A. A transaction between the corporation or one or more entities controlled by the corporation and one or more of the corporation's directors, officers, or related persons, shall not be the subject of equitable relief, or give rise to an award of damages against a director or officers of the corporation because of the foregoing circumstances or the receipt of any benefit by any such director, officer, or related person or because the director or officer is present at or participates in the meeting of the board or committee that authorizes the transaction, or was involved in the initiation, negotiation, or approval of the transaction, including by virtue of a director's vote being counted for such purpose, if:
1. The material facts of the director's or officer's relationship or interest as to the transaction were disclosed or are known to the board of directors or a committee of the board of directors and the board of directors or committee authorized, approved, or ratified the transaction; or
2. The material facts of the transaction and the director's or officer's relationship or interest as to the transaction were disclosed to the disinterested shareholders and they authorized, approved, or ratified the transaction; or
3. The transaction is fair to the corporation.
B. For purposes of subdivision A 1, a transaction is authorized, approved, or ratified if it receives the affirmative vote of a majority of the disinterested directors on the board of directors, or on the committee. A transaction shall not be authorized, approved, or ratified under this section by a single director. If a majority of the disinterested directors vote to authorize, approve or ratify the transaction, a quorum is present for the purpose of taking action under this section. The presence of, or a vote cast by, a director who is not disinterested does not affect the validity of any action taken under subdivision A 1 if the transaction is otherwise authorized, approved or ratified as provided in that subsection.
C. For purposes of subdivision A 2, a transaction is authorized, approved, or ratified if a quorum exists and it receives the vote of a majority of the shares entitled to be counted under this subsection. Shares owned by or voted under the control of a director, officer, or related person who, in each case, has a material interest in the transaction, other than one which would devolve on the corporation or the shareholders generally shall not be counted in a vote of shareholders to determine whether to authorize, approve, or ratify a transaction under subdivision A 2, but such shares shall be counted in determining whether the transaction is approved under other sections of this chapter. A majority of the shares that are entitled to be counted in a vote on the transaction under this subsection constitutes a quorum for the purpose of taking action under this section.
D. For purposes of this section, a related person is a person who has a familial, financial, professional, or employment relationship with one or more directors or officers of the corporation that would reasonably be expected to impair the objectivity of the judgment of one or more of the corporation's directors or officers.
Code 1950, § 13.1-39.1; 1975, c. 500; 1980, c. 341; 1985, c. 522; 2005, c. 765; 2026, cc. 383, 892.
Notes of Decisions
Willard v. Moneta Bldg. Supply, Inc., 515 S.E.2d 277 (Va. 1999).
· cites it 73× “In an amended bill of complaint, Willard sought to void the sale of Moneta's assets to Capps on the basis that the transaction violated the provisions of Code § 13.1-691 dealing with conflict of interests.”
DCG & T ex rel. Battaglia/Ira v. Knight, 68 F. Supp. 3d 579 (E.D. Va. 2014).
· cites it 21× “Count IV is Dismissed in Part In Count IV, DCG & T alleges both a direct class claim and derivative claim under Virginia Code §§ 13.1-691 and -725 in *589 order to rescind the merger of A7, A8, and A9.”
Byelick v. Vivadelli, 79 F. Supp. 2d 610 (E.D. Va. 1999).
· cites it 22× “Va.Code Ann. § 13.1-691 (emphasis added).”
Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (1991).
· cites it 5× “Under the terms of Va. Code Ann. § 13.1-691 (A) (1989), minority approval after disclosure of the material facts about the transaction and the director's interest was one of three avenues to insulate the merger from later attack for conflict, the two others being ratification by…”
Willard v. Moneta Bldg. Supply, Inc., 551 S.E.2d 596 (Va. 2001).
· cites it 2× “and Rose Mary. Willard sought to void the sale of Moneta’s assets to Capps Home and Building Center, Inc.”
Hildebrand v. Lewis, 281 F. Supp. 2d 837 (E.D. Va. 2003).
· cites it 3× “1-692 (Count I), (ii) breach of fiduciary duty in violation of Va.Code § 13.1-691 and § 13.1-725 (Count II), and (iii) conversion (Count III).”
In re Virginia Broadband, LLC, 521 B.R. 539 (Bankr. W.D. Va. 2014).
· cites it 2× “See Va.Code Ann. § 13.1-691. By contrast, neither the VLLCA nor the common law imposes a duty of loyalty on members or managers of Virginia limited liability companies.”
Izadpanah v. Boeing Jt. Venture, 412 S.E.2d 708 (Va. 1992).
“However, when a conflict of interest as defined in § 13.1-691 exists, such as Izadpanah presented here, the burden shifts to the directors to show that their actions complied with the requirements of that section.”
WLR Foods, Inc. v. Tyson Foods, Inc., 857 F. Supp. 492 (W.D. Va. 1994).
“One strand of this argument suggests that § 690 did not repeal common law standards of director conduct where director conflicts of interest are alleged, as here. As to conflicts not arising inherently from the takeover attempt (that is, between a director and the corporation),…”
Wlr Foods, Inc. v. Tyson Foods, Inc., 155 F.R.D. 136 (W.D. Va. 1994).
· cites it 3× “1-691 (§ 13.1-691). Under § 13.1-691, transactions in which a director has an interest (conflict of interests transactions) are not void, only voidable, a marked change from the previous which rendered them void.”
— Va. Code Ann. § 13.1-691(A) — 1 case
DCG & T ex rel. Battaglia/Ira v. Knight, 68 F. Supp. 3d 579 (E.D. Va. 2014).
“Count IV is Dismissed in Part In Count IV, DCG & T alleges both a direct class claim and derivative claim under Virginia Code §§ 13.1-691 and -725 in *589 order to rescind the merger of A7, A8, and A9.”
— Va. Code Ann. § 13.1-691(A)(3) — 2 cases
Willard v. Moneta Bldg. Supply, Inc., 515 S.E.2d 277 (Va. 1999).
“In an amended bill of complaint, Willard sought to void the sale of Moneta's assets to Capps on the basis that the transaction violated the provisions of Code § 13.1-691 dealing with conflict of interests.”
— Va. Code Ann. § 13.1-691(B) — 2 cases
Willard v. Moneta Bldg. Supply, Inc., 515 S.E.2d 277 (Va. 1999).
“In an amended bill of complaint, Willard sought to void the sale of Moneta's assets to Capps on the basis that the transaction violated the provisions of Code § 13.1-691 dealing with conflict of interests.”
DCG & T ex rel. Battaglia/Ira v. Knight, 68 F. Supp. 3d 579 (E.D. Va. 2014).
“Count IV is Dismissed in Part In Count IV, DCG & T alleges both a direct class claim and derivative claim under Virginia Code §§ 13.1-691 and -725 in *589 order to rescind the merger of A7, A8, and A9.”
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