Managing Conflict of Interest: A Guide for Directors Conflict of interest is part of board life. If you sit on more than one board, invest personally, or have professional roles outside the company, conflicts will arise. That’s normal. What matters is how they’re handled. Poorly managed conflicts damage trust and expose directors to legal risk. Well - managed ones protect both the individual and the company. This guide explains what directors need to know, in practical terms, and how sound processes — often supported by corpo rate secretarial services — make conflict management routine rather than stressful. Understanding what a conflict really is A conflict of interest exists when a director’s personal, financial, or professional interests could influence their judgement. Importantly, it doesn’t need to result in wrongdoing. The mere appearance of influence can be enough to cause concern. This is where many directors go wrong. They focus only on actual conflicts and ignore perceived ones. Regulators, investors, and courts don’t make that distinction. They look at whether a reasonable outsider could question the director’s independence. If you have to stop and think, “Would this look awkward if it appeared in meeting minutes or an audit file?” that’s usually your cue to disclose. Why conflicts carry real consequences Conflicts matter because they strike at trust. Shareholders expect decisions to be made in the company’s best interests. Employees want confidence in leadership. Counterparties want clarity that deals are fair. For directors, the consequences can be personal. Failure to disclose a conflict properly can lead to regulatory action, civil liability, or disqualification. Even if no harm occurs, poor handling looks careless. And once trust is lost, it’s hard to rebuild Good conflict management isn’t about being defensive. It’s about showing that decisions were made thoughtfully and transparently. Disclosure is the foundation If there’s one principle directors should remember, it’s disclose early and clearly. Disclosure works best when it happens before decisions are made, not during or after. Early disclosure gives the board space to assess the situation without pressure. It a lso avoids awkward moments where a conflict comes to light halfway through a discussion. Clarity matters. Saying “I might have an interest” doesn’t help anyone. A proper disclosure explains what the interest is, how it relates to the matter, and whether it’s ongoing. Just as important, the disclosure must be recorded. If it’s not in the minute s or registers, it effectively didn’t happen. Process protects more than intention Many directors assume that acting in good faith is enough. It isn’t. When conflicts are reviewed later — by auditors, regulators, or courts — they look at process. Was the conflict declared? Was it discussed? Did the board decide how to manage it? Did the conflicted director participate in the decision? Clear processes remove ambiguity. They also protect directors by showing that issues were handled properly at the time. This is where corporate secretarial services play a quiet but important role. A good secretary ensures disclosures are captured, minutes reflect what actually happened, and required steps aren’t skipped because a meeting ran long or felt informal. Knowing when to step aside Not every conflict means a director must leave the room. The response depends on the nature of the interest and the decision being made. Where a director stands to benefit directly, or where independence could reasonably be questioned, stepping aside is often the safest option. This usually means not taking part in the discussion or vote on that specific matter. What matters is that the decision is deliberate and recorded. Silence or informal agreement creates uncertainty. Clear documentation creates protection. Conflict management in smaller boards Smaller boards face unique challenges. Directors often wear multiple hats, and conflicts are harder to avoid. Excluding one director can sometimes leave too few people to make a decision. In these situations, transparency becomes even more important. Full disclosure, independent advice where appropriate, and detailed records help demonstrate that decisions were fair and considered. Sometimes the best solution is bringing in an external perspective. Independent advisers or directors can provide balance when internal separation isn’t practical. Registers, policies, and daily discipline Most companies maintain a register of directors’ interests. This isn’t just a compliance exercise. It should be updated regularly and reviewed before major decisions. A written conflict of interest policy also helps. It sets expectations and reduces guesswork. Directors know when to declare, how declarations are handled, and what the board will do next. The most effective policies are short and practical. Consistency ma tters more than complexity. Corporate secretarial services often maintain these registers and apply policies evenly across the board. That consistency prevents the perception that conflicts are handled differently depending on who is involved. Conflicts during transactions and high - pressure moments Conflicts attract the most scrutiny during deals. Mergers, acquisitions, fundraising rounds, and asset sales bring interests into sharp focus. These are not the moments to take shortcuts. Disclosures should be refreshed. Approvals should be explicit. Independent advice may be needed to support decision - making. Trying to manage conflicts quietly during a transaction almost always backfires. Buyers, investors, and auditors will ask questions. Clean records and clear processes prevent last - minute damage control. Culture shapes outcomes Rules and registers only go so far. Board culture matters just as much. Boards that treat conflict disclosure as routine reduce risk. Boards that treat it as awkward or embarrassing encourage silence. Directors should feel comfortable saying, “I have an in terest here,” without fear of judgement. Chairs play a critical role. When leaders model openness, others follow. Over time, conflict management becomes part of normal board behaviour rather than a special event. How secretarial support keeps things steady Managing conflicts consistently takes attention. Many boards rely on corporate secretarial services to keep the process disciplined. A strong secretary prompts regular updates to interest declarations, flags potential conflicts before meetings, and ensures minutes reflect disclosures and decisions accurately. This reduces reliance on memory and removes pressure from directors to self - po lice every detail. Some boards work with experienced providers like Entrust because they bring structure and familiarity with board dynamics. The value isn’t in the name. It’s in having someone who understands how conflicts play out in real boardrooms. Avoiding common pitfalls Most mistakes in conflict management aren’t intentional. Directors assume an interest is too minor to mention. They disclose verbally but don’t check that it’s recorded. They stay silent to avoid uncomfortable conversations. These habits are understandable. They’re also risky. Informality offers little protection when decisions are questioned later. Final thoughts Conflict of interest isn’t a sign of poor governance. It’s a reality of modern boards. Poor handling is the real problem. For directors, the safest approach is straightforward. Disclose early. Follow process. Keep records clear. Step aside when appropriate With the right habits — and reliable corporate secretarial services supporting the board — conflict management becomes routine rather than reactive. Done well, it protects directors, strengthens trust, and shows that governance isn’t just written down. It’s practiced.