Mich. Comp. Laws » Michigan Compiled Laws / Chapter 450 / Act 284 of 1972

Mich. Comp. Laws § 450.1545a

Interest of director or officer in transaction; compensation of directors.

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BUSINESS CORPORATION ACT


Act 284 of 1972


450.1545a Interest of director or officer in transaction; compensation of directors.

Sec. 545a.

    (1) A transaction in which a director or officer is determined to have an interest shall not, because of the interest, be enjoined, set aside, or give rise to an award of damages or other sanctions, in a proceeding by a shareholder or by or in the right of the corporation, if the person interested in the transaction establishes any of the following:

    (a) The transaction was fair to the corporation at the time entered into.

    (b) The material facts of the transaction and the director's or officer's interest were disclosed or known to the board, a committee of the board, or the independent director or directors, and the board, committee, or independent director or directors authorized, approved, or ratified the transaction.

    (c) The material facts of the transaction and the director's or officer's interest were disclosed or known to the shareholders entitled to vote and they authorized, approved, or ratified the transaction.

    (2) For purposes of subsection (1)(b), a transaction is authorized, approved, or ratified if it received the affirmative vote of the majority of the directors on the board or the committee who had no interest in the transaction, though less than a quorum, or all independent directors who had no interest in the transaction. The presence of, or a vote cast by, a director with an interest in the transaction does not affect the validity of the action taken under subsection (1)(b).

    (3) For purposes of subsection (1)(c), a transaction is authorized, approved, or ratified if it received the majority of votes cast by the holders of shares who did not have an interest in the transaction. A majority of the shares held by shareholders who did not have an interest in the transaction constitutes a quorum for the purpose of taking action under subsection (1)(c).

    (4) Satisfying the requirements of subsection (1) does not preclude other claims relating to a transaction in which a director or officer is determined to have an interest. Those claims shall be evaluated under principles of law applicable to a transaction in which a director or officer does not have an interest.

    (5) The board, by affirmative vote of a majority of directors in office and irrespective of any personal interest of any of them, may establish reasonable compensation of directors for services to the corporation as directors or officers, but approval of the shareholders is required if the articles of incorporation, bylaws, or another provision of this act requires that approval. Transactions pertaining to the compensation of directors for services to the corporation as directors or officers shall not be enjoined, set aside, or give rise to an award of damages or other sanctions in a proceeding by a shareholder or by or in the right of the corporation unless it is shown that the compensation was unreasonable at the time established.

History: Add. 1989, Act 121, Eff. Oct. 1, 1989 ;-- Am. 2008, Act 402, Imd. Eff. Jan. 6, 2009

Notes of Decisions
Cited in 10 cases (2 in the last 5 years), 1993–2022 · leading case: Camden v. Kaufman
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Camden v. Kaufman (2000) michctapp · cites it 11× “The trial court also granted defendants’ motion for summary disposition, holding that MCL 450.1545a; MSA 21.200(545a) was satisfied.”
Meyer Jewelry Co. v. Meyer Holdings, Inc. (1995) mied · cites it 5× “Section 450.1545a of Michigan’s Business Corporation Act provides: A transaction in which a director or officer is determined to have an interest shall not, because of the interest, be enjoined, set aside, or give rise to an award of damages or other sanctions, in a proceeding…”
Krieger v. Gast (2000) miwd · cites it 3× “§ 450.1545a, which governs interested director transactions.”
Boyd v. Sachs (In Re Auto Specialties Manufacturing Co.) (1993) miwd “§ 450.1545a; M.S.A. § 21.200(545a), persuasive.”
Frank Kern III v. Bonnie Kern-Koskela (2017) michctapp · cites it 5× “A review of the record makes it clear that the jury was asked to decide the very narrow issue of whether the lease was fair to Maxitrol under MCL 450.1545a, which provides, in relevant part: (1) A transaction in which a director or officer is determined to have an interest shall…”
in Re Talmer Bancorp Shareholder Litigation (2019) michctapp · cites it 5× “116(C)(10) because MCL 450.1545a precluded plaintiffs from maintaining their actions.”
Huron City Company v. Charles Abram Parcells III (2018) michctapp “Pertinent to this appeal, defendants filed a second amended counter-complaint 2 that raised nine counts, including “self dealing with the corporation (MCL 450.1545a),” “misappropriation of corporate opportunities,” “waste of corporate assets,” and “breach of articles of…”
Huron City Company v. Charles Abram Parcells III (2018) michctapp “Pertinent to this appeal, defendants filed a second amended counter-complaint 2 that raised nine counts, including “self dealing with the corporation (MCL 450.1545a),” “misappropriation of corporate opportunities,” “waste of corporate assets,” and “breach of articles of…”
Msc 345758 Leslie J Murphy V Samuel M Inman Iii Supremecourtopinion 4/5/2022 (2022) mich “26 Although MCL 450.1545a addresses the duty of loyalty in the context of transactions in which corporate directors or officers have an interest, plaintiff does not allege a breach of defendants’ fiduciary duties under § 545a.”
Leslie J Murphy v. Samuel M Inman III (2022) mich “26 Although MCL 450.1545a addresses the duty of loyalty in the context of transactions in which corporate directors or officers have an interest, plaintiff does not allege a breach of defendants’ fiduciary duties under § 545a.”
— Mich. Comp. Laws § 450.1545a(1) — 1 case
Frank Kern III v. Bonnie Kern-Koskela (2017) michctapp “A review of the record makes it clear that the jury was asked to decide the very narrow issue of whether the lease was fair to Maxitrol under MCL 450.1545a, which provides, in relevant part: (1) A transaction in which a director or officer is determined to have an interest shall…”
— Mich. Comp. Laws § 450.1545a(1)(a) — 1 case
Frank Kern III v. Bonnie Kern-Koskela (2017) michctapp “A review of the record makes it clear that the jury was asked to decide the very narrow issue of whether the lease was fair to Maxitrol under MCL 450.1545a, which provides, in relevant part: (1) A transaction in which a director or officer is determined to have an interest shall…”
— Mich. Comp. Laws § 450.1545a(l) — 1 case
Krieger v. Gast (2000) miwd “§ 450.1545a, which governs interested director transactions.”
— Mich. Comp. Laws § 450.1545a(l)(a) — 2 cases
Camden v. Kaufman (2000) michctapp “The trial court also granted defendants’ motion for summary disposition, holding that MCL 450.1545a; MSA 21.200(545a) was satisfied.”
Krieger v. Gast (2000) miwd “§ 450.1545a, which governs interested director transactions.”
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