35-14-860 . Definitions -- director's conflicting interest transactions. For the purposes of 35-14-860 through 35-14-863 , unless otherwise specified, the following definitions apply: (1) "Control" or "controlled by" means: (a) having the power, directly or indirectly, to elect or remove a majority of the members of the board of directors or other governing body of an entity, whether through the ownership of voting shares or interests, by contract, or otherwise; or (b) being subject to a majority of the risk of loss from the entity's activities or entitled to receive a majority of the entity's residual returns. (2) "Director's conflicting interest transaction" means a transaction effected or proposed to be effected by the corporation or by an entity controlled by the corporation: (a) to which, at the relevant time, the director is a party; (b) respecting which, at the relevant time, the director had knowledge and a material financial interest known to the director; or (c) respecting which, at the relevant time, the director knew that a related person was a party or had a material financial interest. (3) "Fair to the corporation" means, for purposes of 35-14-861 (2)(c), that the transaction as a whole was beneficial to the corporation, taking into appropriate account whether it was: (a) fair in terms of the director's dealings with the corporation; and (b) comparable to what might have been obtainable in an arm's-length transaction, given the consideration paid or received by the corporation. (4) "Material financial interest" means a financial interest in a transaction that would reasonably be expected to impair the objectivity of the director's judgment when participating in action on the authorization of the transaction. (5) "Related person" means: (a) an individual's spouse; (b) a child, stepchild, grandchild, parent, stepparent, grandparent, sibling, step sibling, half sibling, aunt, uncle, niece, or nephew, or spouse of any of them, of an individual or of an individual's spouse; (c) a natural person living in the same home as an individual; (d) an entity, other than the corporation or an entity controlled by the corporation, controlled by an individual or any person specified in subsections (5)(a) through (5)(c); (e) a domestic or foreign: (A) business or nonprofit corporation, other than the corporation or an entity controlled by the corporation, of which an individual is a director; (B) unincorporated entity of which an individual is a general partner or a member of the governing body; or (C) individual, trust, or estate for whom or of which an individual is a trustee, guardian, personal representative, or similar fiduciary; or (f) a person that is or an entity that is controlled by an employer of an individual. (6) "Relevant time" means: (a) the time at which directors' action respecting the transaction is taken in compliance with 35-14-862 ; or (b) if the transaction is not brought before the board of directors or a committee for action under 35-14-862 , the time at which the corporation or an entity controlled by the corporation becomes legally obligated to consummate the transaction. (7) "Required disclosure" means disclosure of: (a) the existence and nature of the director's conflicting interest; and (b) all facts known to the director respecting the subject matter of the transaction that a director free of that conflicting interest would reasonably believe to be material in deciding whether to proceed with the transaction.
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