State Codes and Statutes

Statutes > Utah > Title-16 > Chapter-10a > 16-10a-850

16-10a-850. Definitions relating to conflicting interest transactions.
As used in Sections 16-10a-850 through 16-10a-853:
(1) "Conflicting interest" with respect to a corporation means the interest a director hasrespecting a transaction effected or proposed to be effected by the corporation or by any entity inwhich the corporation has a controlling interest if:
(a) whether or not the transaction is brought before the board of directors of thecorporation for action, the director knows at the time of commitment that the director or a relatedperson of the director is a party to the transaction or has a beneficial financial interest in or is soclosely linked to, the transaction and the transaction is so financially significant to the director or arelated person of the director that the interest would reasonably be expected to exert an influenceon the director's judgment if the director were called upon to vote on the transaction; or
(b) the transaction is brought, or is of a character and significance to the corporation thatit would in the normal course be brought, before the board of directors for action, and the directorknows at the time of commitment that any of the following persons is either a party to thetransaction or has a beneficial financial interest in, or is so closely linked to, the transaction andthe transaction is so financially significant to the person that the interest would reasonably beexpected to exert an influence on the director's judgment if the director were called upon to voteon the transaction:
(i) an entity, other than the corporation, of which the director is a director, generalpartner, agent, or employee or an entity to which the director owes a fiduciary duty, other than afiduciary duty arising because the director is a director of the corporation;
(ii) an individual who is a general partner, principal, or employer of the director or who isa beneficiary of a fiduciary duty owed by the director, other than a fiduciary duty arising becausethe director is a director of the corporation; or
(iii) a person that controls one or more of the entities specified in Subsection (1)(b)(i) oran entity that is controlled by, or is under common control with, one or more of the entities orindividuals specified in Subsection (1)(b)(i) or (1)(b)(ii).
(2) "Director's conflicting interest transaction" with respect to a corporation means atransaction effected or proposed to be effected by the corporation, or by any entity controlled bythe corporation respecting which a director has a conflicting interest.
(3) "Qualified director" means, with respect to a director's conflicting interest transaction,any director who does not have either a conflicting interest respecting the transaction, or afamilial, financial, professional, or employment relationship with a second director who doeshave a conflicting interest respecting the transaction, which relationship would, in thecircumstances, reasonably be expected to exert an influence on the first director's judgment whenvoting on the transaction.
(4) "Required disclosure" means disclosure by the director who has a conflicting interestof:
(a) the existence and nature of the conflicting interest; and
(b) all facts known to the director respecting the subject matter of the transaction that anordinarily prudent person would reasonably believe to be material to a judgment about whether ornot to proceed with the transaction.
(5) "Time of commitment" respecting a transaction means the time when the transactionis consummated or, if made pursuant to contract, the time when the corporation or the entitycontrolled by the corporation becomes contractually obligated so that its unilateral withdrawal

from the transaction would entail significant loss, liability, or other damage.

Enacted by Chapter 277, 1992 General Session