The purpose of the conflicts of interest policy is to protect the Association’s interest when it is contemplating entering into a transaction or arrangement that might benefit the private interest of an officer or director of the Association. This policy is intended to supplement but not replace any applicable state laws governing conflicts of interest applicable to nonprofit or charitable corporations.
A. Interested Person
Any director, principal officer or member of a committee with board-delegated powers who has a direct or indirect financial interest, as defined below, or any familial or potential or actual conflict of interest, is an interested person.
B. Financial Interest
A person has a financial interest if the person has, directly or indirectly, through business, investment or family:
- an ownership or investment interest in any entity with which the Association has a transaction or arrangement, or
- a compensation arrangement with the Association or with any entity or individual with which the Association has a transaction or arrangement, or
- a potential ownership or investment interest in or compensation arrangement with, any entity or individual with which the Association is negotiating a transaction or arrangement.
Compensation includes direct and indirect remuneration as well as gifts or favors that are substantial in nature.
A. Duty to Disclose
In connection with any actual or possible conflicts of interest, an interested person must disclose the existence and nature of his or her conflict of interest or potential conflict of interest to the directors and members of committees with board-delegated powers considering the proposed transaction or arrangement.
B. Determining Whether a Conflict of Interest Exists/Waiver
After disclosure of the conflict of interest, the interested person shall leave the board or committee meeting while the conflict of interest is discussed and voted upon. The remaining board or committee members shall decide if a conflict of interest exists, and if the board or committee decides to waive the conflict.
C. Procedures for Addressing the Conflict of Interest
- The chairperson of the board or committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
- After exercising due diligence, the board or committee shall determine whether the Association can obtain a more advantageous transaction or arrangement with reasonable efforts from a person or entity that would not give rise to a conflict of interest.
- If a more advantageous transaction or arrangement is not reasonably attainable under circumstances that would not give rise to a conflict of interest, the board or committee shall determine by a majority vote of the disinterested directors whether the transaction or arrangement is in the Association’s best interest and for its own benefit and whether the transaction is fair and reasonable to the Association and shall make its decision as to whether to enter into the transaction or arrangement in conformity with such determination.
D. Violations of the Conflicts of Interest Policy
- If the board or committee has reasonable cause to believe that a member has failed to disclose actual or possible conflicts of interest, it shall inform the member of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose.
- If, after hearing the response of the member and making such further investigation as may be warranted in the circumstances, the board or committee determines that the member has in fact failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.
Records of proceedings
The minutes of the board and all committee with board-delegated powers shall contain:
- the names of the persons who disclosed or otherwise were found to have an actual or possible conflict of interest, the nature of the interest, any action taken to determine whether a conflict of interest was present, and the board’s or committee’s decision as to whether a conflict if interest in fact existed.
- the names of the persons who were present for discussions and votes relating to the transaction or arrangement, the content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection therewith.
Each director, principal officer and member of a committee with board-delegated powers shall annually sign a statement which affirms that such person:
- has received a copy of the conflicts of interest policy;
- has read and understands the policy; and
- has agreed to comply with the policy.