Reading time: 5 minutes

Directors have duties to avoid conflicts that may arise between their personal interests and those of the company that they manage. Nonetheless, it is not uncommon that in business, conflicts can arise. When they do, directors must give notice of their interest in a matter and identify the potential conflict. This article sets out why directors must disclose conflicts of interests, as well as when and how they can give other directors notice of a potential conflict of interest.

Duty to Disclose Conflicts of Interest

A director’s legal obligation to disclose conflicts of interests or any information that might raise a conflict arises from several sources:

  • under the Corporations Act 2001 (Cth) (the Act), directors must disclose when they have a material personal interest in a matter that relates to the affairs of the company;
  • under general law, directors have a duty to act in the best interests of the company and, therefore, must disclose conflicts of interests which may prevent them from properly fulfilling these duties; and
  • under the company’s constitution and shareholders agreement, there may be a stated obligation on directors to disclose personal interests in matters relating to the company and a restriction on them voting on such matters unless the other directors agree otherwise.

The Act does list out situations where a director does not need to disclose an interest. These include when the interest arises:

  • because the director is a shareholder of a company held in common with other shareholders; 
  • in relation to the director’s remuneration as a director of the company; and
  • merely because the director is a guarantor, or has given an indemnity or security for all or part of a loan, to the company.

However, there may be circumstances where you are unsure whether: 

  • you need to disclose a conflict of interest; or 
  • a personal interest is “material” enough to warrant disclosure.

In most cases, it is safer to simply give notice of the interest and seek the consent of other directors to allow you to vote on the relevant matter. 

When and How to Give Notice

You must give notice of a conflict or potential conflict at a directors meeting as soon as practicable after you become aware of the matter. You should disclose in appropriate detail the nature and full extent of your interest concerning the affairs of the company. 

If there is a directors meeting to vote on a matter in which you have a personal interest, you must ensure you disclose the interest before the directors all vote on that matter. The person taking minutes at the directors meeting must also record the disclosure. 

Instead of holding a directors meeting, the directors might approve the matter in which you have an interest by signing a written resolution. In this instance, you must ensure that the written resolution includes disclosure of your personal interest in the matter being decided. If the other directors consent to you voting on the matter regardless of your personal interest, the written resolution should also include an acknowledgement of this decision.

Giving Standing Notice

If a potential conflict will relate to the ongoing affairs of the company rather than just a single matter, you can give a standing notice to the other directors of the interest that you have. This allows you to notify the other directors of a potential conflict of interest before you are legally required to do so.

You can provide the standing notice: 

  • in a directors meeting;
  • in a written resolution of directors; or
  • by writing to each director individually to advise them of the interest (and tabling the notice at the next meeting of directors).

If you give a standing notice, you must be aware that it will cease to have effect when a new person becomes a director. This is because a standing notice is only effective if it has been given to all the directors. Once you notify the newest director of the interest, the standing notice takes effect again. 

If the nature and extent of your interest increase materially after you give the standing notice, the notice will also cease to have any effect and you must provide a new notice.

Key Takeaways

As a director of a company, you must give notice to the other directors of any personal interests you have in the affairs of the company which may lead to a conflict of interest. You should disclose the interest as soon as you become aware of it and definitely before the directors all vote on the matter in which you have an interest. A notice disclosing a personal interest can be a one-off notice in relation to a particular matter, or a standing notice that relates to the ongoing affairs of the company. If you have any questions or concerns regarding your duties as a director to disclose conflicts of interest, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.


Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards