(a) If a licensee provides financing assistance to a business firm or engages in another business transaction, and if that financing assistance or transaction involves a potential conflict of interest, the terms and conditions under which the licensee provides the financing assistance or engages in the transaction shall not be less favorable to the licensee than the terms and conditions that would be required by the licensee in the ordinary course of business if the transaction did not involve a potential conflict of interest. Each person who participates in the decision of the licensee relating to a transaction described in this section and has knowledge of a potential conflict of interest involving that transaction shall take care that the potential conflict of interest is disclosed in the documents of the transaction or, for a business transaction not involving financing assistance, in appropriate documents.

Terms Used In Tennessee Code 45-8-213

  • Affiliate: means , if used with respect to a specified person other than a natural person, a person controlling or controlled by the specified person, or a person controlled by a person who also controls the specified person. See Tennessee Code 45-8-203
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Associate: means , if used with respect to a licensee:
    (A) A controlling person, director, officer, agent, or advisor of that licensee. See Tennessee Code 45-8-203
  • Business firm: means a person that transacts business on a regular basis, or that proposes to transact business on a regular and continual basis. See Tennessee Code 45-8-203
  • Commissioner: means the commissioner of financial institutions. See Tennessee Code 45-8-203
  • controlling person: means a person or any combination of persons acting in concert, owning or controlling, directly or indirectly, a twenty percent (20%) or greater equity interest. See Tennessee Code 45-8-203
  • Licensee: means a Tennessee corporation that is licensed under this part. See Tennessee Code 45-8-203
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Officer: means :
    (A) If used with respect to a corporation, a person appointed or designated as an officer of the corporation by or pursuant to applicable law or the charter or bylaws of the corporation, or a person who performs, with respect to the corporation, functions usually performed by an officer of a corporation. See Tennessee Code 45-8-203
  • Person: includes an individual, proprietorship, joint venture, partnership, trust, business trust, syndicate, association, joint stock company, corporation, cooperative, government, agency of a government, or any other entity or organization. See Tennessee Code 45-8-203
  • Principal shareholder: means a person that owns, directly or indirectly, of record or beneficially, securities representing ten percent (10%) or more of the outstanding voting securities of a corporation. See Tennessee Code 45-8-203
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
  • Relative: means parent, legal guardian, child, sibling, spouse, father-in-law, mother-in-law, son-in-law, brother-in-law, daughter-in-law, sister-in-law, grandparent, grandchild, nephew, niece, uncle or aunt. See Tennessee Code 45-8-203
  • Subsidiary: means , if used with respect to a licensee, a company or business firm that the licensee holds control of as permitted by §. See Tennessee Code 45-8-203
(b) For the purposes of subsection (a), transactions engaged in by a licensee that involve a potential conflict of interest include, but are not limited to, the following:

(1) Providing financing assistance to a principal shareholder of the licensee, to a person controlled by a principal shareholder of the licensee, or to a director, officer, partner, relative, controlling person, or affiliate of a principal shareholder of the licensee;
(2) Providing financing assistance to a business firm that is a principal shareholder of the licensee, or to a director, officer, partner, relative, controlling person, or affiliate of a principal shareholder of the licensee, or to a person controlled by a principal shareholder of the licensee that provides or plans to provide contemporaneous financing assistance;
(3) Providing financing assistance to a business firm that has or is expected to have a substantial business relationship with another business firm that has a director, officer, or controlling person who is also a director, officer or controlling person of the licensee or who is the spouse of a director, officer, or controlling person of the licensee;
(4) Providing financing assistance to a business firm if that business firm, or a director, officer or controlling person of that business firm, contemporaneously, has loaned or will loan money to an associate of the licensee;
(5) Providing financing assistance for the purchase of property of an associate or principal shareholder of the licensee; and
(6) Selling or otherwise transferring any of its assets to an associate or principal shareholder of the licensee.
(c) Nothing in this section or in any other section of this part limits the authority of the commissioner to determine that an act involves a conflict of interest and, therefore, is an unsafe or unsound act.
(d) Except with the approval of the commissioner, a licensee shall not provide a lien on or security interest in any of its property for the purpose of securing an obligation of, or an obligation incurred for the benefit of, another person, other than a direct or indirect subsidiary thereof.
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