NSW Conflict of Interest as Company Director?

Australia's #1 for Law
Join 150,000 Australians every month. Ask a question, respond to a question and better understand the law today!
FREE - Join Now
29 August 2014

I am about to become a director of Company A and a shareholder of Company B with the intention of becoming a director of Company B in the future. Company A is an import/export business of products. Company B is an engineering consultancy firm.

Would it be considered as a conflict of interest as company directors if I am working for Company B and I am in a position to specify products from Company A for a project. Company B would clearly specify the product as "Product X or approved equal and equivalent", opening it up to the competitors "Product Z".

If I (Company B) carry out a due diligence on Product Z and deem it to be not equal and equivalent on a technical basis and cost, does this cover me in terms of transparency? I do not see it as a conflict of interest if I know my Product X is more superior to what is currently for sale on the market.

Your views and comments on this with regards to commercial law would be appreciated.

Is there a way for me to be a silent partner of Company A so I am not visible for a conflict of interest argument?


LawConnect (LawTap) Verified
27 May 2014
You need to declare your conflict of interest to both parties.

You should possibly remove yourself from decisions where there is a conflict of interest, though I don't think it is strictly necessary as long as the conflict of interest is clearly known by both parties, and should be documented to protect yourself. You need to ensure that your decisions do not adversely affect minority interests. Best to remove yourself from any decisions where there are adverse affects resulting from these decisions.