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California Corporations Code Section 310

Legal Research Home > California Laws > Corporations Code > California Corporations Code Section 310

(a) No contract or other transaction between a corporation and
one or more of its directors, or between a corporation and any
corporation, firm or association in which one or more of its
directors has a material financial interest, is either void or
voidable because such director or directors or such other
corporation, firm or association are parties or because such director
or directors are present at the meeting of the board or a committee
thereof which authorizes, approves or ratifies the contract or
transaction, if
    (1) The material facts as to the transaction and as to such
director's interest are fully disclosed or known to the shareholders
and such contract or transaction is approved by the shareholders
(Section 153) in good faith, with the shares owned by the interested
director or directors not being entitled to vote thereon, or
    (2) The material facts as to the transaction and as to such
director's interest are fully disclosed or known to the board or
committee, and the board or committee authorizes, approves or
ratifies the contract or transaction in good faith by a vote
sufficient without counting the vote of the interested director or
directors and the contract or transaction is just and reasonable as
to the corporation at the time it is authorized, approved or
ratified, or
    (3) As to contracts or transactions not approved as provided in
paragraph (1) or (2) of this subdivision, the person asserting the
validity of the contract or transaction sustains the burden of
proving that the contract or transaction was just and reasonable as
to the corporation at the time it was authorized, approved or
ratified.
   A mere common directorship does not constitute a material
financial interest within the meaning of this subdivision. A director
is not interested within the meaning of this subdivision in a
resolution fixing the compensation of another director as a director,
officer or employee of the corporation, notwithstanding the fact
that the first director is also receiving compensation from the
corporation.
   (b) No contract or other transaction between a corporation and any
corporation or association of which one or more of its directors are
directors is either void or voidable because such director or
directors are present at the meeting of the board or a committee
thereof which authorizes, approves or ratifies the contract or
transaction, if
   (1) The material facts as to the transaction and as to such
director's other directorship are fully disclosed or known to the
board or committee, and the board or committee authorizes, approves
or ratifies the contract or transaction in good faith by a vote
sufficient without counting the vote of the common director or
directors or the contract or transaction is approved by the
shareholders (Section 153) in good faith, or
   (2) As to contracts or transactions not approved as provided in
paragraph (1) of this subdivision, the contract or transaction is
just and reasonable as to the corporation at the time it is
authorized, approved or ratified.
   This subdivision does not apply to contracts or transactions
covered by subdivision (a).
   (c) Interested or common directors may be counted in determining
the presence of a quorum at a meeting of the board or a committee
thereof which authorizes, approves or ratifies a contract or
transaction.

Last modified: February 13, 2012