Corporate Interested-Director Transaction Requirements in Nevada
At a glance
| Governing law, entity, transaction, and covered-person scope | NRS ch. 78; Nevada domestic private corporation. Covers corporation contract/other transaction with one or more directors/officers, or another corporation/firm/association where its director/officer holds office or financial interest; no proposed-transaction or controlled-subsidiary formula (§§ 78.012, 78.140(1)) |
|---|---|
| Interest, relationship, control, and materiality definitions | Triggers are common directorship/office or financial interest; section does not define financial interest, materiality, control, related person, disinterested, or independence. Separate no-knowledge route applies when director/officer did not know the interest when transaction reached board (§ 78.140(1)-(2)) |
| Required disclosure, facts, timing, knowledge, and recipients | Board or committee knows fact of common directorship, office, or financial interest; shareholder route requires same fact known to stockholders. Section does not expressly require material transaction facts, interested-person disclosure source, writing, confidentiality procedure, or earlier timing (§ 78.140(2)(a)-(b)) |
| Disinterested or qualified board/committee composition, quorum, vote, and good faith | Good-faith approval/ratification by directors or committee members other than common/interested persons; majority of disinterested directors may act when interested votes excluded. Interested directors count toward meeting quorum. No minimum-two, all-disinterested committee, selection, or exclusion-from-deliberation rule (§ 78.140(2)(a), (3)) |
| Disinterested shareholder notice, voting group, quorum, consent, and threshold | Stockholders holding majority of voting power approve/ratify in good faith after common-office/financial-interest fact known; common/interested director or officer votes must be counted. No disinterested-share exclusion, separate conflict quorum, votes-cast formula, group rule, or consent formula in § 78.140 (§ 78.140(2)(b)) |
| Fairness alternative, relevant time, burden, and statutory standard | Separate route when contract/transaction fair to corporation at authorization or approval; section states no fairness elements or express burden for ordinary transaction. Director compensation is presumed fair unless proven unfair by preponderance (§ 78.140(2)(d), (5)) |
| Interested-person presence, participation, vote, abstention, and written consent | Interested director/officer may attend, participate, or have vote counted; interested director may sign unanimous consent. Written abstention route requires interest known before signing, described in consent, and unanimous good-faith approval excluding abstention. Interested directors count toward meeting quorum (§§ 78.140(1), (3)-(4), 78.315(2)(a)) |
| Controlling stockholders, officers, compensation, and special transaction routes | Express directors, officers, common-office entities, and financial interests. No controlling-stockholder, going-private, corporate-opportunity, or loan branch in § 78.140. Board may set director compensation regardless of personal interest unless articles/bylaws vary, with rebuttable fairness presumption (§ 78.140(1), (5)) |
| Statutory effect, remedies, records, fiduciary, and public-company boundaries | Qualifying route makes contract/transaction not void/voidable solely for covered relationship, presence, participation, consent, or counted-vote grounds. Chapter 78 states no general board-minute/consent retention duty; consent-specific disclosure stays in the consent. Authorization, governing-document, fiduciary, securities, public-company, enforcement, and other-remedy questions remain (§§ 78.140, 78.315(2)) |
Requirements one by one
The statute expressly covers directors and officers
NRS § 78.140 covers a contract or other transaction between the corporation and one or more directors or officers. It also reaches a transaction with another corporation, firm, or association in which a corporate director or officer holds office or is financially interested.
The section does not use proposed-transaction, controlled-subsidiary, direct-or- indirect, related-person, or material-financial-interest definitions. Whether a real interest fits its language therefore depends on the facts and other law.
Disclosure is limited to the relationship or interest fact
The board route requires the fact of the common directorship, office, or financial interest to be known to the board or committee. The shareholder route requires that fact to be known to stockholders.
Section 78.140 does not expressly require disclosure of all material transaction facts, identify who must supply the information, impose a writing, or provide a confidential-information alternative. Those features should not be imported from another state's conflict statute.
The board route uses good-faith disinterested approval
Directors or committee members other than the common or interested persons must approve or ratify in good faith. If the interested votes are not counted, a majority of the disinterested directors or committee members may act.
Interested directors still count toward meeting quorum. The section states no minimum-two requirement, all-disinterested committee, committee-selection rule, or exclusion from deliberation.
The shareholder route must count interested votes
After the common-office or financial-interest fact is known, stockholders holding a majority of voting power approve or ratify in good faith. The votes of the common or interested directors or officers must be counted.
Section 78.140 states no disinterested-share exclusion, separate conflict quorum, votes-cast denominator, voting-group allocation, or special shareholder- consent formula.
Lack of knowledge and fairness are separate routes
One route applies when the director or officer did not know the common directorship, office, or financial interest when the transaction was brought to the board for action. This is a knowledge rule, not a conclusion that an unknown interest did not exist.
Fairness to the corporation is another route, measured when the contract or transaction is authorized or approved. The section does not define fairness or assign an express burden for an ordinary transaction.
Presence, participation, vote, and consent may coexist with protection
The statute expressly addresses the interested director's or officer's presence and participation and the interested director's counted vote. Those facts do not alone make the transaction void or voidable when one subsection 2 route is met.
The interested director also may sign the otherwise unanimous board consent. Alternatively, NRS § 78.315(2)(a) permits a written abstention when the interest fact is known before signing, the consent describes the fact, and every other member approves in good faith without counting the abstention.
Director compensation has its own presumption
Unless the articles or bylaws provide otherwise, subsection 5 lets the board set director compensation without regard to personal interest. The compensation is presumed fair to the corporation unless unfairness is proven by a preponderance of the evidence.
That special burden rule should not be generalized to other contracts or transactions. Section 78.140 states no controlling-stockholder, going-private, corporate-opportunity, or loan branch.
The statutory effect is narrow
A qualifying route makes the contract or transaction not void or voidable solely because of the covered relationship or interest, presence, participation, signed consent, or counted vote. It does not declare the transaction authorized, fair, enforceable, or immune from fiduciary, governing- document, securities, or another independent ground.
Chapter 78 states no general duty to retain board minutes or written consents. The specific written-abstention route does require the interest fact to appear in the consent itself.
What trips people up
Nevada's board and shareholder routes treat interested votes differently. The board route depends on disinterested approval, but the shareholder route requires the interested director's or officer's votes to be counted.
The fairness time is authorization or approval, while the separate lack-of- knowledge route asks what the director or officer knew when the transaction was brought to the board.
Common questions
May an interested director attend, participate, and vote?
Yes. Those facts do not alone defeat the statutory protection if one subsection 2 route is satisfied. Disinterested directors still must supply the board- approval route.
May the interested director abstain from written consent?
Yes, using the specific written-abstention procedure: prior board knowledge, description of the interest fact in the consent, and unanimous good-faith approval without counting the abstention.
Must interested shares be excluded from the stockholder vote?
No. Section 78.140(2)(b) says the common or interested director's or officer's votes must be counted.
Does the compensation presumption cover every interested transaction?
No. Subsection 5 states the preponderance presumption specifically for board-set director compensation.
Statutes and sources
- NRS § 78.012(2) — Nevada internal-affairs rule.
- NRS § 78.140 — covered contracts, four routes, quorum, consent, and compensation.
- NRS § 78.315(2)(a) — interested-director written abstention.
All are in the official Nevada Legislature Chapter 78 text, accessed September 4, 2026.
Source links
Every statute quoted above, linked, with the date we checked it.
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