As used in this part:

(1) “Control” or “controlled by” means:

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Terms Used In Tennessee Code 48-58-701

  • board of directors: means the governing board of a corporation, whether denominated the board of directors or otherwise, except that no person or group of persons is the board of directors because of powers delegated to that person or group pursuant to §. See Tennessee Code 48-51-201
  • Business: includes every trade, occupation, profession, investment activity and other lawful purpose for gain or the preservation of assets whether or not carried on for profits. See Tennessee Code 48-202-101
  • Contract: A legal written agreement that becomes binding when signed.
  • 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. See Tennessee Code 48-58-701
  • 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.
  • Directors: means natural persons, designated in the charter or bylaws or elected or appointed by the incorporators, and their successors and natural persons elected or appointed to act as members of the board, irrespective of the names or titles by which such persons are described. See Tennessee Code 48-51-201
  • Entity: includes the following, whether foreign or domestic: LLCs. See Tennessee Code 48-202-101
  • Fiduciary: A trustee, executor, or administrator.
  • Governing body: means the board of governors in the case of a board-managed LLC, the members in the case of a member-managed LLC, and the board of directors in the case of a corporation. See Tennessee Code 48-202-101
  • 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: includes the estate of an incompetent or deceased individual. See Tennessee Code 48-11-201
  • Interest: means either or both of the following rights under the organic law of an unincorporated entity:
    (A) The right to receive distributions from the entity either in the ordinary course or upon liquidation. See Tennessee Code 48-11-201
  • 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. See Tennessee Code 48-58-701
  • 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. See Tennessee Code 48-58-701
  • Member: means a person reflected in the required records of an LLC as the owner of some governance rights of a membership interest of the LLC. See Tennessee Code 48-202-101
  • Person: includes individual and entity. See Tennessee Code 48-202-101
  • Qualified director: means a director who, at the time action is to be taken under §. See Tennessee Code 48-58-701
  • Relevant time: means :
    (A) The time at which directors' action respecting the transaction is taken in compliance with §. See Tennessee Code 48-58-701
  • Representative: means a governor, manager, employee or other agent of a foreign LLC. See Tennessee Code 48-202-101
  • Trustee: A person or institution holding and administering property in trust.
  • Unincorporated entity: means an organization or artificial legal person that either has a separate legal existence or has the power to acquire an estate in real property in its own name and that is not any of the following: a domestic or foreign business or nonprofit corporation, an estate, a trust, a state, the United States, or a foreign government. See Tennessee Code 48-11-201
(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.
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