Financial interest of officer or director in corporate transaction; effect; quorum

17-6304. Financial interest of officer or director in corporate transaction; effect; quorum. (a) No contract or transaction between a corporation and one or more of its directors or officers, or between a corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers, are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee which authorizes the contract or transaction, or solely because any such director's or officer's votes are counted for such purpose, if: (1) The material facts as to the director's or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; (2) the material facts as to the director's or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) the contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified by the board of directors, a committee or the stockholders. (b) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction. History: L. 1972, ch. 52, § 26; L. 2016, ch. 110, § 28; July 1. Source or Prior Law: 8 Del. C. § 144. Cross References to Related Sections: General contractual powers of corporations, see 17-6102 (13). Quorum requirements for board of directors meeting, see 17-6301. Law Review and Bar Journal References: "The Kansas Corporation Code of 1972," William E. Treadway, 40 J.B.A.K. 301, 341 (1971). "Close Corporations and the Kansas General Corporation Code of 1972," Edwin W. Hecker, Jr., 22 K.L.R. 489, 543 (1974). "Hospital Trustees' Fiduciary Responsibilities: An Emerging Tripartite Distinction," Eugene T. Hackler, 15 W.L.J. 422, 430 (1976). "The Voidability of Interested Director Contracts Under the Kansas Corporation Code," 24 K.L.R. 655 (1976). "Survey of Kansas Law: Business Associations," William E. Treadway, 27 K.L.R. 171, 178 (1979). "Personal Liability of Nonprofit Directors," Charles Engel, 60 J.K.B.A. No. 4, 28, 30 (1991). "Nonprofit Hospital Conversions in Kansas: The Kansas Attorney General Should Regulate All Nonprofit Hospital Sales," Rachel B. Rubin, 47 K.L.R. 521 (1999). "The Kansas Uniform Fraudulent Transfer Act," Leon B. Graves, 68 J.K.B.A. No. 6, 34 (1999). "Applying the Business Judgment Rule Fairly: A Clarification for Kansas Courts," Emily E. Cassell, 52 K.L.R. 1119, 1139 (2004). "Fiduciary Duties in Business Entities," Edwin W. Hecker, Jr., 54 K.L.R. 975 (2006). Attorney General's Opinions: Financial interest of officer or director in corporate transaction; application to certain nonprofit corporations. 89-44. CASE ANNOTATIONS 1. In shareholders' derivative action court held this section does not authorize a breach of the director's fiduciary duties. Newton v. Hornblower, Inc., 224 Kan. 506, 522, 582 P.2d 1136 (1978). 2. Eighty-percent shareholder/director not disinterested majority for ratifying loan to self; must show intrinsic fairness of loan. Oberhelman v. Barnes Investment Corp., 236 Kan. 335, 341, 342, 343, 690 P.2d 1343 (1984). 3. Mortgage asserting corporate official had authority to encumber corporate property charged with constructive notice of requirements of (a)(1). In re Branding Iron Motel, Inc., 798 F.2d 396, 401, 402 (1986). 4. Whether possible unauthorized mortgage was preliminary transaction that could be part of self-dealing transaction examined. Schmidt v. Farm Credit Services, 977 F.2d 511, 515 (1992). Previous | Next LEGISLATIVE COORDINATING COUNCIL General Policies 2026 Archived LCC Documents Archived LCC Meetings REVISOR OF STATUTES Archived Session Documents Archived School Finance Documents USEFUL LINKS Session Laws Kansas Administrative Regulations OTHER LEGISLATIVE SITES Kansas Legislature Administrative Services Division of Post Audit Research Department Contact Us PDF Help www.ksrevisor.gov 2026