What is required to approve a transaction involving a director with a conflict of interest?

To approve a transaction involving a director with a conflict of interest, the requirement for approval by qualified directors after the necessary disclosure is essential to ensure transparency and fairness in the decision-making process. This requirement respects the principle that directors should not exploit their positions for personal gain at the expense of the community they serve.

When the director discloses their conflict of interest, it provides the other board members with the information they need to assess the situation impartially. By allowing only qualified directors—those who do not have a conflict in the decision at hand—to participate in the approval process, the board maintains a level of integrity and protects the interests of the community association. This safeguards against any potential biases or self-serving decisions that could undermine trust in the governance of the association.

In some governance documents or state laws, actions taken by a board member with a conflict of interest may be voidable unless properly disclosed and approved by disinterested board members. This reinforces the importance of having proper protocol in place to handle such situations effectively.