F. 
Directors' Conflicting Interest Transactions



 



[§414-261]  Definitions.  As used in
this subpart:



"Conflicting interest" with respect
to a corporation means the interest a director of the corporation has
respecting a transaction effected or proposed to be effected by the corporation
(or by a subsidiary of the corporation or any other entity in which the
corporation has a controlling interest) if:



(1)  Whether or not the transaction is brought before
the board of directors of the corporation for action, the director knows at the
time of commitment that the director or a related person is a party to the
transaction or has a beneficial financial interest in or so closely linked to
the transaction and of such financial significance to the director or a related
person that the interest would reasonably be expected to exert an influence on
the director's judgment if the director were called upon to vote on the
transaction; or



(2)  The transaction is brought (or is of such
character and significance to the corporation that it would in the normal
course be brought) before the board of directors of the corporation for action,
and the director knows at the time of commitment that any of the following
persons is either a party to the transaction or has a beneficial financial
interest in or so closely linked to the transaction and of such financial
significance to the person that the interest would reasonably be expected to
exert an influence on the director's judgment if the director were called upon
to vote on the transaction:



(A)  An entity (other than the corporation) of
which the director is a director, general partner, agent, or employee;



(B)  A person that controls one or more of the
entities specified in subparagraph (A) or an entity that is controlled by, or
is under common control with, one or more of the entities specified in
subparagraph (A); or



(C)  An individual who is a general partner,
principal, or employer of the director.



"Director's conflicting interest
transaction" with respect to a corporation means a transaction effected or
proposed to be effected by the corporation (or by a subsidiary of the
corporation or any other entity in which the corporation has a controlling
interest) respecting which a director of the corporation has a conflicting interest.



"Related person" of a director means:



(1)  The spouse (or a parent or sibling thereof) of
the director, or a child, grandchild, sibling, parent (or spouse of any
thereof) of the director, or an individual having the same home as the
director, or a trust or estate of which an individual specified in this
paragraph is a substantial beneficiary; or



(2)  A trust, estate, incompetent, conservatee, or
minor of which the director is a fiduciary.



"Required disclosure" means
disclosure by the director who has a conflicting interest of:



(1)  The existence and nature of the director's
conflicting interest; and



(2)  All facts known to the director respecting the
subject matter of the transaction that an ordinarily prudent person would
reasonably believe to be material to a judgment about whether or not to proceed
with the transaction.



"Time of commitment" respecting a
transaction means the time when the transaction is consummated or, if made
pursuant to contract, the time when the corporation (or its subsidiary or the
entity in which it has a controlling interest) becomes contractually obligated
so that its unilateral withdrawal from the transaction would entail significant
loss, liability, or other damage. [L 2000, c 244, pt of §1]