You are legally obliged to declare any conflict of interest to your fellow directors: for example, if you or a member of your family own shares in another company with which the company is doing, or planning to do, business, or you want to exploit company property or information, or hijack a company opportunity, for personal gain.
You may not be allowed to vote on any decision where you have a potential conflict of interest - although your company's articles of association often permit you to, provided you have declared your interest. If you do have a conflict, then your decisions as a director must not be influenced by your personal interests. Your duty is to put your company's interests first.
Conflicts are only allowed if:
- The articles of association authorise them; or
- they are authorised by a majority of the independent members of the board of directors (ie those with no direct or indirect interest in the matter). The conflicts must have been proposed to the board and, for a private company, the company's constitution must not prohibit this. (For a public company there must be express authority in the articles.)
One circumstance where you are very likely to have a conflict of interest is where someone offers you a benefit because you are a director, or because of something you do (or do not do) as a director. The most obvious example would be a bribe. Accepting benefits in these circumstances is a breach of duty, although there is an exception if the benefit is authorised by the articles of association (or by the members in some other way), or if the acceptance of the benefit is unlikely to give rise to a conflict of interest.
