CONFLICT OF INTEREST POLICY
A person shall not be disqualified from serving as a member of The Exploris School’s board of directors because of the existence of a conflict of interest, so long as the person’s actions comply with the school’s conflict of interest policy as provided in G.S. 115C-218.15(b)(3) and applicable law. Reference § 115C- 218.15.
No voting member of the governing board shall be an employee of a for-profit company that provides substantial services to the charter school for a fee.
SECTION 1. GENERAL PROVISIONS.
Directors shall avoid improper conduct arising from conflicts of interest and shall abide by all legal requirements governing conflicts of interests, including G.S. 55A-8-31. If any Director has or may have a conflict of interest in a matter pending before the Board, such member shall fully disclose to the Board the nature of the conflict or potential conflict. No transaction may be approved if it would constitute self- dealing.
SECTION 2. STATUTORY REQUIREMENTS.
Board practice regarding conflicts of interest shall be governed ultimately by G.S. 55A-8-31, as amended or replaced at any time subsequent to the adoption of this policy. Specific statutory requirements include the following.
(a) A conflict of interest transaction is a transaction with The Exploris School in which a Director of the The Exploris School has a direct or indirect interest. A conflict of interest transaction is not voidable by The Exploris School solely because of the Director’s interest in the transaction if any one of the following is true:
(1) The material facts of the transaction and the Director’s interest were disclosed or known to the Board of Directors or a committee of the Board and the Board or committee authorized, approved, or ratified the transaction;
(2) The material facts of the transaction and the Director’s interest were disclosed or known to the members entitled to vote and they authorized, approved, or ratified the transaction; or
(3) The transaction was fair to The Exploris School.
(b) A Director of The Exploris School has an indirect interest in a transaction if:
(1) Another entity in which he or she has a material financial interest or in which he or she is a
general partner is a party to the transaction; or
(2) Another entity of which he or she is a Director, officer, or trustee is a party to the transaction and the transaction is or should be considered by the Board of Directors of The Exploris School.
(c) For purposes of subdivision (a)(1) of this section, a conflict of interest transaction is authorized, approved, or ratified if it receives the affirmative vote of a majority of the Directors on the Board of Directors (or on the committee) who have no direct or indirect interest in the transaction, but a transaction shall not be authorized, approved, or ratified under this section by a single Director. If a majority of the Directors who have no direct or indirect interest in the transaction vote to authorize, approve, or ratify the transaction, a quorum is present for the purpose of taking action under this section. The presence of, or a vote cast by, a Director with a direct or indirect interest in the transaction does not affect the validity of any action taken under subdivision (a)(1) of this section if the transaction is otherwise authorized, approved, or ratified as provided in that subdivision.
(d) For purposes of subdivision (a)(2) of this section, a conflict of interest transaction is authorized, approved, or ratified by the members if it receives a majority of the votes entitled to be counted under this subsection. Votes cast by or voted under the control of a Director who has a direct or indirect interest in the transaction, and votes cast by or voted under the control of an entity described in subdivision (b)(1) of this section, shall not be counted in a vote of members to determine whether to authorize, approve, or ratify a conflict of interest transaction under subdivision (a)(2) of this section. The vote of these members, however, is counted in determining whether the transaction is approved under other sections of this Chapter. A majority of the votes, whether or not present, that are entitled to be cast in a vote on the transaction under this subsection constitutes a quorum for the purpose of taking action under this section.
(e) The Articles of Incorporation, Bylaws, or a resolution of the Board may impose additional requirements on conflict of interest transactions.
SECTION 3. DEFINITIONS.
(a) Interested Person. Any Director, principal officer, or member of a committee with Board-delegated powers, who has a direct or indirect financial interest, as defined below, is an interested person.
(b) Financial Interest. A person has a financial interest if the person has, directly or indirectly, through business, investment, or family:
(1) An ownership or investment interest in any entity with which The Exploris School has a transaction or
(2) A compensation arrangement with The Exploris School or with any entity or individual with which The
Exploris School has a transaction or arrangement, or
(3) A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which The Exploris School is negotiating a transaction or arrangement. Compensation includes direct and indirect remuneration as well as gifts or favors that are not insubstantial.
SECTION 4. PROCEDURES.
(a) Duty to Disclose. In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial interest and be given the opportunity to disclose all material facts to the Directors and members of committees with board-delegated powers considering the proposed transaction or arrangement.
(b) Determining Whether a Conflict of Interest Exists. After disclosure of the financial interest and all material facts, and after any discussion with the interested person, he/she shall leave the Board or committee meeting while the determination of a conflict of interest is discussed and voted upon. The remaining Board or committee members shall decide if a conflict of interest exists.
(c) Procedures for Addressing the Conflict of Interest.
(1) An interested person may make a presentation to the Board of Directors or committee meeting, but after the presentation, he/she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement involving the possible conflict of interest.
(2) The Chair of the Board of Directors, or the chair of the committee if a committee meeting is appropriate, shall appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
(3) After exercising due diligence, the Board or committee shall determine whether The Exploris School can obtain, with reasonable efforts, a more advantageous transaction or arrangement from a person or entity that would not give rise to a conflict of interest.
(4) If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the Board or committee shall determine by a majority vote of the disinterested members whether the transaction or arrangement is in The Exploris School’s best interest, for its own benefit, and whether it is fair and reasonable. In conformity with the above determination it shall make its decision as to whether to enter into the transaction or arrangement.
(d) Violations of the Conflicts of Interest Policy.
(1) If the Board of Directors or one of its committees has reasonable cause to believe a member has failed to disclose actual or a foreseeable conflict of interest, it shall inform the member of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose.
(2) If, after hearing the member’s response and after making further investigation as warranted by the circumstances, the Board or committee determines the member has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary or corrective action including, without limitation, dismissal from the Board.
SECTION 4. RECORDS OF PROCEEDINGS.
The minutes of the Board of Directors and all committees with Board-delegated powers shall contain:
(a) The names of the persons who disclosed or otherwise were found to have a financial interest in connection with an actual or possible conflict of interest, the nature of the financial interest, any action taken to determine whether a conflict of interest was present, and the decision of the Board or committee as to whether a conflict of interest in fact existed.
(b) The names of the persons who were present for discussions and votes relating to the transaction or arrangement, the content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection with the proceedings.
SECTION 6. COMPENSATION.
(a) Board members shall receive no compensation for serving on the board and may not receive compensation from The Exploris School for any services provided to The Exploris School.
(b) Board members may be reimbursed for travel, accommodations, and meals when traveling on behalf of the school.
SECTION 7. ANNUAL STATEMENTS.
Each Director, principal officer and member of a committee with Board-delegated powers shall annually sign a statement that affirms such person
(a) has received a copy of the conflicts of interest policy,
(b) has read and understands the policy,
(c) has agreed to comply with the policy, and
(d) understands The Exploris School is charitable and in order to maintain its federal tax exemption it must engage primarily in activities which accomplish one or more of its tax-exempt purposes.
SECTION 8. PERIODIC REVIEWS.
To ensure that The Exploris School operates in a manner consistent with charitable purposes and does not engage in activities that could jeopardize its tax-exempt status, periodic reviews shall be conducted. The periodic reviews shall, at a minimum, include the following subjects:
(a) Whether compensation arrangements and benefits are reasonable, based on competent survey information, and the result of arm’s length bargaining.
(b) Whether partnerships, joint ventures, and arrangements with management organizations conform to The Exploris School’s written policies, are properly recorded, reflect reasonable investment or payments for goods and services, further charitable purposes and do not result in inurement, impermissible private benefit or in an excess benefit transaction.
SECTION 9. USE OF OUTSIDE EXPERTS.
When conducting the periodic reviews as provided for in this Article, The Exploris School may choose to employ outside experts. If outside experts are used, their use shall not relieve the Board of Directors of its responsibility for ensuring that periodic reviews are conducted.
References: Section 4.3 Charter Agreement, NCGS Section 115C-218.15, NCGS Section 55A-8-31
Adopted: July 24, 2018