501A.713 - DIRECTOR CONFLICTS OF INTEREST.

        501A.713  DIRECTOR CONFLICTS OF INTEREST.         1.  Conflict and procedure when conflict arises.         a.  A contract or other transaction between a cooperative and      one or more of its directors, or between a cooperative and a business      entity in or of which one or more of its directors are governors,      directors, managers, officers, or legal representatives or have a      material financial interest, is not void or voidable because the      director or directors or the other business entities are parties or      because the director or directors are present at the meeting of the      members or the board or a committee at which the contract or      transaction is authorized, approved, or ratified, if any of the      following applies:         (1)  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 cooperative at the time it was authorized,      approved, or ratified and all of the following apply:         (a)  The material facts as to the contract or transaction and as      to the director's or directors' interest are disclosed or known to      the members.         (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 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 are not counted in determining the presence of a quorum and      must not vote.         (2)  The contract or transaction is a distribution, contract, or      transaction that is made available to all members or patron members      as part of the cooperative's business.         b.  If a committee is elected or appointed to authorize,      ratify, or approve a contract or transaction under this section, the      members of the committee must not have a conflict of interest and      must be charged with representing the best interests of the      cooperative.         2.  Material financial interest.  For purposes of this      section, all of the following apply:         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 cooperative is not void or voidable or      considered to be a contract or other transaction between a      cooperative 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 cooperative.         b.  A director has a material financial interest in each      organization in which the director or a family member of the director      has a material financial interest.  A contract or other transaction      between a cooperative and a family member of a director is considered      to be a transaction between the cooperative and the director.  A      family member of a director includes 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.  
         Section History: Recent Form
         2005 Acts, ch 135, §47         Referred to in § 501A.711