Nonprofit Director Conflict Transaction Approval Rules in Wisconsin
At a glance
| Governing act and covered transactions | Chapter 181 nonstock corporations; corporation-director or corporation-director-linked entity contract/transaction (§ 181.0831(1)) |
|---|---|
| Interest and related-person trigger | Director counterparty, or director/officer of other entity or materially financially interested there; no related-person formula in section (§ 181.0831(1)) |
| Disclosure and knowledge | Relationship or interest disclosed or known to board/committee or voting members; section specifies no separate transaction-fact disclosure (§ 181.0831(1)(a)-(b)) |
| Board or committee approval | Board/committee authorization, approval, or ratification by sufficient vote or consent without interested directors’ votes/consents (§ 181.0831(1)(a)) |
| Member approval and vote | Members entitled to vote authorize, approve, or ratify after interest disclosure/knowledge, by vote or written consent; no conflict-specific threshold stated (§ 181.0831(1)(b)) |
| Fairness route and time | Fair and reasonable to corporation is independent route; section does not set a particular assessment time (§ 181.0831(1)(c)) |
| Interested participation and quorum | Common/interested directors count toward board/committee quorum; interest, presence, or counted vote is not a voidability ground if route applies (§ 181.0831(1)-(2)) |
| Burden, effect, and separate authorization | Not void/voidable for listed interest or participation grounds on a route; no proof burden stated; ordinary board vote remains governed by § 181.0824(2) (§§ 181.0831(1), 181.0824(2)) |
| Special coverage and later changes | Articles, bylaws, or board resolution may add conflict requirements; chapter 181 published October 1, 2026 (§ 181.0831(3)) |
Requirements one by one
Who and what is covered
Section 181.0831(1) covers a contract or transaction between the corporation and a director, or an entity in which its director is a director, officer, or holder of a material financial interest. It addresses voidability because of that relationship or interest, the director's presence at the authorizing meeting, or counting the director's vote.
Disclosure and board action
Under § 181.0831(1)(a), the relationship or interest must be disclosed or known to the board or committee. Authorization, approval, or ratification then requires a vote or consent sufficient for the purpose without counting interested directors' votes or consents. The statute names the relationship or interest as the fact to disclose; it does not expressly name separate facts about the transaction.
Member and fairness routes
Section 181.0831(1)(b) allows members entitled to vote to authorize, approve, or ratify by vote or written consent after the relationship or interest is disclosed or known to them. The conflict subsection supplies no separate member-vote threshold. Subsection (1)(c) gives a separate route when the contract or transaction is fair and reasonable to the corporation; it does not name a measurement date.
What trips people up
Common or interested directors may count toward a board or committee quorum under § 181.0831(2), but the board approval route still requires a sufficient vote without their votes or consents. Section 181.0824(2) supplies the ordinary board voting rule, subject to the chapter, articles, or bylaws; the conflict provision protects against only the listed voidability grounds. Section 181.0831(3) lets the articles, bylaws, or board resolution add requirements.
Common questions
May a committee handle the conflict vote?
Yes. Section 181.0831(1)(a) expressly names a committee and requires a sufficient vote or consent without interested directors' votes or consents.
Does an interested director's attendance destroy the protection?
No. Section 181.0831(1) expressly includes the director's presence at the board or committee meeting among the grounds that do not make a qualifying transaction void or voidable.
Statutes and sources
- Wis. Stat. § 181.0831(1)-(3): covered transactions, approval and fairness routes, quorum, and added requirements. Current official section, accessed 2026-10-02.
- Wis. Stat. § 181.0824(1)-(2): ordinary board quorum and vote. Current official section, accessed 2026-10-02.
Source links
Every statute quoted above, linked, with the date we checked it.
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