[COM 107] Duty to avoid conflicts of interest — civil obligations107 

107

(1) A director or other officer of a company must avoid a situation in which they have, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company.

(2) Subsection (1) shall apply in particular to the exploitation of any property, information or opportunity and it shall be immaterial whether the company could take advantage of the property, information or opportunity.

(3) This duty is not infringed if—

• (a)the situation cannot reasonably be regarded as likely to give rise to a conflict of interest; or
• (b)the matter has been authorised by the directors in accordance with subsection (4).

(4) Authorisation may be given by the directors—

• (a)where the company is a private company and nothing in the articles of association of the company 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 articles of association includes a provision enabling the directors to authorise the matter, by the matter being proposed to and authorised by them in accordance with the articles of association.

(5) A director of a company must not vote on any resolution of directors in which the director has a conflict of interest unless—

• (a)authorised to do so by the directors in accordance with subsection (4); or
• (b)the director is a director of a private company and the articles of association of the private company authorise them to vote on the resolution notwithstanding the conflict of interest.

(6) The authorisation shall be 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.