Corporate Interested-Director Transaction Requirements in Georgia

At a glance

Requirements one by one

Governing law, entity, transaction, and person scope

O.C.G.A. § 14-2-140(4) defines the domestic corporation as a for-profit corporation under the chapter. O.C.G.A. § 14-2-860 makes the director-conflict part reach proposed or effected transactions by the corporation, a subsidiary, or another entity in which the corporation has a controlling interest.

The separate O.C.G.A. § 14-2-864 officer rule applies only to a nondirector officer holding a bylaw-described office or appointed by the board under the bylaws. A dual director-officer's transaction remains within the director rule.

Conflict, related-person, disclosure, and commitment definitions

Section 14-2-860 defines a conflict through the director's knowledge at the time of commitment. It reaches the director or related person as party, a sufficiently significant beneficial financial interest, and—in a board-level transaction— specified roles and control links involving another entity, the director's general partner, principal, or employer.

The related-person list covers specified family and household relationships, substantial-beneficiary trusts or estates, and a trust, estate, incompetent, conservatee, or minor for which the director is fiduciary. Required disclosure means the conflict's existence and nature plus all known transaction facts an ordinarily prudent person would reasonably consider material to whether to proceed. Commitment occurs at consummation or when contractual obligation makes unilateral withdrawal entail significant loss, liability, or damage.

Qualified-director approval and modified disclosure

O.C.G.A. § 14-2-862 requires an affirmative majority—but never fewer than two— of the qualified directors who vote after required disclosure. A committee must be duly empowered. A majority of all qualified directors, again at least two, is the special quorum. A director is not qualified if conflicted or linked to a conflicted director by an influential familial, financial, professional, or employment relationship.

The section has a narrow confidentiality alternative when neither the director nor a specified close related person is a transaction party. The director discloses the conflict and the character and limits of the legal, professional, or confidentiality duty, supplies all nonprotected information, and plays no direct or indirect part in deliberations or voting. Otherwise-compliant action is not affected by a nonqualified director's presence or vote.

Qualified-share approval and the tabulator statement

O.C.G.A. § 14-2-863 requires a majority of the votes entitled to be cast by all qualified shares—not merely a majority of votes actually cast. The shareholders must receive notice describing the transaction, the director's ownership and control information, and required disclosure to the extent not already known.

Qualified shares exclude shares the secretary or other authorized tabulator knows before the vote are beneficially owned or vote-controlled by the conflicted director or a related person. The director must identify to that tabulator the number and holders or controllers of all such shares known to the director. A majority of all qualified votes is the special quorum. If only that reporting step failed, a court may give the vote appropriate effect when the director proves the failure neither determined nor was intended to influence the outcome.

Fairness at the time of commitment

O.C.G.A. § 14-2-861 gives three alternatives for a defined director-conflict transaction: compliant director action, compliant shareholder action, or a transaction established fair to the corporation when judged in the circumstances at the time of commitment. The statute supplies no element list or separate burden sentence in these sections. This cell does not decide fairness or who can prove it.

Officer transactions are a separate, simpler route

Section 14-2-864 covers a transaction with one or more nondirector officers or an officer's related person, excluding anything already treated as a director transaction. After required disclosure, either board or shareholder approval works; established fairness at commitment is the third route. Unlike the director provisions, the officer section states no qualified-director, qualified-share, quorum, vote, or tabulator formula.

The officer's presence or participation at the authorizing board or committee meeting is not, by itself, a voidability ground. The section has no separate controlling-stockholder or going-private branch, and the corporate-opportunity disclaimer sits in a different statutory part.

Written action and permanent records

O.C.G.A. § 14-2-821 makes ordinary board action without a meeting unanimous: each director signs and delivers a consent describing the action, subject to any meeting requirement in the articles or bylaws. The conflict provisions do not create a special written-abstention route, so consent should not be assumed to work like a qualified-director meeting vote.

O.C.G.A. § 14-2-1601(a) requires permanent shareholder and board minutes, executed consents, committee-action records, and board/committee notice waivers. Those records can preserve the procedure but cannot themselves establish a conflict classification, required disclosure, voter qualification, fairness, authority, or fiduciary compliance.

Statutory effect and external boundaries

Section 14-2-861 prevents an injunction, set-aside, damages, or other sanctions on the ground of the director's or associate's transaction interest when a route applies; a transaction outside the statutory conflict definition receives the same protection against an interest-ground claim. Section 14-2-864 gives the parallel effect for officer transactions and separately rejects voidability solely for officer presence or participation.

The stated ground matters. These provisions do not determine independent authorization, compliance with governing documents, fiduciary duties, securities rules, public-company law, or relief based on another legal ground.

What trips people up

The board and shareholder denominators are unusually exact. The board route needs at least two qualified directors; the shareholder route needs a majority of every vote entitled to be cast by qualified shares, not merely a majority of votes cast at the meeting.

Modified disclosure is also not a general privilege exception. It is unavailable when the director or specified close related person is a party, and it requires the conflicted director to stay entirely out of deliberation and voting.

Common questions

Can one qualified director approve the director-conflict route?

No. Section 14-2-862 requires both the voting majority and quorum to include at least two qualified directors.

Are an officer's conflict rules identical to a director's?

No. Section 14-2-864 uses the same related-person, disclosure, and commitment definitions but does not state the director route's detailed qualified-voter and tabulation mechanics.

Does a nonqualified director have to leave every meeting?

Ordinary full disclosure does not make presence or voting fatal to compliant action. The no-participation requirement applies specifically when the director uses § 14-2-862(b)'s modified disclosure route.

Statutes and sources

• O.C.G.A. §§ 14-2-140 and 14-2-821 — domestic corporation and board consent. State-authorized Title 14 distribution, accessed September 4, 2026.
• O.C.G.A. §§ 14-2-860 to -863 — director conflict definitions, statutory effect, qualified-director procedure, and qualified-share procedure. State-authorized Title 14 distribution, accessed September 4, 2026; current through the official amendment sweep described above.
• O.C.G.A. § 14-2-864 — nondirector officer transactions. State-authorized Title 14 distribution, accessed September 4, 2026; current through the official amendment sweep described above.
• O.C.G.A. § 14-2-1601(a) — permanent corporate records. State-authorized Title 14 distribution, accessed September 4, 2026.