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Conflict of Interest Policy for Regents : 1.02.03.30

Policy/Guideline Area

Governance, Organization, and General Policies

Applicable Divisions

Board Members

Purpose

The purpose of this policy is to ensure objectivity and integrity on the part of the  Regents by identifying and avoiding conflicts of interest, both real and perceived.

Definitions

As used in this policy:

Immediate family means parent, spouse, sibling or child, including step-children;

The system means the Tennessee Board of Regents system or any of its member institutions.

Policy/Guideline

  1. Conflicts
    1. General Policy Statement. In addition to the specific circumstances prohibited by state law, the Board considers that a conflict of interest exists in the following situations: (1) when a Regent or immediate family member has a direct or indirect financial interest in a transaction involving the system; (2) when the actions of a Regent involve the obtaining of personal gain or advantage; (3) when an adverse effect or impact on the system’s interest occurs for the personal gain of a Regent  or  immediate family member; and (4) when a Regent obtains or assists in obtaining for a third party improper gain from, or unfair advantage, of the system. Disclosure of any situation in doubt should be made in order to protect the Regent and the system.
    2. State Law. Tennessee Code Annotated § 49-8-203(g), which applies specifically to members of the Board of Regents, provides that "It is unlawful for any member of a state university board or the board of regents to be financially interested in any contract or transaction affecting the interest of any institution governed by the  board, or to procure, or be a party in any way to procuring, the appointment of any relative to any position of trust or profit connected with the universities and colleges governed." T.C.A. § 45-2-405 provides, however, that notwithstanding the above provision, or any other law to the contrary, "any officer, director, or employee of any bank may serve in any capacity in state or local government, except in any capacity with the department of financial institutions, or on any board, commission, or other agency of such governmental unit, provided that such officer, director or employee" has disclosed such fact as provided therein. T.C.A. § 12-4-101 and -103 are general conflict of interest statutes applicable to all state officials and employees, including Regents. Because the Regent statute, T.C.A. § 49-8- 203(g), is more restrictive, however, its terms are controlling on questions of Regent conflicts of interest. Thus, the system cannot do business with a Regent or with a  closely held company in which a Regent owns any interest—whether a direct or indirect interest, and however minimal the interest may be. This strict standard does not apply  to a Regent’s mere ownership of less than a controlling interest in stock of large, publicly-traded companies.
    3. Guidance. Although it is not possible to list every circumstance which is, or is not, a conflict of interest, the following examples are provided:
      1. If a Regent commingles assets with a spouse or other family member who is financially interested in a contract or transaction affecting the system, the Regent is also financially interested in the contract or transaction.
      2. A Regent's service as a salaried officer (without stock ownership) of a company doing business with the system does not violate T.C.A. § 49-8-203(g) unless the facts in a given case show that the trustee's compensation is linked to the company's performance and could be enhanced by the company's business with the system.
      3. A Regent’s service as a member of the board of directors without stock ownership of a company doing business with the system does not violate  T.C.A. § 49-8-203(g) unless the facts in a given case show that the Regent receives a director's fee that is linked to the company's performance and could be enhanced by the company's business with the system. In view of the broad nature of the prohibition found in T.C.A. §49-8-203(g), any activity which might constitute, or be perceived to constitute, a prohibited conflict should be fully reported.  Full disclosure of any situation in doubt should be made.
  2. Disclosure
    1. Initial Disclosure. Within thirty (30) days of appointment to the Board, each Regent must complete the Regents Disclosure Form. (Exhibit 1) The form shall be submitted to  the General Counsel.
    2. Annual Disclosure. By January 31 of each year, each Regent must submit an updated Regents Disclosure Form and submit it to the General Counsel. In early January of each year, the Office of General Counsel will contact each Regent and provide the necessary form and instructions.
    3. Interim Disclosure. If an event occurs during the year that requires disclosure by a Regent, the Regent should submit an amended Regents Disclosure Form to the General Counsel within sixty (60) days of the event.

Exhibits

Sources

Authority

T.C.A. § 49-8-20; T.C.A. § 45-2-405;T.C.A § 12-4-101 and -103.

History

New Policy Approved at TBR Board Meeting September 19 & 20, 2019.