Corporate Interested-Director Transaction Requirements in Montana

At a glance

Requirements one by one

Control is not limited to ownership of a voting majority

Mont. Code § 35-14-860 includes majority power to elect or remove an entity’s governing body, but also majority exposure to risk of loss or residual returns. Related persons include listed relatives and household members, controlled entities, fiduciary and common-board relationships, and employers.

Qualification excludes an impairing relationship as well as the conflict

Section 35-14-143 excludes a director with the transaction conflict and a director with a material relationship to another conflicted director. The materiality test asks about expected impairment of objective judgment. Shared board service or nomination by a nonqualified director is not automatically disqualifying.

Disclosure covers all known material transaction facts

Section 35-14-860(7) includes the conflict’s existence and nature and all known facts a conflict-free director would reasonably consider material to proceeding. The conflicted director must provide unknown facts to the qualified voters under § 35-14-862(1), subject to its separate modified-disclosure provision.

Qualified voting and quorum use different denominators

Section 35-14-862 measures quorum against all qualified directors on the body and approval against qualified directors who vote, with a two-director floor for each. With five qualified directors, three form quorum; if those three vote, two affirmative votes satisfy the special approval threshold. Other directors cannot participate in that deliberation or vote.

The shareholder vote follows notice and a written report

Section 35-14-863 requires the conflicted director to give the tabulator a written count of known nonqualified shares and the holders’ identities before voting. Record, beneficial, and unrestricted voting-trust beneficial owners are included. The meeting electorate is fixed at the notice record date, and the related-person exclusion expressly excepts the employer branch.

Fairness is assessed at the defined relevant time

Sections 35-14-860(3), (6) and 35-14-861(2)(c) require established fairness at qualifying board action or, without it, the binding corporate commitment. Fairness takes account of whole-transaction benefit, the director’s dealings, and arm’s-length comparability for the consideration. The text does not assign a general fairness burden to a named party.

General written board action is complete on delivery

Section 35-14-821 requires each director to sign and deliver a consent unless the articles or bylaws require a meeting. A later effective time may be specified; a signed revocation received before all unrevoked consents arrive withdraws consent. The conflict provision supplies no special omitted-signature or abstention procedure.

Opportunities and compensation have separate provisions

Section 35-14-870 reaches directors and officers pursuing an opportunity directly or through another person. It provides informed precommitment disclaimer and compliant articles-based duty-limitation routes. Section 35-14-811 separately permits board-set director compensation absent contrary articles or bylaws; it does not state an exemption from conflict requirements.

The remedy bar has a specified ground and proceeding

Section 35-14-861 addresses the specified equitable relief, damages, and sanctions against directors on the interest ground in shareholder or corporate proceedings. It separately addresses transactions outside the defined conflict category. Section 35-14-1601 requires shareholder, board, and committee minutes and action records maintained for inspection within a reasonable time.

What trips people up

The modified-disclosure provision in § 35-14-862(2) says the conflict must arise solely through “a related person of the director.” It does not limit this to particular employer or entity branches. It still requires the specified reasonable belief about a legal duty, enforceable confidentiality obligation, or professional ethics rule, plus disclosure of nonprotected information, the conflict, and the nondisclosure duty.

Sections 35-14-862(4) and 35-14-863(6) require independent action if another law or governing record leaves an authorization requirement unmet. Nonqualified directors or shares may participate in that separate action, and nonqualified- share presence or voting does not otherwise spoil a compliant conflict vote.

Common questions

Can a court address a missing share report?

Section 35-14-863(5) allows discretion if reporting is the sole defect and the director establishes that the omission was neither intended to influence nor determinative of the vote. Protection is not automatic.

Can qualifying approval occur after the transaction?

Section 35-14-861(2)(a)-(b) permits compliant board or shareholder action “at any time,” subject to the disclosure and procedural requirements.

Does skipping an opportunity disclaimer prove a breach?

Section 35-14-870(2) says that omission creates no implication that the opportunity should first have been offered to the corporation and does not alter the otherwise-applicable burden of proof.

Statutes and sources

All official texts below were accessed September 4, 2026.

• Mont. Code § 35-14-860 — Official text: “35-14-860. Definitions: director's conflicting interest transactions. For the purposes of 35-14-860 through 35-14-863, unless otherwise specified, the following definitions apply: (1) "Control" or "controlled by" means: (a) having the power, directly or indirectly, to elect or remove a majority of the members of the board of directors or other governing body of an entity, whether through the ownership of voting shares or interests, by contract, or otherwise; or (b) being subject to a majority of the risk of loss from the entity's activities or entitled to receive a majority of the entity's residual returns. (2) "Director's conflicting interest transaction" means a transaction effected or proposed to be effected by the corporation or by an entity controlled by the corporation: (a) to which, at the relevant time, the director is a party; (b) respecting which, at the relevant time, the director had knowledge and a material financial interest known to the director; or (c) respecting which, at the relevant time, the director knew that a related person was a party or had a material financial interest. (3) "Fair to the corporation" means, for purposes of 35-14-861(2)(c), that the transaction as a whole was beneficial to the corporation, taking into appropriate account whether it was: (a) fair in terms of the director's dealings with the corporation; and (b) comparable to what might have been obtainable in an arm's-length transaction, given the consideration paid or received by the corporation. (4) "Material financial interest" means a financial interest in a transaction that would reasonably be expected to impair the objectivity of the director's judgment when participating in action on the authorization of the transaction. (5) "Related person" means: (a) an individual's spouse; (b) a child, stepchild, grandchild, parent, stepparent, grandparent, sibling, step sibling, half sibling, aunt, uncle, niece, or nephew, or spouse of any of them, of an individual or of an individual's spouse; (c) a natural person living in the same home as an individual; (d) an entity, other than the corporation or an entity controlled by the corporation, controlled by an individual or any person specified in subsections (5)(a) through (5)(c); (e) a domestic or foreign: (A) business or nonprofit corporation, other than the corporation or an entity controlled by the corporation, of which an individual is a director; (B) unincorporated entity of which an individual is a general partner or a member of the governing body; or (C) individual, trust, or estate for whom or of which an individual is a trustee, guardian, personal representative, or similar fiduciary; or (f) a person that is or an entity that is controlled by an employer of an individual. (6) "Relevant time" means: (a) the time at which directors' action respecting the transaction is taken in compliance with 35-14-862; or (b) if the transaction is not brought before the board of directors or a committee for action under 35-14-862, the time at which the corporation or an entity controlled by the corporation becomes legally obligated to consummate the transaction. (7) "Required disclosure" means disclosure of: (a) the existence and nature of the director's conflicting interest; and (b) all facts known to the director respecting the subject matter of the transaction that a director free of that conflicting interest would reasonably believe to be material in deciding whether to proceed with the transaction.”

• Mont. Code § 35-14-861 — Official text: “35-14-861. Judicial action. (1) A transaction effected or proposed to be effected by the corporation or by an entity controlled by the corporation may not be the subject of equitable relief or give rise to an award of damages or other sanctions against a director of the corporation in a proceeding by a shareholder or by or in the right of the corporation on the ground that the director has an interest respecting the transaction if it is not a director's conflicting interest transaction. (2) A director's conflicting interest transaction may not be the subject of equitable relief or give rise to an award of damages or other sanctions against a director of the corporation in a proceeding by a shareholder or by or in the right of the corporation on the grounds that the director has an interest respecting the transaction if: (a) directors' action respecting the transaction was taken in compliance with 35-14-862 at any time; (b) shareholders' action respecting the transaction was taken in compliance with 35-14-863 at any time; or (c) the transaction, judged according to the circumstances at the relevant time, is established to have been fair to the corporation.”

• Mont. Code § 35-14-862 — Official text: “35-14-862. Directors' action. (1) Directors' action respecting a director's conflicting interest transaction is effective for purposes of 35-14-861(2)(a) if the transaction has been authorized by the affirmative vote of a majority, but no fewer than two, of the qualified directors who voted on the transaction after required disclosure by the conflicted director of information not already known by the qualified directors or after modified disclosure in compliance with subsection (2), provided that: (a) the qualified directors have deliberated and voted outside the presence of and without participation by any other director; and (b) if the action has been taken by a board committee, all members of the committee were qualified directors and either: (i) the committee was composed of all the qualified directors on the board of directors; or (ii) the members of the committee were appointed by the affirmative vote of a majority of the qualified directors on the board of directors. (2) Notwithstanding subsection (1), when a transaction is a director's conflicting interest transaction only because a related person of the director is a party to or has a material financial interest in the transaction, the conflicted director is not obligated to make required disclosure to the extent that the director reasonably believes that doing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule if the conflicted director discloses to the qualified directors voting on the transaction: (a) all information required to be disclosed that is not violative of the duty, obligation, or rule; (b) the existence and nature of the director's conflicting interest; and (c) the nature of the conflicted director's duty not to disclose the confidential information. (3) A majority, but no fewer than two, of all the qualified directors on the board of directors or on the board committee constitutes a quorum for purposes of action that complies with this section. (4) If directors' action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the transaction by reason of the articles of incorporation or bylaws or a provision of law, independent action to satisfy those authorization requirements must be taken by the board of directors or a board committee, in which directors who are not qualified directors may participate.”

• Mont. Code § 35-14-863 — Official text: “35-14-863. Shareholders' action. (1) Shareholders' action respecting a director's conflicting interest transaction is effective for purposes of 35-14-861(2)(b) if a majority of the votes cast by the holders of all qualified shares are in favor of the transaction after: (a) notice to shareholders describing the action to be taken respecting the transaction; (b) provision to the corporation of the information referred to in subsection (2); and (c) communication to the shareholders entitled to vote on the transaction of the information that is the subject of required disclosure, to the extent the information is not known by them. In the case of shareholders' action at a meeting, the shareholders entitled to vote must be determined as of the record date for notice of the meeting. (2) A director who has a conflicting interest respecting the transaction shall, before the shareholders' vote, inform the secretary or other officer or agent of the corporation authorized to tabulate votes, in writing, of the number of shares that the director knows are not qualified shares under subsection (3), and of the identity of the holders of those shares. (3) For purposes of this section: (a) "holder" means and "held by" refers to shares held by a record shareholder, a beneficial shareholder, and an unrestricted voting trust beneficial owner; and (b) "qualified shares" means all shares entitled to be voted with respect to the transaction except shares that the secretary or other officer or agent of the corporation authorized to tabulate votes either knows or under subsection (2) is informed are held by: (i) a director who has a conflicting interest respecting the transaction; or (ii) a related person of the director, excluding a person described in 35-14-860(5)(f). (4) A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of compliance with this section. Subject to the provisions of subsection (5), shareholders' action that otherwise complies with this section is not affected by the presence of holders of or by the voting of shares that are not qualified shares. (5) If a shareholders' vote does not comply with subsection (1) solely because of a director's failure to comply with subsection (2) and if the director establishes that the failure was not intended to influence and did not in fact determine the outcome of the vote, the court may take any action respecting the transaction and the director, and may give any effect to the shareholders' vote, that the court considers appropriate in the circumstances. (6) If shareholders' action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the transaction by reason of the articles of incorporation, the bylaws, or a provision of law, independent action to satisfy those authorization requirements must be taken by the shareholders, in which shares that are not qualified shares may participate.”

• Mont. Code § 35-14-143 — Official text: “35-14-143. Qualified director. (1) A qualified director is a director who, at the time action is to be taken under: (a) 35-14-202(2)(f), is not a director: (i) to whom the limitation or elimination of the duty of an officer to offer potential business opportunities to the corporation would apply; or (ii) who has a material relationship with any other person to whom the limitation or elimination would apply; (b) 35-14-744, does not have: (i) a material interest in the outcome of the proceeding; or (ii) a material relationship with a person who has such an interest; (c) 35-14-853 or 35-14-855: (i) is not a party to the proceeding; (ii) is not a director as to whom a transaction is a director's conflicting interest transaction or who sought a disclaimer of the corporation's interest in a business opportunity under 35-14-870, which transaction or disclaimer is challenged in the proceeding; and (iii) does not have a material relationship with a director described in subsection (1)(c)(i) or (1)(c)(ii); (d) 35-14-862, is not a director: (i) as to whom the transaction is a director's conflicting interest transaction; or (ii) who has a material relationship with another director as to whom the transaction is a director's conflicting interest transaction; or (e) 35-14-870, is not a director who: (i) pursues or takes advantage of the business opportunity directly or indirectly through or on behalf of another person; or (ii) has a material relationship with a director or officer who pursues or takes advantage of the business opportunity, directly or indirectly through or on behalf of another person. (2) For purposes of this section: (a) "material interest" means an actual or potential benefit or detriment, other than one that would devolve on the corporation or the shareholders generally, that would reasonably be expected to impair the objectivity of the director's judgment when participating in the action to be taken; and (b) "material relationship" means a familial, financial, professional, employment, or other relationship that would reasonably be expected to impair the objectivity of the director's judgment when participating in the action to be taken. (3) The presence of one or more of the following circumstances does not automatically prevent a director from being a qualified director: (a) nomination or election of the director to the current board by any director who is not a qualified director with respect to the matter (or by any person that has a material relationship with that director), acting alone or participating with others; (b) service as a director of another corporation of which a director who is not a qualified director with respect to the matter (or any individual who has a material relationship with that director) is or was also a director; or (c) with respect to action to be taken under 35-14-744, status as a named defendant, as a director against whom action is demanded, or as a director who approved the conduct being challenged.”

• Mont. Code § 35-14-870 — Official text: “35-14-870. Business opportunities. (1) If a director or officer pursues or takes advantage of a business opportunity directly, or indirectly through or on behalf of another person, that action may not be the subject of equitable relief or give rise to an award of damages or other sanctions against the director, officer, or other person in a proceeding by or in the right of the corporation on the ground that the opportunity should have first been offered to the corporation if: (a) before the director, officer, or other person becomes legally obligated respecting the opportunity, the director or officer brings it to the attention of the corporation and either: (i) action by qualified directors disclaiming the corporation's interest in the opportunity is taken in compliance with the procedures set forth in 35-14-862; or (ii) shareholders' action disclaiming the corporation's interest in the opportunity is taken in compliance with the procedures set forth in 35-14-863, in either case as if the decision being made concerned a director's conflicting interest transaction, except that rather than making required disclosure as defined in 35-14-860, the director or officer must have made prior disclosure to those acting on behalf of the corporation of all material facts concerning the business opportunity known to the director or officer; or (b) the duty to offer the corporation the business opportunity has been limited or eliminated pursuant to a provision of the articles of incorporation adopted and, if required, made effective by action of qualified directors in accordance with 35-14-202(2)(f). (2) In any proceeding seeking equitable relief or other remedies based on an alleged improper pursuit or taking advantage of a business opportunity by a director or officer directly, or indirectly through or on behalf of another person, the fact that the director or officer did not employ the procedure described in subsection (1)(a)(i) or (1)(a)(ii) before pursuing or taking advantage of the opportunity does not create an implication that the opportunity should have been first presented to the corporation or alter the burden of proof otherwise applicable to establish that the director or officer breached a duty to the corporation in the circumstances.”

• Mont. Code § 35-14-821 — Official text: “35-14-821. Action without meeting. (1) Except to the extent that the articles of incorporation or bylaws require that action by the board of directors be taken at a meeting, action required or permitted by this chapter to be taken by the board of directors may be taken without a meeting if each director signs a consent describing the action to be taken and delivers it to the corporation. (2) Action taken under this section is the act of the board of directors when one or more consents signed by all the directors are delivered to the corporation. The consent may specify a later time as the time at which the action taken is to be effective. A director's consent may be withdrawn by a revocation signed by the director and delivered to the corporation before delivery to the corporation of unrevoked written consents signed by all the directors. (3) A consent signed under this section has the effect of action taken at a meeting of the board of directors and may be described in that manner in any document.”

• Mont. Code § 35-14-811 — Official text: “35-14-811. Compensation of directors. Unless the articles of incorporation or bylaws provide otherwise, the board of directors may fix the compensation of directors.”

• Mont. Code § 35-14-1601 — Official text: “35-14-1601. Corporate records. (1) A corporation shall maintain the following records: (a) its articles of incorporation as currently in effect; (b) any notices to shareholders referred to in 35-14-120(11)(e) specifying facts on which a filed document is dependent if those facts are not included in the articles of incorporation or otherwise available as specified in 35-14-120(11)(e); (c) its bylaws as currently in effect; (d) all written communications within the past 3 years to shareholders generally; (e) minutes of all meetings of and records of all actions taken without a meeting by its shareholders, its board of directors, and board committees established under 35-14-825; (f) a list of the names and business addresses of its current directors and officers; and (g) its most recent annual report delivered to the secretary of state under 35-14-1621. (2) A corporation shall maintain all annual financial statements prepared for the corporation for its last 3 fiscal years or any shorter period of existence and any audit or other reports with respect to those financial statements. (3) A corporation shall maintain accounting records in a form that permits preparation of its financial statements. (4) A corporation shall maintain a record of its current shareholders in alphabetical order by class or series of shares showing the address of and the number and class or series of shares held by each shareholder. Nothing in this subsection requires the corporation to include in the record the electronic mail address or other electronic contact information of a shareholder. (5) A corporation shall maintain the records specified in this section in a manner that allows them to be made available for inspection within a reasonable time.”