Nonprofit Director Conflict Transaction Approval Rules in South Dakota
At a glance
| Governing act and covered transactions | Nonprofit corporations are subject to chapters 47-22–47-28; § 47-23-20 supplies ordinary board action, without a transaction-specific conflict rule (§§ 47-1A-140(24), 47-23-20) |
|---|---|
| Interest and related-person trigger | § 47-23-20 states a board-action rule rather than an interest or related-person trigger |
| Disclosure and knowledge | § 47-23-20 addresses quorum and vote; it does not specify a conflict-facts disclosure step |
| Board or committee approval | Ordinary board action: majority of directors present at a quorum meeting; articles/bylaws may require more (§§ 47-23-20, 47-23-23) |
| Member approval and vote | § 47-23-20 sets a board vote; no member conflict-approval substitute is stated there |
| Fairness route and time | § 47-23-20 states no fairness alternative or measuring date for interested transactions |
| Interested participation and quorum | Ordinary quorum is majority of fixed/stated directors, never below one third; act by majority present unless greater vote applies (§ 47-23-20) |
| Burden, effect, and separate authorization | § 47-23-20 defines board action and does not state a conflict-specific voidability, liability, or burden effect |
| Special coverage and later changes | Business corporation definition is for profit; nonprofit corporation means one subject to chapters 47-22–47-28 (§ 47-1A-140(4), (24)) |
Requirements one by one
Ordinary nonprofit board action
Section 47-1A-140(24) places a domestic nonprofit corporation under chapters 47-22 through 47-28. For board action, § 47-23-20 requires a quorum of a majority of directors fixed by the bylaws, or by the articles if the bylaws do not fix the number. The articles or bylaws may change that quorum, but it cannot be below one third of the fixed or stated board. Once a quorum is present, action takes a majority of directors present unless the nonprofit chapters, articles, or bylaws require more. Section 47-23-23 gives effect to a higher article or bylaw vote.
The ordinary provisions do not give an interested transaction a separate statutory vote or fairness protection. Section 47-23-22 permits a board committee with delegated authority if the articles or bylaws allow it; that provision does not set a disinterested-director approval formula.
What trips people up
Section 47-1A-140(4) defines a “corporation” under the business chapter as a corporation for profit. Its definition in subsection (24) separately places nonprofit corporations in chapters 47-22 through 47-28. A business-corporation conflict procedure should therefore not be presented as this nonprofit board's statutory safe harbor.
Common questions
Does the ordinary quorum rule require disinterested directors?
Section 47-23-20 uses the fixed or stated number of directors and does not make disinterested status part of its quorum formula.
Can the articles or bylaws require a larger vote?
Yes. Sections 47-23-20 and 47-23-23 expressly preserve greater voting requirements in the articles or bylaws.
Statutes and sources
- S.D. Codified Laws § 47-23-20: nonprofit board quorum and vote. Official section, accessed 2026-10-02.
- S.D. Codified Laws § 47-23-22: committee authority. Official section, accessed 2026-10-02.
- S.D. Codified Laws § 47-23-23: greater article or bylaw vote. Official section, accessed 2026-10-02.
- S.D. Codified Laws § 47-1A-140(4), (24): business and nonprofit corporation definitions. Official section, accessed 2026-10-02.
Source links
Every statute quoted above, linked, with the date we checked it.
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