Without a doubt, conflicts of interest are a serious ethics issue that can alter decision-making, undermine board credibility and upset financial planning. Conflict of interest policies are an important part of board director responsibilities. Such policies outline how board directors should avoid conflicts of interest. Boards usually require their board directors to sign a board of directors' conflict of interest policy at the time of their board appointment. However, that only provides partial protection.
Some conflicts of interest are blatantly obvious. Others are so subtle, they're barely noticeable. In most cases, boards need to expand their view of what might constitute a conflict of interest. Board meeting minutes should serve as a record for documenting any actual, perceived or potential conflicts of interest. A board management software program such as Diligent Boards is the best way to document the actions that the board has taken to disclose and resolve conflicts of interest. Diligent Minutes is one of the many software solutions that make up Governance Cloud, a suite of governance solutions for boards.
To complicate matters further, the interconnectedness of global interactions makes identifying conflicts of interest even harder and creates greater potential for conflicts of interest, especially when board directors have multiple roles. To further their awareness of conflicts of interest, board directors should be aware of four different types of situations that can set the stage for a conflict of interest.
A proactive approach to addressing conflicts of interest is to have a conflict of interest policy in place to address conflicts between the board directors and the company. The board of directors' conflict of interest policy should outline how the board will deal with actual or potential conflicts, such as fraud, misappropriation of assets, poor effort toward fulfilling board duties and insider trading. Boards should insist that all board directors sign the conflict of interest statement and require board directors to declare conflicts of interest at each board meeting.
Diligent knows how important convenience is to board directors, so the software designers developed applications where board directors can access all the tools using their tablets and cell phones, in addition to their laptops. Time is money, so Diligent offers top-notch customer service every day of the year, around the clock, by qualified service technicians who are standing by and ready to help. Diligent designed its products by supporting board directors in their quest for good governance. There's no conflict about the quality of Governance Cloud.
Some conflicts of interest are blatantly obvious. Others are so subtle, they're barely noticeable. In most cases, boards need to expand their view of what might constitute a conflict of interest. Board meeting minutes should serve as a record for documenting any actual, perceived or potential conflicts of interest. A board management software program such as Diligent Boards is the best way to document the actions that the board has taken to disclose and resolve conflicts of interest. Diligent Minutes is one of the many software solutions that make up Governance Cloud, a suite of governance solutions for boards.
Where Do Board Director Responsibilities Lie in Relation to Conflict of Interest?
In the United States, shareholders have strong rights. For this reason, board directors are accountable to shareholders. By contrast, in many other countries, board directors have a duty to the company, rather than to the shareholders. In some countries, board directors may be representatives of employees, shareholders and stakeholders, creating an obvious division of loyalties.To complicate matters further, the interconnectedness of global interactions makes identifying conflicts of interest even harder and creates greater potential for conflicts of interest, especially when board directors have multiple roles. To further their awareness of conflicts of interest, board directors should be aware of four different types of situations that can set the stage for a conflict of interest.
Four Types of Conflicts of Interest
Integrity and good ethics lie at the heart of preventing conflicts of interest. Carrying that through requires board directors having an awareness of the many possible ways that conflicts could occur and having an action plan for how to address them. Following are four areas in which boards should be on the lookout for conflicts of interest.- Actual or potential conflicts of interest between the board and the company.
A proactive approach to addressing conflicts of interest is to have a conflict of interest policy in place to address conflicts between the board directors and the company. The board of directors' conflict of interest policy should outline how the board will deal with actual or potential conflicts, such as fraud, misappropriation of assets, poor effort toward fulfilling board duties and insider trading. Boards should insist that all board directors sign the conflict of interest statement and require board directors to declare conflicts of interest at each board meeting.
- When board directors' duty of loyalty to stakeholders or the company is compromised.
- When the interests of stakeholder groups aren't appropriately balanced or harmonized.
- Conflicts between the company and society.
Final Words on Board of Directors' Conflict of Interest Policy
Good governance begins with board management software by Diligent Corporation, which aids board directors in upholding their moral obligations. Diligent Boards is the base program for agendas and board meeting planning. The platform offers state-of-the-art security so there's no worry over cybercriminal activity. Diligent Boards integrates fully with all the software solutions that comprise Governance Cloud, a complete ecosystem of digital governance solutions. With fully integrated software solutions for meeting minutes, secure messaging tools, D&O questionnaires, board self-assessments, voting, nominations, virtual data rooms and entity management, board directors can manage issues like conflict of interests using one, highly secure platform.Diligent knows how important convenience is to board directors, so the software designers developed applications where board directors can access all the tools using their tablets and cell phones, in addition to their laptops. Time is money, so Diligent offers top-notch customer service every day of the year, around the clock, by qualified service technicians who are standing by and ready to help. Diligent designed its products by supporting board directors in their quest for good governance. There's no conflict about the quality of Governance Cloud.