Nonprofit Director Conflict Transaction Approval Rules in Connecticut

At a glance

Requirements one by one

Covered interests and fairness

Section 33-1127(1) covers a transaction effected or proposed by the corporation or a controlled entity when the director is a party, knows of a material financial interest, or knows a related person is a party or has such an interest at the relevant time. Subsections (4) and (5) define materiality and the related-person groups. Under § 33-1128(b)(3), the fairness route asks whether the transaction is established to have been fair in the circumstances at the relevant time; § 33-1127(3), (6) define that time and the fair-to-corporation factors.

Qualified director action

The conflicted director's required disclosure under § 33-1127(7) includes the nature of the interest and material subject-matter facts known to that director. Section 33-1129(a) then requires affirmative votes of a majority of qualified directors who vote, never fewer than two. A committee must contain only qualified directors and satisfy its appointment rule. Section 33-1003a(a)(2) disqualifies a director with the conflict or a material relationship with such a director. Section 33-1129(b) allows modified disclosure when specified legal, confidentiality, or professional duties prevent full disclosure; it still requires disclosure of the conflict and the duty preventing release.

Eligible member action

Section 33-1130(a) requires notice describing the proposed action, required disclosure communicated to voting members, and approval by a majority of votes cast by members entitled to vote. The director must identify known conflicted-director and related-person members to the vote tabulator in writing before the vote. Subsections (b)-(c) exclude those votes, with the stated employer-related-person exception. A majority of eligible voting power is the conflict-action quorum under subsection (d).

What trips people up

Conflict approval can have a different quorum from ordinary authorization. Section 33-1129(c)-(d) gives a qualified-director quorum for conflict action but requires independent board or committee action if the applicable authorization rule is not met. Section 33-1130(f) gives the same warning for member action. A court has discretion under § 33-1130(e) when a director's failure to identify excluded member votes was unintended and did not determine the vote.

Common questions

What does the protection actually prevent?

Section 33-1128(b) bars equitable relief, damages, or other sanctions against a director, in the specified proceedings, on the ground of the director's interest when one statutory route applies. It does not address every possible ground for challenging a transaction.

Does an interested director's presence invalidate the qualified-director vote?

No. Section 33-1129(c) says a compliant qualified-director action is unaffected by the presence or vote of a director who is not qualified.

Statutes and sources

• Conn. Gen. Stat. § 33-1003a(a)(2), (b)-(c): qualified directors. Current official chapter, accessed 2026-10-02.
• Conn. Gen. Stat. § 33-1127(1)-(7): covered interests and definitions. Current official chapter, accessed 2026-10-02.
• Conn. Gen. Stat. § 33-1128(a)-(b): interest-based effect and routes. Current official chapter, accessed 2026-10-02.
• Conn. Gen. Stat. § 33-1129(a)-(d): qualified board or committee action. Current official chapter, accessed 2026-10-02.
• Conn. Gen. Stat. § 33-1130(a)-(f): eligible member action. Current official chapter, accessed 2026-10-02.