High Court justice Owen Rogers has suggested that s 75 of the Companies Act of 2008 may not be exhaustive enough in dealing with conflicts of interest by directors. It allowed them to enter into contracts or transactions that could be perceived as being in conflict with their interests as directors, if that contract was disclosed and declared valid by the board or quorum.
Justice Owen Rogers was addressing delegates at the Department of Trade and Industry’s (DTI’s) recent Company Law Seminar:
“[This provision] indicates that, when you have made disclosure [of the contract], then it is valid, which is a big departure from the old Companies Act of 1973 and appears [to] supersede the common-law no conflict duty and its consequences.
“[It also means that], if you comply, the contract is valid and you can retain any profit from it. I don’t want to be unwittingly critical of the lawmaker, [but] I think time will tell if the new Act – in terms of fiduciary duties – is helpful or will give rise to much disputation”.
Read the full report on the Polity website: Judge cautious over conflict of interest provisions in Companies Act first published on 13 August 2015.