2023 District of Columbia Code › Title 29 - Business Organizations. [Enacted title] › Chapter 3 - Business Corporations › Subchapter VI - Directors and Officers › Part F - Directors’ Conflicting Interest Transactions › § 29–306.70. Definitions

§ 29–306.70. Definitions.
For the purposes of this part, the term:
(1) “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.
(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:
(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.
(3) “Fair to the corporation” means, for the purposes of § 29-306.71(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 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 judgment when participating in action on the authorization of the transaction.
(5) “Related person” means:
(A) The director’s spouse;
(B) A child, stepchild, grandchild, parent, step parent, grandparent, sibling, step sibling, half sibling, aunt, uncle, niece or nephew, or spouse of any thereof, of the director or of the director’s spouse;
(C) An individual living in the same home as the director;
(D) An entity, other than the corporation or an entity controlled by the corporation, controlled by the director or any person specified above in this paragraph;
(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 governor;
(ii) Unincorporated entity of which the director is a governor 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) “Relevant time” means:
(A) The time at which directors’ action respecting the transaction is taken in compliance with § 29-306.72; or
(B) If the transaction is not brought before the board of directors of the corporation, or its committee, for action under § 29-306.72, 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:
(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.
(July 2, 2011, D.C. Law 18-378, § 2, 58 DCR 1720.)
Section References
This section is referenced in § 29-306.72, § 29-306.73, and § 29-306.80.