Iowa Code 490.860 – Part definitions
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As used in this part, unless otherwise specified:
1. “Control”, including the term “controlled by”, means any of the following:
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.
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.
Terms Used In Iowa Code 490.860
- Child: includes child by adoption. See Iowa Code 4.1
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Entity: includes a domestic and foreign business corporation; domestic and foreign nonprofit corporation; estate; trust; domestic and foreign unincorporated entity; and a state, the United States, and a foreign government. See Iowa Code 490.140
- Fiduciary: A trustee, executor, or administrator.
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Guardian: A person legally empowered and charged with the duty of taking care of and managing the property of another person who because of age, intellect, or health, is incapable of managing his (her) own affairs.
- Individual: means a natural person. See Iowa Code 490.140
- Interest: means either or both of the following rights under the organic law governing an unincorporated entity:a. See Iowa Code 490.140
- Person: means a person as defined in section 4. See Iowa Code 490.140
- Shares: means the units into which the proprietary interests in a domestic or foreign corporation are divided. See Iowa Code 490.140
- Trustee: A person or institution holding and administering property in trust.
- Unincorporated entity: includes a general partnership, limited liability company, limited partnership, business trust, joint stock association, and unincorporated nonprofit association. See Iowa Code 490.140
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, to which, or respecting which, any of the following applies: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.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 section 490.861, subsection 2, paragraph “c”, that the transaction as a whole was beneficial to the corporation, taking into appropriate account whether it was all of the following:a. Fair in terms of the director’s dealings with the corporation.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 any of the following:a. The individual‘s spouse.b. A child, stepchild, grandchild, parent, stepparent, grandparent, sibling, stepsibling, half sibling, aunt, uncle, niece, or nephew, or spouse of any such person, of the individual or of the individual’s spouse.c. A natural person living in the same home as the individual.d. An entity, other than the corporation or an entity controlled by the corporation, controlled by the individual or any person specified in this subsection.e. Any of the following:(1) A domestic or foreign business or nonprofit corporation, other than the corporation or an entity controlled by the corporation, of which the individual is a director.(2) A domestic or foreign unincorporated entity of which the individual is a general partner or a member of the governing body.(3) A domestic or foreign individual, trust, or estate for whom or of which the individual is a trustee, guardian, personal representative, or like fiduciary.f. A person that is, or an entity that is controlled by, an employer of the individual.6. “Relevant time” means the following:a. The time at which directors’ action respecting the transaction is taken in compliance with section 490.862.b. If the transaction is not brought before the board of directors or a board committee for action under section 490.862, at the time the corporation or an entity controlled by the corporation becomes legally obligated to consummate the transaction.7. “Required disclosure” means disclosure of all of the following:a. The existence and nature of the director’s conflicting interest.b. All facts known to the director respecting the subject matter of the transaction that a director free of such conflicting interest would reasonably believe to be material in deciding whether to proceed with the transaction.