IL Bar Practice Questions - Illinois Bar Examination Exam

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On the Multistate Essay Examination, a question tests Business Associations. A corporation's board approves a transaction in which a director has a material financial interest. Under the safe-harbor rules for interested-director transactions, the transaction is NOT voidable solely for the conflict if which is true?

The director personally guarantees the transaction will be profitable The director abstains from all future board meetings The transaction was approved by disinterested directors or shareholders after full disclosure, or it was fair to the corporation The corporation later ratifies any unrelated contract

Correct Answer:

The transaction was approved by disinterested directors or shareholders after full disclosure, or it was fair to the corporation

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