F. Directors' Conflicting Interest Transactions

 

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

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

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

(2)  The transaction is brought (or is of suchcharacter and significance to the corporation that it would in the normalcourse 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 followingpersons is either a party to the transaction or has a beneficial financialinterest in or so closely linked to the transaction and of such financialsignificance to the person that the interest would reasonably be expected toexert an influence on the director's judgment if the director were called uponto vote on the transaction:

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

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

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

"Director's conflicting interesttransaction" with respect to a corporation means a transaction effected orproposed to be effected by the corporation (or by a subsidiary of thecorporation or any other entity in which the corporation has a controllinginterest) 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) ofthe director, or a child, grandchild, sibling, parent (or spouse of anythereof) of the director, or an individual having the same home as thedirector, or a trust or estate of which an individual specified in thisparagraph is a substantial beneficiary; or

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

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

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

(2)  All facts known to the director respecting thesubject matter of the transaction that an ordinarily prudent person wouldreasonably believe to be material to a judgment about whether or not to proceedwith the transaction.

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