Board and governance policies · 03
Conflict of interest and declaration of interests policy
Requires interests to be disclosed before they influence a decision, and governs what happens once they are: the single policy most often asked for by auditors, funders and supply-chain offices.
Requires interests to be disclosed before they influence a decision, and governs what happens once they are: the single policy most often asked for by auditors, funders and supply-chain offices.
Define “interest” widely enough to be useful: direct and indirect financial interests, interests of a related person, directorships and memberships, outside remunerative work, gifts and hospitality, and personal relationships with counterparties. Then build the machinery: an annual written declaration by every director, employee and committee member; a standing agenda item at every meeting; a per-item disclosure duty; a register that is maintained rather than filed; and a clear recusal rule stating whether the conflicted person leaves the room, whether they may answer questions first, and whether they count towards the quorum. For a company, track section 75 of the Companies Act precisely: what must be disclosed, when, and the consequence of failing to. For a public entity, align it with the procurement declaration forms and with the Public Service Regulations where they apply. Provide for the case the policy usually forgets: the sole director, or the chairperson, being the conflicted person.
Most conflict policies fail on quorum and on evidence. If the conflicted member recuses but is still counted for quorum, the decision is vulnerable; say expressly how quorum is calculated after recusal and what happens if the remaining members are not quorate. And a declaration signed once on appointment is not a system; the register must be tabled, reviewed and minuted, because the value of the policy is entirely in the record it produces. Watch too for the policy that prohibits conflicts rather than managing them: a blanket prohibition is unenforceable in a small market, and drives disclosure underground, which is precisely the opposite of what the policy is for.
The law it sits under
What governs this instrument.
Section 75 of the Companies Act 71 of 2008 governs a director’s personal financial interest: the interest must be disclosed, and the director must leave the meeting and not participate. Section 76 sets the standard of directors’ conduct. The provision that catches small organisations is the quorum consequence: where the only decision-maker is conflicted, there may be no body properly constituted to take the decision at all, and the honest answer is to decline the matter.
Related pages, tools and documents
Where this instrument sits in the wider set, and the engagement that produces it.
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