Corporate Interested-Director Transaction Requirements in Utah

At a glance

Requirements one by one

The conflict rule reaches proposed controlled-entity transactions

Utah Code § 16-10a-101 names Chapter 10a as the Utah Revised Business Corporation Act, and § 16-10a-102(11) defines the domestic corporation as a nonforeign for-profit corporation incorporated under or subject to the chapter.

Sections 16-10a-850 and 16-10a-851 reach a proposed or effected transaction by that corporation or its controlled entity when a corporate director has the defined conflict. The ordinary provisions name directors rather than officers who are not also directors.

A conflict depends on relationship, significance, and influence

The first definition branch applies when the director or a related person is a party or has a beneficial financial interest or close link that is financially significant enough that influence on the director's judgment would reasonably be expected.

The board-consideration branch separately reaches listed entity, general- partner, agency, employment, principal, fiduciary, beneficiary, and control relationships under the same financial-significance and influence test. A qualified director has neither the conflict nor a relationship with the conflicted director that would reasonably be expected to influence judgment.

The separate § 16-10a-102(31) related-person definition includes specified family and household members, a trust or estate with a substantial beneficiary, and listed fiduciary relationships. Applying these standards to a real person requires the underlying facts.

Required and modified disclosure differ

Required disclosure includes the conflict's existence and nature and all known subject-matter facts an ordinarily prudent person would reasonably consider material to deciding whether to proceed. The board route requires that disclosure to the extent the qualified directors do not already know it.

When neither the director nor a related person is a transaction party and law, professional canon, or a confidentiality duty prevents full disclosure, § 16-10a-852(2) permits disclosure of the conflict's existence and nature plus the character and limits of that duty before the vote.

The shareholder route adds transaction notice, required disclosure to the voters to the extent not known, and a pre-vote statement to the secretary or tabulator identifying the number of affected shares and the holders or voting controllers. The statute does not require that last statement to be written.

Qualified-director approval has no minimum-two floor

Approval requires an affirmative majority of the qualified directors who vote. An approving committee must consist only of qualified directors and include either every qualified board director or members appointed by a qualified- director majority.

A majority of all qualified board or committee directors forms the special conflict quorum. Unlike several other qualified-director statutes, Utah states no minimum-two floor. Nonqualified-director presence or voting does not affect otherwise compliant action.

Qualified shares use voting power present, not merely votes cast

Under Utah Code § 16-10a-853, the quorum is a majority of all votes entitled to be cast by qualified-share holders. Once that quorum exists, approval requires a majority of the votes entitled to be cast by qualified shares present personally or by proxy—not merely a majority of votes actually cast.

Qualified shares exclude shares known before the vote to be beneficially owned or vote-controlled by the conflicted director or a related person. Presence or voting by nonqualified shares does not affect otherwise compliant action, subject to the narrow statutory cure for a nonoutcome-determinative disclosure failure.

Fairness is tied to a defined commitment time

The fairness route judges the transaction under the circumstances at the time of commitment. That means consummation or, for a contract, the point when the corporation or controlled entity becomes contractually bound so that unilateral withdrawal would entail significant loss, liability, or other damage.

Section 16-10a-851(2)(c) says fairness must be established but neither defines fairness nor expressly names who carries the burden. This cell does not supply those rules from outside the statute.

Presence, voting, and unanimous consent are distinct

Nonqualified-director presence or voting does not affect an otherwise compliant qualified-director action. That does not make the nonqualified vote part of the required qualified majority.

Section 16-10a-821 generally requires every board member's written consent for action without a meeting and permits a qualifying electronic transmission unless the bylaws provide otherwise. The conflict provisions do not supply a special written-abstention or conflicted-signature route.

Compensation is separate from the conflict provisions

Section 16-10a-811 lets the board fix director compensation unless the articles or bylaws say otherwise. It does not state that compensation is automatically outside the conflict provisions.

Sections 16-10a-850 through 16-10a-853 state no controlling-stockholder, going- private, corporate-opportunity, loan, or general officer route. Any separate transaction-specific rule must be analyzed on its own terms.

The statutory effect is interest-ground limited

For a qualifying conflict transaction, § 16-10a-851 bars injunction, set-aside, damages, or other sanctions in the named shareholder or corporate proceeding solely because of the director's or associate's interest. The same interest- ground limitation applies when the transaction does not meet the defined conflict test. It does not declare every transaction authorized, valid, fair, or immune from another ground.

Section 16-10a-1601 requires permanent meeting, no-meeting-action, and waiver records in written or reasonably convertible form. Its October 1, 2026 version changes an annual-report cross-reference but not these operative record rules.

What trips people up

The shareholder approval formula is not simply a majority of votes cast. Utah uses the votes entitled to be cast by the qualified shares present personally or by proxy, after a separate majority-of-all-qualified-voting-power quorum is established.

The board route has no minimum-two floor. A one-person qualified-director group can meet the text's majority quorum and vote formulas, although all committee members still must be qualified and the ordinary authorization rules remain separate.

Common questions

Must a nonqualified director leave the meeting?

Section 16-10a-852 states no departure requirement. Subsection (3) says the director's presence or vote does not affect otherwise compliant action, though approval still must come from qualified directors.

Is a majority of qualified-share votes cast enough?

No. Utah measures approval from all votes entitled to be cast by qualified shares present, not merely those actually cast, and separately requires a majority-of-all-qualified-voting-power quorum.

Does the fairness route assign a burden?

The statute says fairness must be established but does not expressly identify the burden bearer. It defines the measurement time rather than the substantive fairness test.

Does the ordinary route cover an officer who is not a director?

No general officer-conflict route appears in §§ 16-10a-850 through -853. The defined conflicted person is a corporate director.

Statutes and sources

• Utah Code §§ 16-10a-101 and -102(11), (27), (31) — Act scope, domestic corporation, qualified shares, and related persons.
• Utah Code §§ 16-10a-811 and -821 — compensation and written board action.
• Utah Code §§ 16-10a-850 through -853 — conflict definitions, judicial effect, qualified-director action, and qualified-share action.
• Utah Code § 16-10a-1601(1), (4) — permanent corporate action and waiver records.

All are in the official Utah Legislature Chapter 10a PDF, accessed September 4, 2026.