What is the name of your state (only U.S. law)? michigan
I'm on a board of directors (michigan corporation, closely held, 9 directors). 6 of the Directors pay the corporation for personal services provided by a company employee. 3 directors do not participate in those services. There are no written contracts related to this. (The arrangement used to be fair to the company but a change in circumstances makes it no longer fair. However I believe fairness is not the issue if there is no binding contract and the issue is about the future, not the past transactions.)
A motion is made to lay off the employee and directs that the company payroll will no longer be used to provide personal services to directors or shareholders. The vote is 3 uninterested directors in favor, 6 interested directors opposed. Under Michigan law what was the vote of the board, 6-3 motion fails, or 3-0 motion passes?
My reading of the Michigan law, section 450.1545a, is that the votes of the interested directors cannot be counted and therefore the motion passes and the uninterested directors have the authority to impliment the decision if the other directors fail to act. This interpretation makes sense to me because it's an efficient way to stop self-dealing arrangements without the need to explain all the gory details in court. If it doesn't mean that what's the point of having the provisions?
I'd like to find a court case or some other documentation that clarifies this before considering a written opinion.
The section of Michigan law that seems to apply is. "450.1545a Interest of director or officer in transaction; compensation of directors." http://www.legislature.mi.gov/(S(c4bljqvnmjrplf3q5jlzl045))/mileg.aspx?page=getObject&objectName=mcl-450-1545a
Thanks in advance for any assistance.
Charlie
I'm on a board of directors (michigan corporation, closely held, 9 directors). 6 of the Directors pay the corporation for personal services provided by a company employee. 3 directors do not participate in those services. There are no written contracts related to this. (The arrangement used to be fair to the company but a change in circumstances makes it no longer fair. However I believe fairness is not the issue if there is no binding contract and the issue is about the future, not the past transactions.)
A motion is made to lay off the employee and directs that the company payroll will no longer be used to provide personal services to directors or shareholders. The vote is 3 uninterested directors in favor, 6 interested directors opposed. Under Michigan law what was the vote of the board, 6-3 motion fails, or 3-0 motion passes?
My reading of the Michigan law, section 450.1545a, is that the votes of the interested directors cannot be counted and therefore the motion passes and the uninterested directors have the authority to impliment the decision if the other directors fail to act. This interpretation makes sense to me because it's an efficient way to stop self-dealing arrangements without the need to explain all the gory details in court. If it doesn't mean that what's the point of having the provisions?
I'd like to find a court case or some other documentation that clarifies this before considering a written opinion.
The section of Michigan law that seems to apply is. "450.1545a Interest of director or officer in transaction; compensation of directors." http://www.legislature.mi.gov/(S(c4bljqvnmjrplf3q5jlzl045))/mileg.aspx?page=getObject&objectName=mcl-450-1545a
Thanks in advance for any assistance.
Charlie
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