Nonprofit Director Conflict Transaction Approval Rules in Nebraska
At a glance
| Governing act and covered transactions | Nebraska Nonprofit Corporation Act; public benefit, mutual benefit, or religious corporation director transaction (§§ 21-1914(6), 21-1987(a)–(c)) |
|---|---|
| Interest and related-person trigger | Direct/indirect director interest; material-interest/general-partner or director/officer/trustee role in another party (§ 21-1987(a), (d)) |
| Disclosure and knowledge | Transaction and director-interest material facts disclosed or known for board route; mutual-benefit members for member route (§ 21-1987(b)(1), (c)) |
| Board or committee approval | Disinterested majority, never single director; public benefit/religious vote in advance with good-faith reasonable fairness belief (§ 21-1987(b)(1), (e)) |
| Member approval and vote | Mutual benefit only: informed members, majority of eligible votes; interested-director and specified entity-controlled votes excluded (§ 21-1987(c)(2), (f)) |
| Fairness route and time | Independent protection if fair when entered into; public benefit/religious directors may approve on reasonable fairness belief (§ 21-1987(a), (b)(1)) |
| Interested participation and quorum | Disinterested board majority supplies conflict-action quorum; interested presence/vote does not invalidate compliant board action (§ 21-1987(e)) |
| Burden, effect, and separate authorization | Not voidable or basis for director liability on conflict ground; excluded member votes count under other act sections (§ 21-1987(a), (f)) |
| Special coverage and later changes | Public benefit/religious: Attorney General or joined district-court approval before/after consummation; governing documents may add requirements (§ 21-1987(b)(2), (g)) |
Requirements one by one
Which corporation and interest?
Section 21-1914(6) identifies public benefit, mutual benefit, and religious corporations under this act. Section 21-1987(d) treats a director as indirectly interested when another party entity is one in which the director has a material interest or is a general partner, or one where the director is a director, officer, or trustee.
Public benefit and religious corporations
Under § 21-1987(b)(1), an informed board or committee vote must occur in advance, and approving directors must in good faith reasonably believe the transaction fair to the corporation. Subsection (e) requires a majority of disinterested directors and bars approval by one director alone. Alternatively, subsection (b)(2) permits approval before or after consummation by the Attorney General or the district court in an action joining the Attorney General.
Mutual benefit corporations
Section 21-1987(c) permits informed board or committee approval or ratification, or informed member approval or ratification. The member route in subsection (f) requires a majority of eligible votes, excluding interested-director votes and votes cast or controlled by the entity described in subsection (d)(1). Independently, subsection (a) protects a transaction that was fair when entered into.
What trips people up
The excluded member votes in § 21-1987(f) still count toward any approval required under other sections of the act. The conflict-vote quorum is its own calculation: subsection (e) recognizes a disinterested board majority for the board route, while subsection (f) sets a majority of eligible member voting power for the mutual-benefit member route. Articles, bylaws, or a board resolution may add requirements under subsection (g).
Common questions
May a public benefit corporation obtain approval after closing?
The board route in § 21-1987(b)(1) is in advance. Subsection (b)(2) permits Attorney General or joined district-court approval before or after consummation.
Does an interested director's presence defeat a proper board vote?
No. Section 21-1987(e) says presence or a vote by an interested director does not affect an action otherwise approved under the stated board route.
Statutes and sources
- Neb. Rev. Stat. § 21-1914(6): corporation types. Official section, accessed 2026-10-02.
- Neb. Rev. Stat. § 21-1987(a)–(g): interest, differentiated approval routes, votes, fairness, and effect. Official section, accessed 2026-10-02.
Source links
Every statute quoted above, linked, with the date we checked it.
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