HomeSituationsBoards & governanceA director’s conflict of interest
TN/SIT/20
Edition 2027 · effective 1 January 2027
Boards & governance · A director’s conflict of interest
A director may have an interest on both sides. The board must handle it visibly well.
Conflicts of interest are routine; mishandling them is not. An independent evaluation of the process protects the board, the director and the decision.
§ 01What it looks like
Recognise it early. The earliest moment is the cheapest.
What you notice first
Small, and easy to explain away.
- A director is connected to a counterparty
- Disclosure was late or partial
- Other directors are uncomfortable
- Shareholders or regulators may ask questions
What waiting can cost
Usually more than the original issue.
- Integrity of the decision
- Directors’ duties
- Reputation
§ 02The Neutral route
Usually: Neutral Evaluation.
An independent evaluator reviews the process and recommends safeguards; an independent chair can run the conflicted decision.
Neutral Evaluation
You decide. The evaluator advises.
Also used · No substantive authorityNeutral Chairing
The body decides. The chair keeps the process fair.
§ 03The steps
What a good process looks like.
- Disclose fully and record itBefore anything else01
- Exclude the director from the decision as requiredThe moment independence enters02
- Use an independent chair or committeeWhere the work is done03
- Commission an independent review if the stakes are highSo it holds04
§ 04Prepare and avoid
What to bring. What to leave out.
(Bring)
01
Disclosure
02
Governance rules
03
Transaction details
04
Prior handling of conflicts
(Avoid)
✕
Handling it informally because everyone trusts the director
§ 05Your version
Every situation is different. Describe yours.
§ 06Related