Hi all
First Im finding this site a huge resource so thanks guys!
I know there is new legislation re conflict of interest. I work for a small charity and received a notice from our solicitors saying that we need to "switch on" the power for unconflicted directors to approve conflicts of interest. How would we do this?
I know we can use our solicitors but at the moment we are finding their prices out of our league. I know its probably a case of getting what you pay for but I could do with sussing this out on my own if possible!
Cheers
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This is not such a big deal as the lawyers make out. All you need to do is pass a resolution of the shareholders allowing the board to authorise conflicts of interest. In fact, this can also be done to cover just a specific occasion when an actual conflict is identified. A public company would need to put the authority in its articles and this may be the way to go as it is a more permanent solution covering all instances and enshrined in the articles forever. What constitutes a conflict and at what point it needs authorising is quite complex and is set out at length in the Companies Act 2006. A standard wording could be:-

"Any potential or actual conflict of interest of a director, as defined in section 175 of the Act, should be identified by the board of directors who have the power to consider and, if deemed appropriate, authorise the conflict. “Director” includes persons connected with a director as defined in section 252 of the Act. The director under consideration should take no part in the discussion nor vote on the resolution to authorise the conflict and a majority of the remaining directors voting is required to pass such resolution. No authorisation of a potential or actual conflict of interest relieves a director receiving such authorisation from his statutory and fiduciary duties. Where a director, having received authority for a potential conflict situation, is subsequently judged to be in a position of actual conflict, the remaining directors must resolve to exclude the director in question from all discussion on the subject or resolve to take other such action as deemed appropriate."

Don't forget that having passed this or added it to the articles the board still need to identify occasions of conflict and authorise them. This merely gives them authority to do so when necessary in the future. The requirement begins on 1 October 2008 but as I say for a private company you need do nothing technically until the occasion arises (which may be never).
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