Office for Responsible Outside Interests

What is Arizona’s COI Law?

In addition to federal conflict regulations, the University of Arizona must also comply with Arizona’s conflict of interest (COI) law.

A Substantial Interest is any nonspeculative pecuniary or proprietary interest, either direct or indirect, other than a remote interest. Remote interest is defined in A.R.S. § 38-502(10).

To mitigate the possibility that a personal influence might bear upon a University employee’s decision in his or her capacity as a public employee, a University employee who has, or whose Relative has, a "Substantial Interest" in

1. any contract, sale, purchase, or service by or to the Arizona Board of Regents (“ABOR”) or UArizona, or
2. any decision of ABOR or UArizona,

the University employee shall refrain from voting upon or otherwise participating in any manner as a University employee regarding such contract, sale, purchase, service or decision.

What do I need to do?

University employees must disclose all substantial interest in the official records of ABOR.  UArizona’s Conflicts of Interest & Commitment Policy complies with this law by requiring disclosure in eDisclosure.

What is considered when making Substantial Interest determinations?

1. Will the contract, sale, purchase, service, or decision have an impact, either positive or negative, on an interest of a University employee or their Relative?
2. Is the interest pecuniary (involves money) or proprietary (involves ownership)?
3. Is the interest a remote interest?

How is this state law applicable to Research and Startup Companies?

A University employee who has, or whose Relative has, a Substantial Interest in an entity cannot (1) participate as a University employee in contracting and purchasing decisions related to the entity or (2) subaward research to the entity. This includes the process leading up to the decision (e.g., making recommendations, giving advice, communicating with anyone involved in the purchasing process).

Who is a Relative?

Like we do with federal conflict regulations, the University relies on the state law to define Relative.  Thus, Relative has the meaning set forth in A.R.S. 38-503 (i.e., one's spouse or domestic partner, child grandchild, grandparent, sibling and their spouse or domestic partner, half-sibling and their spouse or domestic partner, and the parent, sibling or child of a spouse or domestic partner).

Even if the University employee does not have a substantial interest in a decision in which they are about to participate, if one of their Relatives has a substantial interest in the decision, they must disclose the interest and refrain from participating in the decision.

Noncompliance with this law cannot be justified by stating you are not unaware of your Relative’s interest. Public officers and employees have an affirmative obligation to become aware of any interests their relatives may have that may create a Substantial Interest.

Who is the Conflict Official for Arizona’s COI law?

While Arizona’s COI law is codified in the Conflicts of Interest & Commitment Policy and Substantial Interest disclosures are made through eDisclosure, Ted Nasser, Chief Procurement Officer, is the Conflict Official for Substantial Interests.

What if I have a question about Substantial Interests?

Please contact the Office for Responsible Outside Interests at coi@arizona.edu for questions related to Substantial Interests.  This law is broadly construed in favor of the public and substantial civil and criminal penalties are provided for failure to comply with the statutory requirements.  It is imperative that your questions are answered.

“Remote interest” means:

1. That of a nonsalaried officer of a nonprofit corporation.
2. That of a landlord or tenant of the contracting party.
3. That of an attorney of a contracting party.
4. That of a member of a nonprofit cooperative marketing association.
5. The ownership of less than three percent of the shares of a corporation for profit, provided the total annual income from dividends, including the value of stock dividends, from the corporation does not exceed five percent of the total annual income of such officer or employee and any other payments made to him by the corporation do not exceed five percent of his total annual income.
6. That of a public officer or employee in being reimbursed for his actual and necessary expenses incurred in the performance of official duty.
7. That of a recipient of public services generally provided by the incorporated city or town, political subdivision or state department, commission, agency, body or board of which he is a public officer or employee, on the same terms and conditions as if he were not an officer or employee.
8. That of a public school board member when the relative involved is not a dependent, as defined in section 43-1001, or a spouse.
9. That of a public officer or employee, or that of a relative of a public officer or employee, unless the contract or decision involved would confer a direct economic benefit or detriment on the officer, the employee or his relative, of any of the following:
   1. Another political subdivision.
   2. A public agency of another political subdivision.
   3. A public agency except if it is the same governmental entity.
10. That of a member of a trade, business, occupation, profession or class of persons consisting of at least ten members which is no greater than the interest of the other members of that trade, business, occupation, profession or class of persons.
11. That of a relative who is an employee of any business entity or governmental entity that employs at least twenty-five employees within this state and who, in the capacity as an employee, does not assert control or decision-making authority over the entity's management or budget decisions.

The ownership of any publicly traded investments that are held in an account or fund, including a mutual fund, that is managed by one or more qualified investment professionals who are not employed or controlled by the officer or employee and that the officer or employee owns shares or interest together with other investors.

Foreign affiliations are defined as associations/relationships (e.g. conducting activity such as consulting engagements, research collaborations, appointments or titles, or teaching) with foreign institutions of higher education, foreign governments, foreign companies or foreign nationals.

Stock and equity valuation should be updated as follows:

Public Entity: Update at least annually, based on Annual Report or other public valuation

Non-Public Entity:

• If original value is $4,999 or less, update within 30 days of value reaching $5,000 or more

• If original value is $5,000 or more, update at least annually

See Also

• How do I disclose stock or equity?
• How do I value stock and equity?

The value of Equity is determined through reference to public prices or other reasonable measures of fair market value (e.g., assets - liabilities = value).

Stock in a public entity is valued based on Annual Reports and other public valuations.

Valuing stock in a private entity can be done various ways using methods such as valuation ratios, internal rates of return, comparative analysis and discounted cash flow analysis.

See Also

• How do I disclose stock or equity?
• When should I update the value of my stock or equity?

Stock and equity only need to be disclosed if they are an Investigator's Significant Financial Interest or a University Employees Substantial Interest.

A Significant Financial Interest includes:

• Any equity in a private company, regardless of value

• Equity valued at $5,000 or more in a public company

However, income from investment vehicles such as mutual funds and retirement accounts, as long as the Investigator does not directly control the investment decisions made by the investment managers within these funds or accounts, do not require disclosure.

A Substantial Interest includes:  The ownership of three percent or more of the shares of a corporation for profit, where the total annual income from dividends, including the value of stock dividends, from the corporation exceeds five percent of the total annual income of the employee.

Completing the Stock in External Entity Page in eDisclosure

On the Stock or Equity page in eDisclosure, there are two options for disclosing stock and equity:

1. "Do you own stock / partnership shares in this organization?" should be used to disclose (1) stocks and shares that you own in a public entity and (2) partnership agreements/shares.
2. "Do you own stock options or any other form of equity in this organization?" should be used to disclose (1) other ownership interests (e.g., equity in a private entity), (2) stock options, including Employee Stock Options ("ESOs"), and stock warrants.

Stock & Equity Definitions

• Equity is any stock or other ownership interest, or an entitlement to obtain any stock or ownership interests (e.g., stock options and warrants). The value of Equity is determined through reference to public prices or other reasonable measures of fair market value (e.g., assets - liabilities = value).
• “Exchange-traded funds (ETFs) are SEC-registered investment companies that offer investors a way to pool their money in a fund that invests in stocks, bonds, or other assets. In return, investors receive an interest in the fund.  Most ETFs are professionally managed by SEC-registered investment advisers.  Some ETFs are passively-managed funds that seek to achieve the same return as a particular market index (often called index funds), while others are actively managed funds that buy or sell investments consistent with a stated investment objective.  ETFs are not mutual funds.” (https://www.investor.gov/introduction-investing/investing-basics/glossary/exchange-traded-fund-etf, last visited Oct. 27, 2022)
• “Options are contracts giving the purchaser the right – but not the obligation -- to buy or sell an underlying asset at a fixed price within a specific period of time. Stock options are traded on a number of exchanges.” (https://www.investor.gov/introduction-investing/investing-basics/glossary/options, last visited Oct. 27, 2022)
• Partnership Shares is a partnership arrangement between two or more people to oversee business operations and share its profits and liabilities. (See generally https://www.irs.gov/businesses/partnerships, last visited Oct. 27, 2022)
• “Stocks are a type of security that gives stockholders a share of ownership in a company. Stocks also are called ‘equities.’”  (https://www.investor.gov/introduction-investing/investing-basics/investment-products/stocks, last visited Oct. 27, 2022)
• A Stock Warrant “is a contract that gives the holder the right to purchase from the issuer a certain number of additional shares of common stock in the future at a certain price, often a premium to the stock price at the time the warrant is issued.” (https://www.finra.org/investors/insights/spac-warrants-5-tips, last visited Oct. 27, 2022)

See Also

• How do I value stock and equity?
• When should I update the value of my stock or equity?

“Significant Use of University Resources” includes but is not limited to: use of research funding; use of funding allocated for asynchronous or distance learning programs; use of telecommunication and data services beyond ordinary use; use of university computing resources; use of instructional design or media production services; access to and use of research equipment and facilities or production facilities; use of University Assets* such as paid employee time, proprietary information, intellectual property (such as patents, trademarks, and copyrights), logos, land and buildings.

The use of library resources, personal workstations, or personal computers are not typically construed as Significant Use of Board or University Resources.

*University Assets is fully defined in the University's Misuse of Assets Policy.

This depends on your UA role (whether an Employee, Administrator and/or Investigator – An complete overview of UA roles and Disclosure requirements can be found here)  

• If you are an Investigator, receiving remuneration/income in any amount from Intellectual Property rights, such as patents or copyrights will make this a Significant Financial Interest that needs to be disclosed via eDisclosure. Additionally,

• If you are a UA employee whose FTE is 0.5 or greater, the definition of Outside Employment and Outside Commitment is included below for your review. The Outside Commitment Decision Tree may be of assistance when making the determination as to whether an activity requires disclosure. Additionally, the Disclosure Table resources provide an overview of the disclosure requirements.  

Outside Employment refers to any employment relationship outside of the University requiring a time commitment.

Outside Commitments: (1) are professional and other activities that are related to a University Employee’s professional expertise, outside of their University duties and responsibilities; (2) are for the benefit of an external entity or individual and are not covered by a fully executed written agreement between the University and the external entity; and (3) require a time commitment. Outside Commitments include Outside Employment, independent contracts for consulting services, private consulting groups comprised of University Employees, volunteer/pro bono work, appointments at postsecondary educational institutions, and foreign components, as that term may be updated by the University’s Office for Responsible Outside Interests.

Also, please refer to the University’s TLA-100 The Intellectual Property Policy in case applicable.

An up-to-date COI disclosure (either an Annual Disclosure or Research Certification submitted within the last 364 days) is required at the time of proposal to a federal funding agency.

Additionally, Federal regulations prohibit expenditures on Awards until after the COI review process is complete. Our office desires to see all funded research go forward without delay.

Therefore, to avoid Award Holds, you are asked to submit Research Certifications early. Generally, Research Certifications are available in eDisclosure 60 days prior to the project start date listed in the Institutional Proposal. (For certain clinical trials, it may be fewer than 60 days) eDisclosure will send a notification to the Investigator as part of the UAccess Research/Sponsored Projects integration. If at any time you have been informed that any given project was not funded  you would then advise sponsor@arizona.edu as soon as possible that the specific project will not be funded and no action is required for the Research Certification.
 

The Human Subjects Protection Program requires protocol personnel submit a Research Certification via eDisclosure for each project they are listed on in eIRB.  For sponsored research, the Human Subjects Protection program has mapped IRB protocol roles to the sponsored project personnel categories. This mapping tool can be used to ensure protocol personnel complete Research Certifications: Investigator Mapping.

If you will be participating in research under the auspices of the University, you are required to complete the Required COI Disclosure Training through Edge Learning and submit a disclosure via via eDisclosure. These requirements apply to anyone who is an “Investigator” on a research project at the University (whether or not externally funded).  “Investigator” is a defined term in the Conflicts of Interest and Commitment policy, and generally means “any person who shares the responsibility for the design, conduct, or reporting of Research” and may include students, postdocs and trainees.

More details can be found on the Conflict of Interest Requirements for Students, Postdocs and Trainees webpage.