What constitutes a conflict of interest?
A conflict arises when a director’s direct or indirect personal interest intersects with the duty to decide in the company’s best interests. Actual harm is not required; a credible risk to independent judgment is enough to require disclosure and controls.
Common conflict scenarios
The form changes with the transaction, but the test remains whether a private interest can influence an independent decision.
- A personal interest in a contract presented to the board.
- Competing with the company or advising a competitor.
- Favouring relatives or related parties in hiring or procurement.
- Accepting benefits capable of influencing judgment.
- Using company assets or confidential information privately.
Prevention and accountability
A current interests register, clear disclosure policy, recusal from discussion and voting, and accurate minutes form the practical baseline. Without them, a governance weakness can become a regulatory breach and personal liability.
