compensation agreements, undertaken
in the ordinary course of the publicly held corporation's business.
History: 1981 c 270 s 45; 1982 c 497 s 31; 1987 c 104 s 17; 1Sp1987 c 1 s 19; 1993 c 17
s 21; 2000 c 264 s 3