C5Part 10A company's directors

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Chapter 2General duties of directors

The general duties

C4175C1C2C3Duty to avoid conflicts of interest

1

A director of a company must avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company.

2

This applies in particular to the exploitation of any property, information or opportunity (and it is immaterial whether the company could take advantage of the property, information or opportunity).

3

This duty does not apply to a conflict of interest arising in relation to a transaction or arrangement with the company.

4

This duty is not infringed—

a

if the situation cannot reasonably be regarded as likely to give rise to a conflict of interest; or

b

if the matter has been authorised by the directors.

5

Authorisation may be given by the directors—

a

where the company is a private company and nothing in the company's constitution invalidates such authorisation, by the matter being proposed to and authorised by the directors; or

b

where the company is a public company and its constitution includes provision enabling the directors to authorise the matter, by the matter being proposed to and authorised by them in accordance with the constitution.

6

The authorisation is effective only if—

a

any requirement as to the quorum at the meeting at which the matter is considered is met without counting the director in question or any other interested director, and

b

the matter was agreed to without their voting or would have been agreed to if their votes had not been counted.

7

Any reference in this section to a conflict of interest includes a conflict of interest and duty and a conflict of duties.