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Company Director Duties To Avoid Conflicts Of Interest

Company Directors serve critical roles in a company’s everyday undertakings as well as in breakthrough decisions that would carve the company’s future. Company law in Singapore stipulates the duties that every company director has in the hope of creating clear-cut expectations on responsibilities, as well as correct erring parties properly.

Conflict of interest is one of the bigger issues that companies and its officers, not least of which are directors, face every now and then. It is every director’s duty to avoid any conflicts of interest in his or her role in the company and any other role he or she may be playing outside.

The common and statutory laws of Singapore stipulates that a director must always make a clear divide between his official duties and his personal interests. These laws have also identified some of the more common instances susceptible to conflicts of interest.

Transactions with the company: conflict of interest arises when a director sells a property to the company or buys the same from them, in his or her personal capacity, directly or indirectly.

Usage of corporate information and opportunities: directors have access to key company information, deals, and other important data which they may take advantage. Conflict of interest arises when the director takes over these properties or information without due company permission. A director who, for instance, starts a new company to directly rival the company to which he belongs after getting crucial data is guilty of conflict of interest and will be deemed to have violated fiduciary duties.

Conflicting duties: if a company director also serves as director of another company (or other companies, for that matter), he or she must disclose immediately all his affiliations and directorship duties elsewhere to the company board following his or her appointment. Overlapping duties between different companies is deemed a conflict of interest as well.

Nominee director: conflict of interest may arise if a nominee director may find himself or herself in a dilemma as to whose interest to represent. A nominee director is a person appointed to represent a group or a person in the company, such as a substantial shareholder or a group of shareholders.

In order for a nominee director to accurately represent, he should first declare the name and position of the person whom the information is being disclosed to, and the particulars of the information he or she wants to disclose.

Aside from these, the nominee director should also receive proper authorisation from the board before the disclosure, and ensure that such disclosure would not prejudice the company in any way.