Is a Conflict of Interest under the General Law the Same as a Material Personal Interest under the Corporations Act?
Company and Securities Law Journal, Vol. 36, No. 3, pp. 284-287, 2018
5 Pages Posted: 27 Oct 2018
Date Written: February 28, 2018
Directors and other officers of a company are subject to a general law duty to avoid placing themselves in a position where their personal interest conflicts with their duty to the company unless they obtain the informed consent of the company. Directors, but not other officers, are also subject to a statutory requirement in s 191(1) of the Corporations Act 2001 to disclose material personal interests. A question arises as to whether a conflict of interest under the general law duty is the same as a material personal interest under the Corporations Act. Views differ. The Australian Securities and Investments Commission is of the view that the two concepts can be different and that the concept of material personal interest is broader than a conflict of interest. However, others believe the two concepts are the same. In this note the authors identify where the concept of material personal interest is used in the Corporations Act, outline the two views, and evaluate the two views. The authors conclude that the two concepts are generally the same. However, there may be circumstances where the general law duty is broader than the statutory disclosure requirements.
Keywords: conflicts of interest; directors' duties
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