MHHS · Business Corporations Act
Part 9 — Directors and Officers
120 Disclosure by directors and officers in relation to contracts
(a) is a party to a material co ntract or material transaction or
proposed material contract or proposed material transaction
with the corporation, or
(b) is a director or an officer of or has a material interest in any
person who is a party to a material contract or material
transaction or proposed material contract or proposed
material transaction with the corporation,
shall disclose in writing to the corporation or request to have
entered in the minutes of meetings of directors the nature and
extent of the director's or officer's interest.
(1.1) This section applies to a person acting in the capacity of a
director or officer of a corporation as if that person were a director
or officer.
(2) Subject to subsection (3), the disclosure required by subsection
(1) shall be made, in the case of a director,
(a) at the meeting at which a p roposed contract or transaction is
first considered,
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(b) if the director was not interested in a proposed contract or
transaction at the time of the meeting referred to in clause
(a), at the first meeting after the director becomes so
interested,
(c) if the director becomes in terested after a contract or
transaction is made, at the first meeting after the director
becomes so interested, or
(d) if a person who is interest ed in a contract or transaction later
becomes a director, at the first meeting after the director
becomes a director.
(3) Where a proposed contract or transaction is dealt with by
resolution under section 117 instead of at a meeting, the disclosure
that would otherwise be required to be made in accordance with
subsection (2)(a) or (b) shall be made
(a) forthwith on receipt of the resolution, or
(b) if the director was not interested in the proposed contrac t or
transaction at the time of receipt of the resolution, at the first
meeting after the director becomes so interested.
(4) The disclosure required by subsection (1) shall be made, in the
case of an officer who is not a director,
(a) forthwith after the officer becomes aware that the contract
or transaction or proposed contract or transaction is to be
considered or has been considered at a meeting of directors,
(b) if the officer becomes in terested after a contract or
transaction is made, forthwith after the officer becomes so
interested, or
(c) if a person who is interest ed in a contract or transaction later
becomes an officer, forthwith after the officer becomes an
officer.
(5) If a material contract or material transaction or proposed
material contract or proposed material transaction is one that, in the
ordinary course of the corporation's business, would not require
approval by the directors or shareholders, a director or officer shall
disclose in writing to the corporation, or request to have entered in
the minutes of meetings of directors, the nature and extent of the
director's or officer's interest forthwith after the director or officer
becomes aware of the contract or transaction or proposed contract
transaction.
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(6) A director referred to in subsection (1) shall not vote on any
resolution to approve the contract or transaction unless the contract
or transaction is
(a) a contract or transaction in which, but only to the extent
that, the director undertakes an obligation or obligations for
the benefit of the corporation,
(b) a contract or transaction relating primarily to the direct or's
remuneration as a director, officer, employee or agent of the
corporation or an affiliate,
(c) a contract or tran saction for indemnity or insurance under
section 124, or
(d) a contract or trans action with an affiliate.
(7) For the purpose of this section, a general notice to the directors
by a director or officer is a sufficient disclosure of interest in
relation to any contract or transaction made between the
corporation and a person in which the director has a material
interest or of which the director is a director or officer if
(a) the notice declares the dir ector is a director or officer of or
has a material interest in the person and is to be regarded as
interested in any contract or transaction made or to be made
by the corporation with that person, and states the nature
and extent of the director's interest,
(b) at the time disclosure would otherwise be required under
subsection (2), (3), (4) or (5), as the case may be, the extent
of the director's interest in that person is not greater than
that stated in the notice, and
(c) the notice is given within the 12-month period immediately
preceding the time at which disclosure would otherwise be
required under subsection (2), (3), (4) or (5), as the case may
be.
(8) If a material contract or material transaction is made between a
corporation and one or more of its directors or officers, or between
a corporation and another person of which a director or officer of
the corporation is a director or officer or in which the director or
officer has a material interest,
(a) the contract or transaction is neither void nor voidable b y
reason only of that relationship, or by reason only that a
director with an interest in the contract or transaction is
present at or is counted to determine the presence of a
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quorum at a meeting of directors or committee of directors
that authorized the contract or transaction, and
(b) a director or officer or fo rmer director or officer of the
corporation to whom a profit accrues as a result of the
making of the contract or transaction is not liable to account
to the corporation for that profit by reason only of holding
office as a director or officer,
if the director or officer disclosed the director's or officer's interest
in accordance with subsection (2), (3), (4), (5) or (7), as the case
may be, and the contract or transaction was approved by the
directors or the shareholders and it was reasonable and fair to the
corporation at the time it was approved.
(8.1) Even if the conditions of subsection (8) are not met, a
director or officer acting honestly and in good faith is not
accountable to the corporation or to its shareholders for any profit
realized from a material contract or material transaction for which
disclosure is required under subsection (1), and the material
contract or material transaction is not void or voidable by reason
only of the interest of the director or officer in the material contract
or material transaction, if
(a) the material contract or ma terial transaction was approved or
confirmed by special resolution at a meeting of the
shareholders,
(b) disclosure of the interest was made to the shareholders in a
manner sufficient to indicate its nature before the material
contract or material transaction was approved or confirmed,
and
(c) the material contract or ma terial transaction was reasonable
and fair to the corporation when it was approved or
confirmed.
(9) If a director or an officer of a corporation fails to comply with
this section, a Court may, on application of the corporation or any
of its shareholders, set aside the material contract or material
transaction on any terms that it thinks fit, or require the director or
officer to account to the corporation for any profit or gain realized
on it, or both.
(10) This section is subject to any unanimous shareholder
agreement.
RSA 2000 cB-9 s120;2005 c8 s25;2021 c18 s22
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