Minute recording a director’s disclosure
of interest

Directors must disclose any conflicts of interest to the board. Use our quick check to ensure that you don’t get things wrong in the boardroom.

Advice

The basic rule is that a director has a duty to avoid a situation in which they have, or can have, a direct or indirect interest that conflicts, or might conflict, with the company’s interest. 

Aside from the basic rule, check the company’s articles to see if they have anything to say about the matter. Even if you anticipate there’s a problem, potential conflicts can be authorised either by the shareholders passing an ordinary resolution, or by the directors who aren’t interested in the matter, authorising the conflict by a majority vote. However, when deciding whether or not to authorise a conflict, the other directors who make up the board, must also be mindful of their other statutory “general duties” owed to the company. These include ensuring they use reasonable care, skill and diligence, exercise independent judgement and promote the success of the company.  Each matter must be assessed and decided on a case-by-case basis.

Duty to declare

Where a director is involved either directly or indirectly in any proposed transaction with the company, they must declare the nature and extent of that interest to the board. The declaration must be made before the company enters into the agreement. 

Caution

Failure to do this is a criminal offence. It’s important to also check the company’s articles to ensure that once an interest has been declared, the director is able to be included in the quorum and participate in the vote. For example, the Model Articles provide that the views of any “interested” director must be disregarded and they don’t count in the decision making quorum.