Texas Business Corporation Act - Article 2.35-1. Interested Directors

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Art. 2.35-1. Interested Directors                                             

A. An otherwise valid contract or transaction between a corporation 
and one or more of its directors or officers, or between a 
corporation and any other domestic or foreign corporation or other 
entity in which one or more of its directors or officers are 
directors or officers or have a financial interest, shall be valid 
notwithstanding whether the director or officer is present at or 
participates in the meeting of the board or committee thereof which 
authorizes the contract or transaction, or solely because his or 
their votes are counted for such purpose, if any one of the 
following is satisfied:

(1) The material facts as to his relationship or interest and as to 
the contract or transaction are disclosed or are known to the board 
of directors or the committee, and the board or committee in good 
faith authorizes the contract or transaction by the affirmative 
vote of a majority of the disinterested directors, even though the 
disinterested directors be less than a quorum;  or

(2) The material facts as to his relationship or interest and as to 
the contract or transaction are disclosed or are known to the 
shareholders entitled to vote thereon, and the contract or 
transaction is specifically approved in good faith by vote of the 
shareholders;  or

(3) The contract or transaction is fair as to the corporation as of 
the time it is authorized, approved, or ratified by the board of 
directors, a committee thereof, or the shareholders.

B. Common or interested directors may be counted in determining the 
presence of a quorum at a meeting of the board of directors or of a 
committee which authorizes the contract or transaction.

Added by Acts 1985, 69th Leg., ch. 128, Sec. 9, eff. May 20, 1985.  
Amended by Acts 1997, 75th Leg., ch. 375, Sec. 13, eff. Sept. 1, 
1997.

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Last modified: August 10, 2007