Statutory Solutions to Conflicts of Interest in Close Corporations

The close corporation' operates in a continual atmosphere of conflict and self-dealing. Typical close corporation transactions between directors and the corporation produce conflicts which, more often than not, evolve from frustration to friction, from friction to disaffection and, ultimately, from disaffection to litigation. Problems caused by transactions between a corporation and one or more of its directors have constituted a pervasive theme of corporate law for the last half century. It is the purpose of this article to consider state statutory provisions governing conflicts of interest and their application to close corporations to determine whether or not such provisions provide useful rules for the unanticipated conflict which arises during corporate operations.