In this article, we will be focusing on the duty to avoid any conflicts of interest.
Section 175 of the Companies Act 2006 states that company Directors must avoid situations where they could have a direct or indirect conflict between their personal interests and those of the company. Particular care must be taken concerning the exploitation of any property, information, or opportunity and it does not matter whether the company could have taken advantage of the property, information, or opportunity but did not.
The Companies Act conflict of interest section, states that potential conflicts of interest are acceptable if:
Directors can give authorisation so long as the company’s articles of association provide for such a circumstance. When authorising a potential conflict of interest the directors must comply with the other relevant directors’ duties, including promoting the success of the company.
The penalties for breaching Directors’ duties can be severe and include a fine and/or being banned from acting as a director for several years. If you require legal advice on any matters relating to conflicts of interest or Directors’ duties, click ‘Get started’ below.
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