New York § 411 - 411Interested managers

§ 411. 411Interested managers

§ 411. Interested managers. (a) No contract or other transaction between a limited liability company and one or more of its managers, or between a limited liability company and any other limited liability company or other business entity in which one or more of its managers are managers, directors or officers, or have a substantial financial interest, shall be either void or voidable for this reason alone or by reason alone that such manager or managers are present at the meeting of the managers, or of a class thereof, which approves such contract or transaction, or that his or her or their votes are counted for such purpose: (1) if the material facts as to such manager's interest in such contract or transaction and as to any such common managership, directorship, officership or financial interest are disclosed in good faith or known to the other managers or class of managers, and the managers or such class approve such contract or transaction by a vote sufficient for such purpose without counting the vote of such interested manager or, if the votes of the disinterested managers are insufficient to constitute an act of the managers pursuant to section four hundred eight of this article, by unanimous vote of the disinterested managers; or (2) if the material facts as to such manager's interest in such contract or transaction and as to any such common managership, directorship, officership or financial interest are disclosed in good faith or known to the members entitled to vote thereon, and such contract or transaction is approved by vote of such members. (b) If such good faith disclosure of the material facts as to the manager's interest in the contract or transaction and as to any such common managership, directorship, officership or financial interest is made to the managers or members, or known to the managers or class of managers or members approving such contract or transaction, as provided in subdivision (a) of this section, the contract or transaction may not be avoided by the limited liability company for the reasons set forth in subdivision (a) of this section. If there was no such disclosure or knowledge, or if the vote of such interested manager was necessary for the approval of such contract or transaction at a meeting of the managers or class of managers at which it was approved, the limited liability company may avoid the contract or transaction unless the party or parties thereto shall establish affirmatively that the contract or transaction was fair and reasonable as to the limited liability company at the time it was approved by the managers, a class of managers or the members. (c) Common or interested managers may be counted in determining the presence of a quorum at a meeting of the managers or of a class of managers that approves such contract or transaction. (d) The operating agreement may contain additional restrictions on contracts or transactions between a limited liability company and its managers and may provide that contracts or transactions in violation of such restrictions shall be void or voidable by the limited liability company. (e) Unless otherwise provided in the operating agreement, the managers shall have authority to fix the compensation of managers for services in any capacity.