Nonprofit Director Conflict Transaction Approval Rules in Massachusetts
At a glance
| Governing act and covered transactions | Chapter 180 nonprofit corporation; § 6C sets director/officer/incorporator duties, § 10C imports specified chapter 156B rules |
|---|---|
| Interest and related-person trigger | No interested-transaction trigger stated in chapter 180 §§ 6C, 10C or imported chapter 156B § 57 |
| Disclosure and knowledge | No transaction-specific disclosure formula in cited chapter 180 duty/import or ordinary board-vote provisions |
| Board or committee approval | Ordinary board action uses majority of directors present at quorum unless law or documents require more (ch. 180, § 10C; ch. 156B, § 57) |
| Member approval and vote | Cited duty/import and board-vote provisions prescribe no special member conflict vote (ch. 180, §§ 6C, 10C; ch. 156B, § 57) |
| Fairness route and time | Chapter 180, § 6C uses good faith, best-interests, and ordinary-care duties; no conflict-specific fairness timing there |
| Interested participation and quorum | Ordinary board quorum is majority of directors in office unless bylaws vary; no interested-director counting rule in chapter 156B, § 57 |
| Burden, effect, and separate authorization | Chapter 180, § 6C limits duty liability on compliance; cited provisions do not grant interest-only transaction nonvoidability |
| Special coverage and later changes | Chapter 180 § 10C imports listed chapter 156B sections for nonprofits and adapts stock terminology to members |
Requirements one by one
Duty and ordinary board action
Chapter 180 § 6C requires a director to act in good faith, with a reasonable belief that the action serves the corporation's best interests, and with the care of an ordinarily prudent person in a comparable position. It limits liability for performing duties when those conditions are met. Chapter 180 § 10C makes selected chapter 156B provisions applicable to nonprofits, including § 57: ordinarily a majority of directors in office forms the board quorum, and a majority of those present may act, subject to a higher requirement in law or governing documents.
These cited sections speak to director conduct and ordinary board action. They do not state a separate interested-transaction definition, disinterested vote, member conflict vote, fairness measurement time, or rule that a transaction is not voidable solely because of a director's interest. The governing documents and transaction's other requirements therefore need separate attention.
What trips people up
Chapter 180, § 10C names the chapter 156B sections that apply and adapts stock terms to nonprofit members. A corporate board vote under imported chapter 156B, § 57 answers who may act for the board; it does not itself establish that an interested director complied with chapter 180, § 6C's good faith and care duties.
Common questions
Does a board vote alone resolve the director's duty question?
No. Chapter 156B, § 57 states the default quorum and board vote, while chapter 180, § 6C independently states the director's conduct standard.
Can a director rely on reports from others?
Chapter 180, § 6C allows reliance on specified officers, employees, experts, and a duly constituted board committee when the director reasonably believes the source competent or trustworthy. Reliance is not good faith under that section if the director knows facts making it unwarranted.
Statutes and sources
- Mass. Gen. Laws ch. 180, § 6C: “A director, officer or incorporator of a corporation shall perform his duties as such” in good faith, with the stated belief and care. Official section text, accessed 2026-10-02.
- Mass. Gen. Laws ch. 180, § 10C: “Every corporation shall, except as otherwise provided in this chapter, be subject to” the listed chapter 156B sections. Official section text, accessed 2026-10-02.
- Mass. Gen. Laws ch. 156B, § 57: ordinary board quorum and majority action. Official section text, accessed 2026-10-02.
Source links
Every statute quoted above, linked, with the date we checked it.
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