Corporate Interested-Director Transaction Requirements in Colorado

At a glance

Requirements one by one

Colorado defines four covered transaction categories

C.R.S. § 7-101-401(11) defines the ordinary domestic corporation as a for- profit corporation incorporated under or subject to the Colorado Business Corporation Act. C.R.S. § 7-108-501(1)(a) then expressly includes four conflicting-interest categories: a loan or other assistance, a guarantee, a contract or transaction, and a director's taking of a corporate opportunity.

The entity branch applies when the director serves as its director or officer or has a financial interest known and material to that director. Transactions with an entity that owns all of the corporation's shares, or an entity all of whose equity interests the corporation owns, are excluded. The section does not define disinterested status, knowledge, materiality, or financial interest.

Disclosure and disinterested-board approval

For an ordinary conflicting transaction, C.R.S. § 7-108-501(2)(a) requires the material facts about both the director's relationship or interest and the transaction to be disclosed to or known by the board or committee. The body then acts in good faith through an affirmative majority of disinterested directors, even when that group is smaller than quorum.

Common or interested directors may count toward meeting quorum under subsection (4), but they do not supply the disinterested approval majority. The section states no two-director floor, special committee-selection rule, or express qualified-only deliberation condition.

Disinterested shareholder groups have their own vote and quorum

C.R.S. § 7-108-501(2)(b), (5) requires the same category of material facts to be disclosed to or known by shareholders entitled to vote. Within each required disinterested voting group, votes favoring specific authorization, approval, or ratification must exceed opposing votes.

Unless the articles provide otherwise, a majority of the disinterested votes entitled in the group is quorum, but the quorum may never fall below one-third of those votes. Articles that create two or more disinterested voting groups require the vote in every group.

C.R.S. § 7-107-104(1), (5) separately authorizes unanimous shareholder consent or, if the articles expressly allow it, meeting-equivalent nonunanimous consent and gives the action meeting effect. A consent record still must preserve § 7-108-501's disinterested-voter and separate-group requirements.

Fairness is a separate but undefined alternative

C.R.S. § 7-108-501(2)(c) makes a transaction fair to the corporation a third route. The section states no fairness factors, relevant time, comparison test, or burden allocation. It therefore does not support treating a disclosure, vote, or recital as proof that a particular transaction is fair.

The corporate-opportunity branch in subsection (3) uses informed disinterested- director or shareholder approval but does not list a separate fairness route.

Participation and written consent use different counts

Section 7-108-501(2) says the director's presence, participation, or counted vote is not by itself a ground for the listed remedies when a statutory route applies. The approval route nevertheless requires the disinterested majority.

C.R.S. § 7-108-202 requires all board members to consent in writing for action without a meeting and gives the action meeting effect. Section 7-108-501 does not create a special written-abstention route for the interested director, so the unanimous-consent form and the disinterested approval count remain separate questions.

Loans, guarantees, opportunities, and wholly owned entities are in the core rule

Colorado does not send director loans and guarantees to a separate statute; they are two of § 7-108-501(1)'s ordinary conflicting-interest categories. A corporate opportunity is also included, unless the articles contain the authorized opportunity-disclaimer provision. Subsection (3) separately states the approval procedures and relief limits for an opportunity taking.

Wholly owned parent and subsidiary transactions are excluded from the defined conflict category. An officer role can trigger a director's interest in the other entity, but the section does not independently cover an interested corporate officer who is not a director. It states no controlling-stockholder, going-private, compensation, or public-company procedure.

The relief limitation is broader than voidability alone

For an ordinary conflict transaction, C.R.S. § 7-108-501(2) bars a void or voidable result, injunction or set-aside, damages, and other sanctions based solely on the conflict or the director's meeting participation, presence, or vote when a route applies. The opportunity branch likewise bars injunction, set-aside, damages, and other sanctions because the director took the approved opportunity.

C.R.S. §§ 7-108-401(1) and 7-108-402(1)(f) separately state conduct and liability rules, with the loyalty provision expressly subject to § 7-108-501. C.R.S. § 7-116-101(1), (4) requires written permanent records of shareholder and board meetings, no-meeting actions, committee actions in place of the board, and notice waivers. Neither the record nor the conflict procedure decides an independent authorization, securities, remedy, or public-company question.

What trips people up

Colorado's shareholder quorum is not the ordinary all-share count. C.R.S. § 7-108-501(5) starts with disinterested votes entitled to be cast, applies any separate voting groups the articles created, and imposes an absolute one-third floor. Counting interested holdings into that denominator would change the conflict procedure.

Common questions

Does the statute cover a director loan or guarantee?

Yes. C.R.S. § 7-108-501(1)(a)(I)-(II) expressly includes corporation assistance or a loan to a director or covered entity and a guarantee of their obligations.

Can fairness alone satisfy the transaction rule?

Fairness to the corporation is one of the three ordinary conflict routes. The section does not define the standard or say who carries a fairness burden, so it does not resolve that factual question for any transaction.

Does the conflict section independently cover officers?

No general officer route appears. A director's office in another entity can create the covered relationship, but the conflicted person remains a director of the Colorado corporation for § 7-108-501 purposes.

Statutes and sources

• C.R.S. §§ 7-101-401(11) and 7-107-104(1), (5) — domestic-corporation scope and shareholder written consent. Official Colorado OLLS Title 7 printout, accessed September 4, 2026.
• C.R.S. §§ 7-108-202, 7-108-401, and 7-108-402 — board written consent and separate conduct/liability boundaries. Official Colorado OLLS Title 7 printout, accessed September 4, 2026.
• C.R.S. § 7-108-501 — conflict scope, exclusions, disclosure, approval routes, fairness, corporate opportunities, quorum, and statutory effect. Official Colorado OLLS Title 7 printout, accessed September 4, 2026.
• C.R.S. § 7-116-101(1), (4) — permanent written corporate records. Official Colorado OLLS Title 7 printout, accessed September 4, 2026.