Quote:
Posted By JudyM9 on 02/15/2019 8:23 PM
The situation here is so unique it is almost impossible to describe without identifying the community. Here is a made-up scenario: two homeowners own a construction company. Their spouses run for board positions, are elected and approve a contract award to the construction company owned by their spouses. This should be a conflict of interest because the director-spouses are not disinterested parties by virtue of the "one vote per lot" rule and one of the lot owners (the non-director spouse) is benefitting.
From link above, the only Arizona statutes that appear to apply are as follows:
"33-1811 ⢠BOARD OF DIRECTORS; CONTRACTS; CONFLICT
If any contract, decision or other action for compensation taken by or on behalf of the board
of directors would benefit any member of the board of directors or any person who is a
parent, grandparent, spouse, child or sibling of a member of the board of directors or a parent
or spouse of any of those persons, that member of the board of directors shall declare a
conflict of interest for that issue. The member shall declare the conflict in an open meeting
of the board before the board discusses or takes action on that issue and that member may
then vote on that issue. Any contract entered into in violation of this section is void and
unenforceable.
33-1243 says the same thing.
"10-3864 ⢠CONFLICT OF INTEREST POLICY; EXCEPTIONS
A. The board of directors of a corporation shall adopt a policy regarding transactions
between the corporation and interested persons, including the sale, lease or exchange of
property to or from interested persons and the corporation, the lending or borrowing of monies to or from interested persons by the corporation or the payment of compensation
by the corporation for services provided by interested persons. For the purposes of this
subsection, âinterested personâ means an officer or director of a corporation or any other
corporation, firm, association or entity in which an officer or director of a corporation is a
member, officer or director or has a financial interest."
... "
[For more see https://www.carpenterhazlewood.com/wp-content/uploads/2017/10/CHDB_AZ_Statute_Book_2017-18.pdf ]
It appears to me that the only thing JudyM9 can do is require that:
-- the director with the conflict of interest (CoI) announce it at a board meeting before a vote is taken. The director with the CoI is allowed to vote.
-- the board adopt a policy pursuant to Arizona statute 10-3864 and consistent with Arizona statute 33-1811. Unfortunately I do not think this policy can require a director to recuse him- or herself. Perhaps the policy could recommend consideration of recusal.