Why is it important to my business?
The board has a strategic responsibility in an organisation to create a positive organisation culture, setting the tone for ethical and responsible decision-making (tone from the top). Directors must act honestly, in good faith, and in the best interests of the organisation and not allow conflicts of duty or interests. It is important that an organisation is trading ethically and morally for the benefit of the shareholders. Where conflicts of interest are deemed as avoidable, directors should take all steps to prevent them. However in some circumstances it may be unavoidable and where this is the case, directors should fully and properly disclose the conflict. directors should be aware of the potential for conflicts to be perceived by others even where there are none and as a rule, directors are wise to disclose rather than omit. Instead of risking damage to the organisation’s reputation and financial performance, all conflicts, both real and perceived, should be appropriately disclosed. Significant penalties and fines can apply if the obligations are breached and substantial reputational damage can occur to the organisation and the director at the centre of the conflict.