Title 10 - Corporations and Associations

Chapter 31, Directors and Officers - Nonprofit Corporations, Sec. 10-3801-10-3864

Directors’ action; definition

Article 6, Director's Conflicting Interest Transactions, § 10-3862

Source: Arizona Revised Statutes

  1. Directors’ action respecting a transaction is effective for purposes of section 10-3861, subsection B, paragraph 1 if the transaction received the affirmative vote of a majority, but at least two, of those qualified directors on the board of directors or on a duly empowered committee of the board who voted on the transaction after either required disclosure to them, to the extent the information was not known by them, or compliance with subsection B of this section. Action by a committee is effective under this section only if both:
    1. All of its members are qualified directors.
    2. Members are either all of the qualified directors on the board or are appointed by the affirmative vote of a majority of the qualified directors or the board.
  2. If a director has a conflicting interest regarding a transaction but neither the director nor a related person of the director specified in section 10-3860, paragraph 3, subdivision (a) is a party to the transaction and if the director has a duty under law or professional canon or a duty of confidentiality to another person, respecting information relating to the transaction such that the director may not make the disclosure described in section 10-3860, paragraph 4, subdivision (b), disclosure is sufficient for purposes of subsection A of this section if the director both:
    1. Discloses to the directors voting on the transaction the existence and nature of the conflicting interest and informs them of the character and limitations imposed by that duty before their vote on the transaction.
    2. Plays no part, directly or indirectly, in their deliberations or vote.
  3. A majority, but at least two, of all of the qualified directors on the board of directors or on the committee is 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.
  4. For purposes of this section, “qualified director” means, with respect to a director’s conflicting transaction, any director who does not have either:
    1. A conflicting interest respecting the transaction.
    2. A familial, financial, professional or employment relationship with a second director who does have a conflicting interest respecting the transaction, which relationship would, in the circumstances, reasonably be expected to exert an influence on the first director’s judgment when voting on the transaction.

Also in: Chapter 31, Sec. 10-3801-10-3864

View all Nonprofit Corporation Act statutes.

Source: This content is sourced from the online version of the Arizona Revised Statutes located at www.azleg.gov.

Disclaimer: These statutes are provided as a courtesy by CHDB Law LLP. CHDB Law cannot guarantee that the statutes set forth on the website or in our published guide will not be found to be defective by a court or other tribunal after the date the books or online material are published. The HOA Knowledge Base does not attempt to include every statute that could apply to a community association issue. There may be other statutes or applicable laws that have a bearing on a particular legal issue confronted by a community association. These statutes are provided as a reference only. If a particular legal issue is confronted by a community association, the association should seek legal advice from competent attorneys.

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