Corporate Interested-Director Transaction Requirements in Oregon
At a glance
| Governing law, entity, transaction, and covered-person scope | Oregon Business Corporation Act, ORS ch. 60; domestic for-profit corporation. Covers transaction with corporation involving corporate director's direct/indirect interest; section names directors, not a general officer-conflict route (ORS 60.001(5), 60.361(1), 60.951) |
|---|---|
| Interest, relationship, control, and materiality definitions | Indirect interest if other party is entity where director has material financial interest/general-partner status, or entity where director is director/officer/trustee and transaction is or should be board-considered. No materiality, related-person, control, or independence definition (ORS 60.361(2)) |
| Required disclosure, facts, timing, knowledge, and recipients | Material facts of transaction and director's interest disclosed to or known by board/committee or shareholders entitled to vote before authorization, approval, or ratification. Fairness route has no disclosure predicate; no special writing, confidentiality, director-source, tabulator, or timing rule stated (ORS 60.361(1)) |
| Disinterested or qualified board/committee composition, quorum, vote, and good faith | Affirmative majority of directors on board/committee without direct/indirect interest; never one director alone. That majority creates conflict quorum. No good-faith, qualified-only committee, selection, or exclusion-from-deliberation condition stated (ORS 60.361(3)) |
| Disinterested shareholder notice, voting group, quorum, consent, and threshold | Majority of shares entitled to count, voting as single group; same eligible-share majority, whether present or not, is conflict quorum. Interested director's shares and material-interest/general-partner entity shares may be counted; no disinterested-share exclusion (ORS 60.361(4)) |
| Fairness alternative, relevant time, burden, and statutory standard | Separate route if transaction was fair to corporation. Section states no measurement time, fairness definition, elements, or burden allocation; do not infer them (ORS 60.361(1)(c)) |
| Interested-person presence, participation, vote, abstention, and written consent | Interested director's presence/vote does not affect otherwise compliant board action, but cannot supply no-interest approving majority. General no-meeting action requires all board members to act and each director to sign; no conflict-specific abstention route stated (ORS 60.341, 60.361(3)) |
| Controlling stockholders, officers, compensation, and special transaction routes | No controlling-stockholder, going-private, corporate-opportunity, or general officer route in ordinary conflict section. Board may fix director compensation unless governing records say otherwise; director loan/guarantee uses benefited-share exclusion or corporate-benefit board determination and approval (ORS 60.334, 60.361, 60.364) |
| Statutory effect, remedies, records, fiduciary, and public-company boundaries | Satisfied route makes transaction not voidable by corporation solely because of director interest; unlawful loan does not affect borrower liability. Permanent meeting/no-meeting action records required. Other authorization, governing-document, fiduciary, securities, public acquisition, enforcement, and remedy questions remain (ORS 60.361(1), 60.364(2), 60.771) |
Requirements one by one
The statute covers a domestic corporation's director transaction
ORS 60.001(5) defines a domestic corporation as a nonforeign corporation for profit incorporated under or subject to Chapter 60. ORS 60.951 names the chapter as the Oregon Business Corporation Act, and ORS 60.361(1) covers a transaction with that corporation in which one of its directors has a direct or indirect interest.
The ordinary conflict provision names directors. It does not create a general officer-conflict, related-person, controlling-stockholder, or going-private procedure.
Indirect interests use two entity branches
The director has an indirect interest if the other party is an entity in which the director has a material financial interest or serves as general partner. A second branch covers an entity for which the director is a director, officer, or trustee when the transaction is or should be considered by the corporation's board.
ORS 60.361 does not define materiality, related person, control, disinterestedness, or independence. A real relationship cannot be classified from its title alone.
Board approval needs a no-interest majority and more than one director
The material facts of both the transaction and the director's interest must be disclosed to or known by the board or committee. Approval then requires an affirmative majority of the directors on that body without a direct or indirect interest.
Oregon expressly bars approval by a single director. When the required no- interest majority approves, that majority establishes the special conflict quorum. The section states no separate good-faith condition, qualified-only committee-selection rule, or requirement that the interested director leave the deliberation.
The shareholder route counts interested shares
The material transaction and interest facts must be disclosed to or known by shareholders entitled to vote. Approval requires a majority of the shares entitled to count, voting as one group, and a majority of those shares—whether present or not—is the special conflict quorum.
Unlike many states using this statutory structure, ORS 60.361(4) expressly says shares owned or vote-controlled by the interested director may be counted. It also allows shares owned or vote-controlled by the entity in which the director has a material financial interest or serves as general partner. This is not a disinterested-shareholder vote.
Fairness is a sparse alternative
Fairness to the corporation is a separate route. ORS 60.361 does not define the standard, identify a measurement time, state elements, or allocate a burden. This cell does not fill those gaps from outside the statute.
Presence, vote, and written consent are separate questions
An interested director's presence or vote does not invalidate an otherwise compliant no-interest-director approval under ORS 60.361(3). That vote still cannot supply the required approving majority.
For ordinary action without a meeting, ORS 60.341 requires all board members to take the action and each director to sign a written consent unless the articles or bylaws provide otherwise. ORS 60.361 states no special conflict abstention or omitted-signature mechanism.
Compensation and director loans have separate text
ORS 60.334 permits the board to fix director compensation unless the articles or bylaws provide otherwise. It does not state that compensation is automatically outside the conflict provision.
ORS 60.364 separately permits a director loan or guarantee if the outstanding voting-share majority approves without benefited-director shares, or if the board determines the loan or guarantee benefits the corporation and approves the specific transaction or a general plan. A violation does not eliminate the borrower's loan liability.
The statutory effect is narrow, and the process leaves records
Satisfying one ORS 60.361(1) route makes the transaction not voidable by the corporation solely because of the director's interest. Those limiting words do not resolve independent authorization, governing-document, fiduciary, securities, public-acquisition, fairness, enforcement, or other-remedy questions.
ORS 60.771 requires permanent shareholder, board, and committee meeting and no- meeting action records in a form reasonably convertible into tangible writing. A record documents the process; it does not by itself prove disclosure, disinterestedness, fairness, or compliance.
What trips people up
The board and shareholder routes use different interest treatment. The board approval must come from more than one director without a direct or indirect interest, while the shareholder approval may count the interested director's shares and the specified interested entity's shares.
Common questions
May an interested director attend or vote at the board meeting?
ORS 60.361(3) says the director's presence or vote does not affect an otherwise compliant action. The approving majority must still consist of more than one director without a direct or indirect interest.
Must the shareholder approval exclude interested shares?
No. Subsection (4) expressly allows shares owned or controlled by the interested director and the subsection (2)(a) entity to be counted.
Does approval prove that the transaction is fair?
No. Board approval, shareholder approval, and fairness are alternative routes, and the statutory effect is limited to voidability by the corporation solely because of the director's interest.
Does the statute assign the fairness burden?
No allocation appears in ORS 60.361. It also does not define fairness or state when it is measured.
Statutes and sources
- ORS 60.001(5) — domestic-corporation definition.
- ORS 60.334 and 60.341 — director compensation and written board action.
- ORS 60.361 — conflict definition, disclosure, board and shareholder approvals, fairness, quorum, share counting, and statutory effect.
- ORS 60.364 — director loans and guarantees.
- ORS 60.771 — permanent corporate action records.
All are in the official Oregon Legislature Chapter 60 text, accessed September 4, 2026.
Source links
Every statute quoted above, linked, with the date we checked it.
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