(1) They are fully disclosed to the rest of the board.
(2) The board has the opportunity to discuss the transaction and vote on it without the interested party being present.
(3) The terms of the deal are in the range of what would be paid if an outside third-party were hired to perform the services (also called "arm's length" terms).
Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.