Nonprofit Director Conflict Transaction Approval Rules in Missouri
At a glance
| Governing act and covered transactions | Missouri Nonprofit Corporation Act; corporation transaction with materially interested director (§ 355.416(1)) |
|---|---|
| Interest and related-person trigger | Director has a material interest; section states no related-person test (§ 355.416(1)) |
| Disclosure and knowledge | Board/committee must know transaction and interest facts for board routes; members receive both for mutual benefit member route (§ 355.416(2)(1)(a), (3)) |
| Board or committee approval | Public benefit/religious: advance board or committee vote plus good-faith reasonable belief of no unfairness; mutual benefit: board/committee action; majority of disinterested directors, at least two (§ 355.416(2)(1), (3)(1), (4)) |
| Member approval and vote | Mutual benefit only: informed members authorize, approve, or ratify; majority of countable votes; interested director member-votes excluded; countable-vote majority is quorum (§ 355.416(3)(2), (5)) |
| Fairness route and time | Not unfair when entered into is an independent protection; public benefit/religious board approvers reasonably believe no unfairness in good faith (§ 355.416(1), (2)(1)(b)) |
| Interested participation and quorum | Disinterested board majority supplies conflict-action quorum; interested director presence/vote does not invalidate otherwise approved board action (§ 355.416(4)) |
| Burden, effect, and separate authorization | No voidability or liability on noncompensated director if not unfair at entry or approved under statute; interested votes count for other chapter approval (§ 355.416(1), (5)) |
| Special coverage and later changes | Public benefit/religious noncompensated director: attorney general or circuit court with attorney general joined may approve before/after closing; documents or board resolution may add requirements (§ 355.416(2)(2), (6)) |
Requirements one by one
Covered interest and effect
Section 355.416(1) defines the transaction by a director's material interest. It protects the transaction from voidability and a noncompensated director from liability when the transaction was not unfair to the corporation when entered into, or when one of the specified approval paths applies. The section gives no definition of material interest.
Public benefit and religious corporation board route
For a noncompensated director, § 355.416(2)(1) calls for an advance board or committee vote after the directors know or receive the material transaction and interest facts. The approving directors must reasonably believe in good faith that the transaction is not unfair. Under subsection (4), the affirmative votes must come from a majority of directors on the board or committee without a direct or indirect interest, and a single director cannot supply approval.
Mutual benefit corporation routes
Section 355.416(3) permits informed board or committee authorization, approval, or ratification, or the same action by informed members. Under subsection (5), a member vote needs a majority of votes entitled to be counted. Votes cast by a director with a material interest are excluded from that conflict vote, although those votes count for approval under other provisions of the chapter.
What trips people up
A majority of disinterested board members voting for the transaction supplies a quorum for this conflict action under § 355.416(4). An interested director's presence or vote does not invalidate otherwise approved board action under the stated routes. For a public benefit or religious corporation's noncompensated director transaction, subsection (2)(2) also permits attorney general approval or circuit court approval with the attorney general joined, before or after consummation. The articles, bylaws, or board resolution may add requirements under subsection (6).
Common questions
Does the mutual benefit member vote require every member to be disinterested?
Section 355.416(5) excludes votes cast by a director with a material interest. It sets a quorum as a majority of the voting power entitled to be counted for this conflict vote, whether or not present.
Is fairness measured when directors vote?
The independent protection in § 355.416(1) asks whether the transaction was not unfair when entered into. The public benefit or religious corporation board route separately asks approving directors to hold a good-faith reasonable belief that it is not unfair.
Statutes and sources
- Mo. Rev. Stat. § 355.416(1)-(6): director-interest trigger, nonprofit-type routes, voting, effect, and additional requirements. Current official section, accessed 2026-10-02.
Source links
Every statute quoted above, linked, with the date we checked it.
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