Also known as: mandatory disclosures · compulsory disclosure · required disclosure
Written by attorneys · grounded in primary & secondary sources — see below
A requirement that a director with a conflicting interest reveal all material facts concerning a transaction or business opportunity to qualified directors or the corporation before they act on the matter.
Maxwell Manufacturing's board considers buying components from a firm owned by director Miguel Mendoza. Mendoza discloses his ownership stake and pricing details to the qualified directors. They deliberate separately and approve the deal by majority vote. The transaction binds the corporation because the disclosure satisfied the statutory prerequisites.
Director Maya Malik learns of a profitable licensing deal for Metro Bank. She discloses every material term to the board before pursuing it personally. The board declines the opportunity after full discussion. Malik may then accept the deal without liability because the prior disclosure complied with the required process.
Select any source to read its text and confirm it supports the definition.
A car manufacturer sells vehicles with undisclosed repainting and fails to reveal the practice to buyers. The jury awards substantial punitive damages. On review the award is reduced because the nondisclosure did not cause the degree of harm needed to justify the original amount.
A corporation funds television ads that mention a federal candidate close to an election. It must file detailed reports identifying donors and amounts spent. Failure to disclose triggers enforcement proceedings and potential civil penalties under the governing statute.
The director must reveal all material facts about the conflicting interest transaction that are not already known to the qualified directors. The disclosure must occur before the qualified directors vote.
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No. The qualified directors must still approve the transaction by the required majority vote after deliberating without the conflicted director. Fairness to the corporation remains an alternative basis for validity if disclosure is incomplete.
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A director or officer must make prior disclosure of all material facts about the opportunity to the corporation. The corporation may then disclaim interest through qualified director or shareholder action that follows the same procedures used for conflicting interest transactions.
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…cardholder agreement, his rights under such federal statutes as TILA. (15 U.S.C. § 1601 et seq.).[^maj-4] This statute imposes mandatory disclosure requirements for consumer credit transactions, including those arising on credit card accounts. As to the latter, the statute provides for detailed disclosure of the terms on which credit…