48-18-303 - Loans to directors and officers. - Tennessee Statutes

48-18-303. Loans to directors and officers.

(a)  Except as provided by subsection (c), a corporation may not lend money to or guarantee the obligation of a director or officer of the corporation unless:

     (1)  The particular loan or guarantee is approved by a majority of the votes represented by the outstanding voting shares of all classes, voting as a single voting group, except the votes of shares owned by or voted under the control of the benefited director or officer; or

     (2)  The corporation's board of directors determines that the loan or guarantee benefits the corporation and either approves the specific loan or guarantee or a general plan authorizing loans and guarantees.

(b)  The fact that a loan or guarantee is made in violation of this section does not affect the borrower's liability on the loan.

(c)  This section does not apply to loans and guarantees authorized by statute regulating any special class of corporation.

(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.

[Acts 1986, ch. 887, § 8.32.]