The Vermont Statutes Online

Title 11C : Mututal Benefit Enterprises

Chapter 008 : Directors and Officers

• § 819. Definitions

  For purposes of this section and sections 819a through 819c of this title:

  (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 enterprise or by an entity controlled by the enterprise that at the relevant time the director:

  (A) was a party to; or

  (B) had knowledge of and a material financial interest known to the director; or

  (C) knew that a related person was a party or had a material financial interest.

  (3) “Fair to the enterprise” means, for purposes of subdivision 819a(b)(3) of this title, that the transaction as a whole was beneficial to the enterprise, taking into appropriate account whether it was:

  (A) fair in terms of the director’s dealings with the enterprise; and

  (B) comparable to what might have been obtainable in an arm’s length transaction, given the consideration paid or received by the enterprise.

  (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, stepparent, 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 enterprise or an entity controlled by the enterprise, controlled by the director or any person specified in this subdivision (5);

  (E) a domestic or foreign:

  (i) business corporation, nonprofit corporation, or mutual benefit enterprise (other than the enterprise or an entity controlled by the enterprise) 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 who is or an entity that is controlled by an employer of the director.

  (6) “Relevant time” means:

  (A) the time at which the directors’ action respecting the transaction is taken in compliance with section 819b of this title; or

  (B) if the transaction is not brought before the board of directors of the enterprise or its committee for action under section 819b of this title, at the time the enterprise or an entity controlled by the enterprise 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. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)