Nonprofit Director Conflict Transaction Approval Rules in Ohio

At a glance

Requirements one by one

Covered relationships and effect

Section 1702.301(A)(1) reaches a contract, action, or transaction between or affecting the corporation and its director or officer, and one with another person where the director or officer holds a director or officer role or has a financial or personal interest. A covered relationship, presence, or vote alone does not make the matter void or voidable if one statutory condition is met. The opening words, “Unless otherwise provided in the articles or the regulations,” require checking those documents too.

Disclosed board or committee action

Under § 1702.301(A)(1)(a), the material facts of both the interest or relationship and the matter must be disclosed or known to the directors or committee. Authorization requires a majority of disinterested directors acting in good faith reasonably justified by those facts; they can be fewer than an ordinary quorum.

Member approval and fairness

Section 1702.301(A)(1)(b) requires a meeting held to vote on the matter and the affirmative vote of a majority of the corporation's voting members who are not interested. The same two sets of material facts must be disclosed or known to members entitled to vote. Section 1702.301(A)(1)(c) separately protects a matter fair to the corporation when the directors, committee, or members authorize or approve it.

What trips people up

Section 1702.301(A)(2) lets a common or interested director count toward the meeting's quorum. That does not replace the disinterested majority required for the board route. Section 1702.301(B) also says the interest-based protection does not limit director liability under § 1702.55.

Common questions

Does a possible change in control itself make a director interested?

No. Under § 1702.301(C), a possible change in control or continuation in office alone does not make a director interested for this section.

Can interested directors set compensation?

Section 1702.301(A)(3) gives directors, by a majority of those in office, authority to establish reasonable compensation for directors and officers regardless of their financial or personal interest, or to delegate that authority to one or more officers or directors.

Statutes and sources

• Ohio Rev. Code § 1702.301(A)(1): “No contract, action, or transaction is void or voidable ... because” of the listed director or officer interests when one of the stated conditions applies. Official section text, accessed 2026-10-02.
• Ohio Rev. Code § 1702.301(A)(2)-(3): interested directors count for quorum; a majority of directors in office may establish reasonable director and officer compensation. Official section text, accessed 2026-10-02.
• Ohio Rev. Code § 1702.301(B)-(D): the section preserves § 1702.55 liability, states the change-of-control rule, and defines “action.” Official section text, accessed 2026-10-02.