In what circumstances might a director have a conflict of interest?

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Directors of a corporation may encounter conflicts of interest in various situations where their personal interests or loyalties diverge from the duties they owe to the corporation and its shareholders Some common circumstances that may give rise to conflicts of interest for directors include Outside Business Ventures Directors may have personal business interests or investments that compete with or conflict with the interests of the corporation For example a director may have ownership stakes in competing companies suppliers or customers of the corporation creating conflicts of interest when making decisions that affect these entities Related Party Transactions Transactions between the corporation and entities or individuals related to directors such as family members close associates or companies in which directors have financial interests may raise conflicts of interest Directors must ensure that such transactions are conducted on arms length terms and are in the best interests of the corporation Executive Compensation Directors may be involved in setting executive compensation packages for senior executives including themselves which can create conflicts of interest if directors receive compensation or benefits that are excessive or not aligned with the corporations performance or shareholder ...View the full answer

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PALASH JHANWAR

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