Corporate Interested-Director Transaction Requirements in Minnesota

At a glance

Requirements one by one

Covered organizations and family attribution

Minn. Stat. § 302A.011, subd. 8 defines the ordinary domestic corporation as a for-profit corporation incorporated under or governed by Chapter 302A. Minn. Stat. § 302A.255, subd. 1 covers its contract or transaction with a director and with an organization in which a director serves as director, officer, or legal representative or has a material financial interest.

Subdivision 2(b) attributes an organization's material financial interest held by the director or specified close family. It also treats a direct corporation transaction with those relatives as a transaction with the director. The list reaches a spouse, parents, children and their spouses, siblings and their spouses, and the director's spouse's siblings; it does not define materiality, disinterested status, control, or independence.

Board approval excludes interested directors entirely

The board or committee route requires full disclosure or knowledge of the material transaction and interest facts. The body must then authorize, approve, or ratify in good faith through a majority of the directors or committee members currently holding office.

Interested directors do not count toward quorum and may not vote under Minn. Stat. § 302A.255, subd. 1(c). For a private corporation, Minn. Stat. § 302A.237, subd. 2 permits the articles to weight director voting power, so the current articles and committee record may affect what the required majority means. Section 302A.255 states no minimum-two or special committee-appointment rule.

Every outstanding holder receives disclosure before either shareholder route

Minn. Stat. § 302A.255, subd. 1(b) sends full disclosure or knowledge beyond the voters to holders of every outstanding share, whether or not entitled to vote. Good-faith approval then has two alternatives: two-thirds of the voting power entitled to vote and owned by persons other than the interested directors, or the unanimous affirmative vote of all outstanding shares, including nonvoting shares.

General Minn. Stat. § 302A.441 permits unanimous shareholder written action and an articles-authorized meeting-equivalent route for a private corporation. A conflict consent still must satisfy § 302A.255's full-holder disclosure and one of its specific approval counts; the general majority floor does not replace the conflict threshold.

Fairness has a time and burden but no statutory factors

Under Minn. Stat. § 302A.255, subd. 1(a), the person asserting validity bears the burden of establishing that the transaction was fair and reasonable to the corporation when authorized, approved, or ratified. The statute supplies no fairness factors or arm's-length comparison test.

Written board action must preserve the conflict exclusion

Minn. Stat. § 302A.239 allows unanimous written or authenticated-electronic board action and, when the articles permit, action by the meeting-equivalent number for matters not requiring shareholder approval. Section 302A.255 still prohibits the interested directors from voting and requires a majority of all current directors or committee members for its conflict route.

At a meeting, Minn. Stat. § 302A.251, subd. 3 ordinarily presumes a present director assented to majority-approved action, but expressly excepts a director prohibited by § 302A.255 from voting. Interested presence therefore does not become an approving vote through the general assent rule.

Compensation, distributions, mergers, and tender offers have special branches

Minn. Stat. § 302A.255, subd. 2(a) removes a director-compensation resolution from the conflict rule even when the compensated director is present and votes or other voting directors also receive compensation. Subdivision 1(d) separately routes a statutory distribution and specified merger or exchange outside the three ordinary approval alternatives.

Subdivision 3 adds a public-company boundary: during a tender offer it bars nonroutine new or amended agreements that increase officer or director compensation, subject to its stated offer and ordinary-course exceptions. This page covers a private corporation and does not apply that public-company rule to its transaction.

Voidability, duties, and records are separate

Section 302A.255, subd. 1 says the contract is not void or voidable because of the parties or the interested directors' presence when one route applies. It does not state a broader injunction, damages, sanction, enforceability, or general-validity effect.

Minn. Stat. § 302A.251, subd. 1 separately requires directors to act in good faith, in reasonably believed corporate best interests, and with ordinary- prudence care. Minn. Stat. § 302A.461, subd. 2 requires records of shareholder and board proceedings for the last three years. Those records can preserve the disclosure and votes without themselves proving fairness, good faith, or validity.

What trips people up

The two shareholder routes use different universes. The two-thirds route counts only voting power owned by persons other than interested directors, while the unanimous route reaches every outstanding share whether or not it ordinarily votes. In both routes, disclosure or knowledge must reach all outstanding-share holders before approval.

Common questions

May an interested director count toward the board quorum?

No. Minn. Stat. § 302A.255, subd. 1(c) expressly excludes interested directors from both quorum and vote for this conflict-approval route.

Does a transaction with a director's close relative count?

Subdivision 2(b) treats contracts with the listed relatives as director transactions and attributes their material financial interests in organizations to the director. The section does not decide whether a particular financial interest is material.

Does § 302A.255 independently cover an interested officer?

No general officer-conflict route appears. A director's service as officer of another organization can trigger the director rule, and the public tender-offer subdivision addresses officer compensation, but the ordinary transaction scope is built around a corporate director.

Statutes and sources

• Minn. Stat. §§ 302A.011, subd. 8, 302A.237, 302A.239, 302A.251, 302A.441, and 302A.461 — entity scope, voting power, board and shareholder written action, conduct, assent, and records. Official Minnesota Revisor Chapter 302A, accessed September 4, 2026.
• Minn. Stat. § 302A.255 — conflict scope, family attribution, disclosure, approval routes, fairness burden, compensation, public-tender rule, and statutory effect. Official Minnesota Revisor text, accessed September 4, 2026.