Company assets are used to conduct Company business. If they are used by anybody for personal reasons, they are not available for investment in productive and income-generating activities. For Board Members, such use also creates conflicts of interest.
When reviewing this issue, investors should determine whether the Company:
A. Yes, as he pays the prevailing interest rate.
The company should not lend the money to John, no matter if he pays the market interest rate or not. Any appearance of a conflict of interest should be avoided.
A. related-party transactions
On the other hand, if a Board Member leases his or her own airplane to the Company, it will be considered a related-party transaction.