Sec. 33-781. Definitions.
Sec. 33-781. Definitions. As used in sections 33-781 to 33-784, inclusive:
(1) "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,
(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, or (C) respecting which, at the relevant time, the director knew that a related
person was a party or had a material financial interest.
(2) "Control", including the term "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
shares 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.
(3) "Relevant time" means (A) the time at which directors' action respecting the
transaction is taken in compliance with section 33-783, or (B) if the transaction is not
brought before the board of directors of the corporation, or its committee, for action under
section 33-783, at the time the corporation, or an entity controlled by the corporation,
becomes legally obligated to consummate the transaction.
(4) "Material financial interest" means a financial interest in a transaction that would
reasonably be expected to impair the objectivity of the director when participating in
action on the authorization of the transaction.
(5) "Related person" means: (A) The director's spouse, or a parent or sibling thereof;
(B) a child, grandchild, parent or sibling of the director, or the spouse of any thereof;
(C) an individual (i) living in the same home as the director, or (ii) a trust or estate of
which a person specified in subparagraph (A) or (B) of this subdivision or clause (i) of
this subparagraph is a substantial beneficiary; (D) an entity, other than the corporation
or an entity controlled by the corporation, controlled by the director or any person specified in subparagraphs (A) to (C), inclusive, of this subdivision; (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 is a director, (ii) unincorporated entity of which
the director is a general partner or a member of the governing body, or (iii) individual,
trust or estate for whom or of which the director 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.
(6) "Fair to the corporation" means, for purposes of subdivision (3) of subsection
(b) of section 33-782, 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 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.
(7) "Required disclosure" means disclosure of (A) the existence and nature of the
director's conflicting interest, and (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.
(P.A. 94-186, S. 116, 215; P.A. 96-271, S. 82, 254; P.A. 97-246, S. 85, 99; P.A. 06-68, S. 9.)
History: P.A. 94-186 effective January 1, 1997; P.A. 96-271 made technical changes, effective January 1, 1997; P.A.
97-246 rephrased definition of "related person" in Subdiv. (3), effective June 27, 1997; P.A. 06-68 replaced former definitions with new Subdivs. (1) to (7) defining "director's conflicting interest transaction", "control", "relevant time", "material
financial interest", "related person", "fair to the corporation" and "required disclosure".
Annotation to former section 33-46:
Contract between director and corporation; when voidable; authorization, and ratification or estoppel, by stockholders.
104 C. 683.
Annotations to former section 33-323:
Cited. 151 C. 437. Cited. 153 C. 527. Cited. 168 C. 201. Cited. 186 C. 587. Cited. 229 C. 771.
Cited. 1 CA 656.
Subsec. (a):
Director's sale of stock and loans to corporation found not improper. 180 C. 199.
Subsec. (d):
Subdiv. (3): Director's sale of stock and loans to corporation found to be prima facie fair. 180 C. 199.