Nonprofit Director Conflict Transaction Approval Rules in Maine

Short answer Maine protects a director or officer conflict transaction from voidability or interest-based liability if it was fair when entered into or approved under § 718. Public benefit approvals require fairness at the approval date and may use the Attorney General or Superior Court; mutual benefit corporations may use a disinterested board or eligible-member vote.

State

Maine

Statute checked

October 2, 2026

Sources

2 statutes

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At a glance

Governing act and covered transactions	Maine Nonprofit Corporation Act; director or officer transaction with direct/indirect financial interest (§ 718(1))
Interest and related-person trigger	Direct/indirect financial interest; another party entity in which fiduciary has a material interest, is general partner, or serves as director/officer/trustee (§ 718(1))
Disclosure and knowledge	Transaction and fiduciary-interest material facts disclosed or known to board/committee; mutual members likewise informed for their route (§ 718(3)(A), (4))
Board or committee approval	Majority of disinterested board/committee directors; one director alone cannot approve; public benefit transaction also must be fair and equitable at approval (§ 718(3)–(5))
Member approval and vote	Mutual benefit only: informed members; majority of countable votes, excluding interested fiduciary and specified entity-controlled votes (§ 718(4)(B), (6))
Fairness route and time	Independent fairness when entered; public benefit approval route additionally requires fair and equitable terms when authorized, approved, or ratified (§ 718(2), (3))
Interested participation and quorum	Disinterested director majority supplies conflict-action quorum; mutual member quorum is majority of eligible voting power, whether present or not (§ 718(5)–(6))
Burden, effect, and separate authorization	Not voidable or grounds for director/officer liability if § 718(2) met; public-benefit approval fairness burden on proponent; interested member votes still count under other sections (§ 718(2), (3), (6))
Special coverage and later changes	Public benefit board may request Attorney General or Superior Court approval; board impasse lets a fiduciary request it; governing documents/resolution may add terms (§ 718(3)(B), (7))

Requirements one by one

Covered interests and different corporate routes

Section 718(1) reaches a director or officer with a direct or indirect financial interest. An indirect interest includes a material interest or general-partner position in another party entity, or a director, officer, or trustee role there. Section 102(8-A), (10-A) identifies the Act's mutual and public benefit corporation categories.

A board or committee approval requires disclosure or knowledge of the transaction's material facts and the fiduciary's interest. Section 718(5) calls for a majority of directors without a direct or indirect interest and forbids approval by one director alone. A public benefit corporation's approval must also be fair and equitable as of authorization, approval, or ratification; the party asserting that fairness bears the burden (§ 718(3)). The board may seek Attorney General or Superior Court approval, and a director or officer may do so if the board cannot decide.

Mutual benefit member vote

Under § 718(4), a mutual benefit corporation may instead use informed members. Section 718(6) requires a majority of votes eligible to count, excluding votes cast or controlled by an interested director or officer or the specified entity in § 718(1)(A). Those votes still count for approvals under other provisions. The conflict-vote quorum is a majority of eligible voting power, whether present or not.

What trips people up

Section 718(2) has an independent fairness-at-entry route; it is distinct from the public benefit approval route's fairness test at the date of approval. Articles, bylaws, or a board resolution may impose additional requirements (§ 718(7)). For a public benefit corporation, the Attorney General may seek to void a transaction believed neither fair nor properly approved, ordinarily after ten days' written notice (§ 718(8)).

Common questions

Can a director or officer's role in another entity create an indirect interest?

Yes. Section 718(1) specifies material-interest, general-partner, director, officer, and trustee connections with another transaction party.

Does Maine allow approval after consummation?

Yes. Sections 718(3)–(4) allow authorization, approval, or ratification before or after consummation under their respective public and mutual benefit routes.

Statutes and sources

13-B M.R.S. § 718(1)–(9): conflict, fairness, approval, votes, effect, and Attorney General action. Official section, accessed 2026-10-02.
13-B M.R.S. § 102(8), (8-A), (10-A): members and corporate categories. Official section, accessed 2026-10-02.

Source links

Every statute quoted above, linked, with the date we checked it.

13-B M.R.S. § 718(1)–(9) · accessed 2026-10-02

13-B M.R.S. § 102(8), (8-A), (10-A) · accessed 2026-10-02

This page gives general legal information about interested-director transactions in an ordinary domestic nonprofit corporation. It is not legal advice. The statute and governing documents may require separate authorization, and whether an interest, disclosure, vote, or transaction is fair depends on facts. Confirm current official law and seek qualified advice for a particular transaction.

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