Section 48-58-701 - Part definitionsAs used in this part:
(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 memberships, voting rights 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 or officer'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 or officer is a party;(B) Respecting which, at the relevant time, the director or officer had knowledge and a material financial interest known to the director or officer; or(C) Respecting which, at the relevant time, the director or officer knew that a related person was a party or had a material financial interest;(3) "Fair to the corporation" means, for purposes of § 48-58-702(b)(3), 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 or officer'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 or officer's judgment when participating in action on the authorization of the transaction;(5) "Material relationship" means a familial, financial, professional, employment or other relationship that would reasonably be expected to impair the objectivity of the director's judgment when participating in the action to be taken;(6)(A) "Qualified director" means a director who, at the time action is to be taken under § 48-58-703, is not a director:(i) As to whom the transaction is a director's or officer's conflicting interest transaction; or(ii) Who has a material relationship with another director as to whom the transaction is a director's or officer's conflicting interest transaction;(B) The presence of one (1) or more of the following circumstances shall not automatically prevent a director from being a qualified director:(i) Nomination or election of the director to the current board by any director who is not a qualified director with respect to the matter (or by any person that has a material relationship with that director), acting alone or participating with others; or(ii) Service as a director of another corporation of which a director who is not a qualified director with respect to the matter (or any individual who has a material relationship with that director), is or was also a director;(7) "Related person" means: (A) The director's or officer's spouse;(B) A child, stepchild, grandchild, parent, stepparent, grandparent, sibling, stepsibling, half-sibling, aunt, uncle, niece or nephew (or spouse of any thereof) of the director or officer or of the director's or officer's spouse;(C) An individual living in the same home as the director or officer;(D) An entity (other than the corporation or an entity controlled by the corporation) controlled by the director or officer or any person specified in subdivisions (7)(A)-(C);(E) A domestic or foreign:(i) Business or nonprofit corporation (other than the corporation or an entity controlled by the corporation) of which the director or officer is a director but only with respect to a transaction or proposed transaction to which the corporation and the other business or nonprofit corporation are parties or proposed parties and that is a transaction or proposed transaction that is or should be considered by the board of directors of the corporation;(ii) Unincorporated entity of which the director or officer is a general partner or a member of the governing body; or(iii) Individual, trust or estate for whom or of which the director or officer is a trustee, guardian, personal representative or like fiduciary; or(F) A person that is or an entity that is controlled by an employer of the director or officer;(8) "Relevant time" means: (A) The time at which directors' action respecting the transaction is taken in compliance with § 48-58-703; or(B) If the transaction is not brought before the board of directors of the corporation (or its committee) for action under § 48-58-703, at the time the corporation (or an entity controlled by the corporation) becomes legally obligated to consummate the transaction; and(9) "Required disclosure" means disclosure of:(A) The existence and nature of the director's or officer's conflicting interest; and(B) All facts known to the director or officer respecting the subject matter of the transaction that a director or officer free of such conflicting interest would reasonably believe to be material in deciding whether to proceed with the transaction.Added by 2014 Tenn. Acts, ch. 899,s 54, eff. 1/1/2015.