What is a Conflict of Interest?

Board members have a fiduciary duty to act in the best interests of the organization. A conflict of interest occurs when a board member’s personal interests clash with their duties and responsibilities as a director. A conflict of interest may lead the board member to take advantage of the position or cause personal biases that affect the decision-making process. This also leaves the organization vulnerable to risks when creating a corporate strategy since the director may intentionally or unintentionally take advantage of the position.

To prevent this from happening, the board of directors should establish a register of interests where board members can disclose the interests they have. This allows the chair of the board to determine if there is a potential conflict of interest. Other members may also identify conflicts and raise the issue with the chair. The register of interests should be reviewed and updated regularly.

During board meetings, board members are also responsible for determining if a conflict of interest is likely to occur. Should they declare a conflict, the board member should inform the chair immediately and excuse themselves from that portion of the meeting. The member should also abstain from votes.

Board portals can help manage conflicts of interest through access controls that can be used to limit user access to information. When there is a conflict of interest, the administrator can remove and restrict the concerned board member from all materials related the conflict.