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Director Conflicts of Interest

Director Conflicts of Interest

As a Director, there is now a statutory duty to avoid conflicts of interest wherever possible, as outlined in the Companies Act 2006 (Section 175).

However in practicality, it can often be confusing with Director responsibilities being so broad, and their individual involvement and circumstances differing company to company.

When faced with a potential issue, judging what constitutes an acceptable conflict of interest for any board or shareholders can be a difficult process, particularly when it comes to third party interests and cross directorships, being the source of much contention.

As a firm familiar with the challenging duties of a Director and the corporate structure, we can assist with the legalities involved with situations involving conflicts of interests, with expert advice and guidance to boards, shareholders and Directors that comes from experience in dealing with all aspects of corporate law, from finance and restructuring to misbehaviour and disputes.

For more information on how we can assist, please contact corporatelaw@taylor-rose.co.uk

The Companies Act 2006 outlines the respective duties of a company Director, in the past Directors official responsibilities were unclear and open to interpretation which caused confusion, and prompted a more detailed and clear act which outlined the responsibilities and how to deal with conflicts of interest.

Section 175 of the Companies Act 2006 specifically applies to conflicts of interests.

There are many issues and situations that Section 175 could apply to such as;

  • Multiple Directorships
  • Connected persons interest
  • Related persons employed by competitor
  • Duties to different entities
  • Interests in suppliers to company or other third parties

Navigating the complex issues and legislation surrounding conflicts of interest even with the Act and Section 175 as guidance can be difficult, we can assist in advising on the changing law, conflict solutions and approaching conflict of interests appropriately.

For more information on how we can assist, please contact corporatelaw@taylor-rose.co.uk

Useful Guides

Conflicts of interest board authorisation
Conflicts of interest board authorisation

A Director has a duty to avoid conflicts of interest wherever possible, but in reality unfortunately this is not always easy to adhere to. Directors can be caught unaware when transactions are considered or have proceeded without their reasonable knowledge, that they have a direct or indirect interest in. On these occasions the failure to declare an interest can result in a transaction being voided and so it becomes the board’s decision as to if they will sanction the transaction, or if the transaction has already proceeded, void it. Not only is this is difficult time for the Director in question seeking authorisation following a declaration of interest, but for the board itself whic...

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