Conflict of Interest Policy

Does anyone have a conflict of interest policy that you would be willing to share that would be appropirate for a site condominium development? We have 80 units and do not have a property manager. We leverage the Board, committees, and individual volunteers to oversee most aspects of the association. We do not have a conflict of interest policy and are looking for relevant examples in order to develop one.

Thank you in advance for your assistance.

To Shelia's fine suggestions, I add that I believe many cities have a well-publicized definition of when a conflict of interest occurs, breaking down the different possibilities. In my city, when charges are being made against a City Councilor, the mayor, or staff, this definition is referred to often.

Following is one example of a functional conflict of interest policy:
Policies and Procedures on Handling Board Member Conflicts of Interest
A conflict of interest occurs when a matter comes before the Board of Directors for consideration in which a Board member has a familial or financial interest. If any action taken by the Board would individually benefit a director or a member of their family, that director shall declare a conflict of interest for that issue. The director shall leave the meeting room while the matter is discussed and voted. They shall not participate in any discussion nor influence other Board members in any manner and shall not vote on the issue. These restrictions shall not be construed to invalidate any provision of the Declaration, or other documents that more strictly define conflicts of interest or contain further limits on participation by a director who may have a conflict of interest. Any conflict
entered into in violation of this section shall be void and unenforceable and the Board member shall be sanctioned.

Following is an example of a policy drafted by an attorney:
CONFLICT OF INTEREST POLICY
A. Definitions:
“Conflicting interest transaction” means a contract, transaction or other financial relationship between: (a) the Association and a member of the Board of Directors, or (b) between the Association and a party related to a member of the Board of Directors, or (c) between the Association and an entity in which a member of the Board of Directors of the Association is a director or officer.

“Party related to a director” means a spouse, a descendent, an ancestor, a sibling, the spouse or descendent of a sibling, an estate or trust in which the director or party related to a director has a beneficial interest, or an entity in which a party related to a director is a director, officer, or has a financial interest.

“Officer,” for purposes of this policy only, means any person designated as an officer of the Association and any person to whom the Board delegates responsibilities, including, without limitation, a managing agent, attorney, or accountant employed by the Board.

Disclosure. The director shall disclose the conflicting interest in the proposed transaction in an open meeting prior to the discussion and vote. Such disclosure shall be reflected in the minutes of the meeting or other written form.

Quorum, Participation and Voting. The interested director shall count for the purpose of establishing a quorum of the Board for the matter in which there is a conflict. The director shall not take part in the discussion and shall leave the room during the discussion and the vote on the matter. Notwithstanding the foregoing, a majority of the disinterested Board members may ask the interested Board member to remain during any portion of the discussion and/or vote, provided that the director does not vote.

Approval of Transaction. The contract, Board decision, or other Board action must be approved by a majority of the disinterested Board members who are voting. No contract, Board decision, or other Board action in which a Board member has a conflict of interest shall be approved unless it is commercially reasonable to and/or in the best interests of the Association.

Standard of Review. Notwithstanding anything to the contrary herein or in the Association’s conflict of interest policy and in accordance with the Colorado Revised Nonprofit Corporation Act, no conflicting interest transaction shall be set aside solely because an interested director is present at, participates in or votes at a Board or committee meeting that authorizes, approves or ratifies the conflicting interest transaction if:
(a) the material facts as to the director’s relationship or interest as to the conflicting interest transaction are disclosed or known to the Board of Directors or the committee, and the Board or committee in good faith authorizes, approves, or ratifies the conflicting interest transaction by the affirmative vote of a majority of the disinterested director, even though the disinterested directors may be less than a quorum; or
(b) the material facts as to the director’s relationship or interest and as to the conflicting interest transaction are disclosed or known to the members entitled to vote on the transaction, if any, and the conflicting interest transaction is specifically authorized,approved, or ratified in good faith by a vote of the members entitled to vote; or
(c) the conflicting interest transaction is fair to the Association.