3-1-13.5 - Conflicts of interest. - Utah Statutes

3-1-13.5. Conflicts of interest.
(1) A director does not have a conflict of interest and is entitled to vote on any matter forwhich the action to be taken or decision to be made by the board relates to matters which haveapplication to other members which are similarly situated to the director or to the memberassociation which the director represents.
(2) Except as provided in Subsection (1), each director on the board of an association hasa duty to serve the association as a whole and not the individual members of the association. Thisduty applies even when the director's own personal interests as a member or representative of amember may be contrary to the interests of the association.
(3) (a) As used in this section, "interested director" means a director who has a directfinancial interest in a transaction or contract being considered by the board or committee of anassociation, whether as a member of the association or as a representative of a memberassociation.
(b) Interested directors may be counted in determining the presence of a quorum at ameeting of the board of directors or a committee which authorizes, approves, or ratifies a contractor transaction.
(c) Interested directors shall be excluded from a board or committee meeting during thediscussion and vote on a matter in which the director has a direct financial interest, unless amajority of the disinterested directors on the board vote that the interested director may remain atthe meeting.
(4) Except as provided in Subsections (1) and (3)(c), every contract or transactionbetween the association and one or more of its directors shall be void, or voidable by theassociation, if:
(a) the director is present at or participates in the discussion at the board or committeemeeting which authorizes, approves, or ratifies the contract or transaction; or
(b) the vote of the interested director is counted in the vote of the board or the committee.
(5) Notwithstanding Subsection (4), a transaction between the association and one ormore of its directors is not void, or voidable by the association, if:
(a) the material facts as to the relationship or interest of the director and as to the contractor transaction are disclosed or are known to the board of directors or the committee, and theboard or committee in good faith authorizes, approves, or ratifies the contract or transaction bythe affirmative vote of a majority of the disinterested directors, even if the disinterested directorsare less than a quorum;
(b) the material facts as to the relationship or interest of the director and as to the contractor transaction are disclosed or are known to the members of the association entitled to vote, andthe contract or transaction is specifically authorized, approved, or ratified in good faith by a voteof the members; or
(c) the contract or transaction is fair to the association.

Enacted by Chapter 204, 1994 General Session