My previous installment on Attorney Thiele’s Corner was on the duties imposed by the law upon the directors of a corporation. Those duties apply whether you are a director of a nonprofit or for- profit corporation. Recall that the very first duty I listed was the Duty of Loyalty to the corporate entity and its purposes. DUTY OF LOYALTY – you place the corp.’s interest highest when acting or deciding, rather than personal or other interests. This duty of course needs further explanation and it has been codified and developed in the Florida Statutes as detailed below. Statutes are the law enacted by a legislative body, in this case the Florida Legislature in Tallahassee, then signed into law by the Governor of the State of Florida.
Section 617.0832, Florida Statutes, entitled Director Conflicts of Interest, explains and establishes that: No contract or transaction is void or voidable because a director has a financial interest in the contract or transaction, so long as (1) that relationship is disclosed or already made known to the board, and, (2) the contract or transaction is fair and reasonable to the corporation, and, (3) a quorum of the board members (without the vote of the member with the financial interest) is established and those members vote to approve the contract or transaction.
The Board Administrator newsletter, which ALPI receives and distributes to you as Board Members in “the packet” for each of your meetings, in the March, 2019 edition, at p. 608, published a Board Member Code of Ethics. It was a proposal for all Community Action Agencies and nonprofits to consider or to adopt as their own. I attach it here as Exhibit A for you to read again because it is simple, concise and to-the-point. When it comes to potential or actual conflicts of interest and whether you have a “financial interest” in a contract or transaction, these resources are helpful in dealing with that.
By the way, the statutes governing all Florida corporations were amended in Florida in a major overhaul in the Spring of 2019 by adopting in all or most respects a Model Corporations Act drafted by recognized experts in the subject and which had already been adopted by many other states. The newest edition of Florida’s laws on corporations will become effective in the Fall of 2019. If the new statute becomes effective as planned, then I may address this subject again with any changes to what is written here.