p. 25112. Duty to avoid a conflict of interest
- Brenda HanniganBrenda HanniganProfessor of Corporate Law University of Southampton
Abstract
This chapter discusses the director’s duty to avoid a situation in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect (the no-conflict rule); and the equally inflexible rule that, without consent, a person in a fiduciary position is not entitled to profit from that position (the no-profit rule or, more accurately no secret profit rule). These two rules, as the most important fiduciary obligations, are considered in detail alongside the extensive case law addressing these duties. Hence consideration is given to the scope of the no-conflict, no-profit obligation, the limitations on exploiting property, information, or opportunities, looked at from the company’s position and the position of the conflicted director. The position on resignation and the possibilities of authorisation are also considered. Benefits obtained from third parties as well as conflicted transactions with the company are also addressed
Keywords
- exploiting property, information, and opportunities
- the no-conflict rule
- no-profit rule
- fiduciary duties
- benefits obtained from third parties
- conflicted transactions with the company
- authorisation of conflicts of interest
- resignation of directors
- secret profits
- duty to disclose conflicts of interest
- disinterested directors
