Directors’ Conflicts

The issue of directors’ accountability and responsibility is never far from the public spotlight, as recently highlighted by corporate governance reforms initiated by the UK government and by the proceedings of the Banking Royal Commission in Australia. A topic of increasing practical and regulatory complexity is the conflicts faced by company directors. Conflicts may occur between directors’ self-interest and the interests of the company, between duties owed to more than one company or principal or between the interests of different stakeholders. This is a core source of concern, and of commentary, in a number of common law jurisdictions. As the complexity of commercial transactions and of corporate life in general increases, the application of the duty to avoid conflicts has necessarily become more complicated. At the same time there is a constant tension between ensuring accountability and not deterring responsible risk-taking. Concerns have been expressed that the legal and regulatory burden is too high. Providing certainty and comprehensive coverage of key aspects of the law relating to directors’ conflicts is therefore vital.