Check an interested-director or officer transaction under § 144

Key facts

Human involvement

Yellow · Close supervision

How AI is used

List the director or officer, the interest the file shows, and which of § 144(a)(1), (a)(2), or (a)(3) the draft relies on. Do not say the transaction is protected.

What the lawyer must review

You decide whether § 144(a) is met. For a Delaware corporation, an act or transaction between the corporation, or one or more of its subsidiaries, and one or more of its directors or officers, or an entity in which one or more of those directors or officers are directors, stockholders, partners, managers, members, or officers, or have a financial interest, may not be the subject of equitable relief, or give rise to damages against a director or officer because of that interest or because the director or officer was present or participated, if one of three paths in § 144(a) is met. The material facts as to the relationship or interest and as to the act or transaction, including any involvement in the initiation, negotiation, or approval, are disclosed or known to all members of the board or a committee, and the board or committee in good faith and without gross negligence authorizes it by the affirmative votes of a majority of the disinterested directors then serving, even if less than a quorum. If a majority of the directors are not disinterested, the act shall be approved or recommended by a committee of two or more directors, each of whom the board has determined to be disinterested. Or the act is approved or ratified by an informed, uncoerced, affirmative vote of a majority of the votes cast by the disinterested stockholders. Or the act is fair to the corporation and its stockholders. Section 144(e)(4) says a disinterested director is a director who is not a party to the act or transaction and does not have a material interest in it or a material relationship with a person that has a material interest in it. A controlling-stockholder transaction is subsection (b), not subsection (a). If the draft uses the stockholder vote, § 222 still requires notice not less than 10 nor more than 60 days before the meeting, unless the chapter provides otherwise, stating the place if any, the date and hour, the means of remote communication if any, the voting record date if it differs from the notice record date, and, for a special meeting, the purpose. The tool does not decide that a director is disinterested, that a vote was informed and uncoerced, or that the act is fair.

Written for / version

United States versionUS