(a) A corporation may not lend money to or guarantee the obligation of a director or officer of the corporation.
non profit

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Terms Used In Tennessee Code 48-58-303

  • 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
  • Class: when used with reference to membership interests, means a category of membership interests that differs in one (1) or more rights or preferences from another category of membership interests of the LLC. See Tennessee Code 48-202-101
  • 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.
  • Employee: includes an officer but not a director. See Tennessee Code 48-11-201
  • 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.
  • Statute: A law passed by a legislature.
(b) This section does not apply to loans and guarantees authorized or permitted by any other statute that regulates any special class of corporation.
(c) This section does not apply to:

(1) Advances to pay reimbursable expenses reasonably expected to be incurred by a director or officer;
(2) Advances to pay premiums on life insurance if the advance is secured by the cash value of the policy;
(3) Advances pursuant to part 5 of this chapter;
(4) Loans or advances pursuant to employee benefit plans; or
(5) Loans to pay relocation expenses.
(d) Neither a sale on credit in the ordinary course of business nor a life insurance policy loan shall be subject to the restrictions of this section.
(e) The fact that a loan or guarantee is made in violation of this section does not affect the borrower’s liability on the loan.
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