THE CHAIRMAN’S ROLE IN A CONFLICT OF INTERESTS POLICY
There are several types of conflicts of interest that can arise in a company and the chairman and board need to be considering a Conflicts of Interests Policy.
Financial conflicts: These occur when an individual or organisation has a financial interest in a decision that could affect the company. For example, a board member who owns stock in a company that is seeking a contract with the company could be in a financial conflict of interest.
Personal relationships: These occur when an individual has a personal relationship with someone who could benefit from a decision made by the company. For example, an employee who hires a family member to work for the company could be in a personal relationship conflict of interest.
Outside employment or consulting arrangements: These occur when an individual has an outside job or consulting arrangement that could affect their decision-making within the company. For example, an executive who works part-time for a competitor could be in a conflict of interest.
Gifts, favours, or other benefits: These occur when an individual receives gifts, favours, or other benefits that could influence their decision-making within the company. For example, an employee who receives expensive gifts from a vendor could be in a conflict of interest.
Intellectual property conflicts: These occur when an individual has a conflict between their personal intellectual property rights and their responsibilities to the company. For example, an employee who develops a product while working for the company may have a conflict of interest regarding the ownership and use of the intellectual property.
Overall, conflicts of interest can arise in many different situations and can potentially compromise the integrity of the company. It is important for companies to have a conflict of interest policy in place to help identify and manage potential conflicts of interest. The chairman and his non-executive directors must lead this process.
The Chairman of a company may lead a conflict of interests policy in several situations, including:
Policy development: The Chairman may lead the development and implementation of the company’s conflict of interests policy. This would involve working with other members of the board of directors and relevant executives to establish guidelines and procedures for identifying and managing conflicts of interest within the company.
Policy review: The Chairman may lead the periodic review of the company’s conflict of interests policy to ensure that it remains up-to-date and effective. This would involve gathering feedback from stakeholders, assessing the policy’s effectiveness, and making recommendations for improvements if necessary.
Conflict resolution: In situations where a conflict of interest arises involving the Chairman or another member of the board of directors, the Chairman may take a leading role in resolving the conflict. This could involve recusing themselves from decision-making, seeking guidance from legal counsel, or working with other members of the board to manage the conflict.
Enforcement: The Chairman may also play a role in enforcing the company’s conflict of interests policy, including overseeing investigations of potential conflicts of interest, and ensuring that appropriate action is taken in cases where the policy has been violated.
Overall, the Chairman has a responsibility to ensure that the company operates with integrity and transparency, and that conflicts of interest are identified and managed effectively. As such, they may take a leading role in developing, reviewing, and enforcing the company’s conflict of interests policy.
Further reading about conflicts of interest policy: