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TexLaw, Attorney
Category: Business Law
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Experience:  Internationational Commercial Attorney
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A private corporation wants to tender an offer to all stockholders

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A private corporation wants to tender an offer to all stockholders to purchase up to 20% of of each stockholders' stock for a set price. A family owns 60% of the outstanding stock and four members of the family are on the board with three non-family directors. Can those family members who are directors vote on the approval of the price for the buy back or do they have a conflict of interest which prevents them from voting?

Thank you for your question.

The board members who would benefit financially from the stock buy back do indeed have a conflict of interest. The interested directors must disclose their interest. A majority of the disinterested directors must pass a resolution acknowledging that they will benefit from the transaction and approving the buy back.

Please let me know if you need further information.

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