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§ 2-419. Interested director; disclosure and vote

West's Annotated Code of MarylandCorporations and Associations

West's Annotated Code of Maryland
Corporations and Associations
Title 2. Corporations in General--Formation, Organization, and Operation (Refs & Annos)
Subtitle 4. Directors and Officers (Refs & Annos)
MD Code, Corporations and Associations, § 2-419
§ 2-419. Interested director; disclosure and vote
Currentness
Contract not void or voidable
(a) If subsection (b) of this section is complied with, a contract or other transaction between a corporation and any of its directors or between a corporation and any other corporation, firm, or other entity in which any of its directors is a director or has a material financial interest is not void or voidable solely because of any one or more of the following:
(1) The common directorship or interest;
(2) The presence of the director at the meeting of the board or a committee of the board which authorizes, approves, or ratifies the contract or transaction; or
(3) The counting of the vote of the director for the authorization, approval, or ratification of the contract or transaction.
Disclosure and authorization, approval, or ratification
(b) Subsection (a) of this section applies if:
(1) The fact of the common directorship or interest is disclosed or known to:
(i) The board of directors or the committee, and the board or committee authorizes, approves, or ratifies the contract or transaction by the affirmative vote of a majority of disinterested directors, even if the disinterested directors constitute less than a quorum; or
(ii) The stockholders entitled to vote, and the contract or transaction is authorized, approved, or ratified by a majority of the votes cast by the stockholders entitled to vote other than the votes of shares owned of record or beneficially by the interested director or corporation, firm, or other entity; or
(2) The contract or transaction is fair and reasonable to the corporation.
Quorum
(c) Common or interested directors or the stock owned by them or by an interested corporation, firm, or other entity may be counted in determining the presence of a quorum at a meeting of the board of directors or a committee of the board or at a meeting of the stockholders, as the case may be, at which the contract or transaction is authorized, approved, or ratified.
Lack of authorization, approval, or ratification
(d)(1) If a contract or transaction is not authorized, approved, or ratified in one of the ways provided for in subsection (b)(1) of this section, the person asserting the validity of the contract or transaction bears the burden of proving that the contract or transaction was fair and reasonable to the corporation at the time it was authorized, approved, or ratified.
(2) This subsection does not apply to the fixing by the board of directors of reasonable compensation for a director, whether as a director or in any other capacity.
Construction with other laws
(e) Any procedures authorized by § 2-418 of this subtitle shall be deemed to satisfy subsection (b)(1) of this section. Any charter, bylaw, contract, or transaction requiring or permitting indemnification, including advances of expenses, in accordance with § 2-418 of this subtitle is fair and reasonable to the corporation.

Credits

Added by Acts 1976, c. 567, § 4. Amended by Acts 1983, c. 346.
MD Code, Corporations and Associations, § 2-419, MD CORP & ASSNS § 2-419
Current through legislation effective through April 9, 2023, from the 2024 Regular Session of the General Assembly. Some statute sections may be more current, see credits for details.
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