Conflicts of interest
The Code of Governance outlines that an effective board will identify, understand and manage conflicts of interest and loyalty.
A conflict of interest arises when the interests of a member of the management committee/board are in conflict with the interests of the organisation they are helping to govern. This can be direct, in relation to the interests of the individual, or indirect, in relation to the interests of a spouse, partner, close relative or business partner.
Organisations need to show that they are dealing with conflicts of interest which will arise from time to time. For more information on conflicts of interest please see the NICVA Advice Note on Conflicts of Interest which also includes a template policy on conflicts of interest.
Statutory obligations of limited companies
If your organisation is a company limited by guarantee, under the Companies Act 2006, the company directors of all limited companies have a statutory obligation to avoid conflicts of interest and to declare them where they exist. This specifically prohibits accepting benefits from third parties and obliges directors to declare any interest in proposed transactions with the company.
NICVA’s Advice note on Running a charitable company provides up to date guidance on both new and existing obligations relating to conflicts of interest. NICVA has also produced an advice note on the requirement in Company Law for companies to keep a register of People with Significant Control. Or download the Company Law Help Sheet for further guidance on Company Law and recent legislative changes.
Definitions of Connected Persons: Under the Companies Act 2006, the definitions of connected persons needs to be considered in relation to conflict of interest. In terms of the Charities Act 2008 there is a slightly different definition which you can access here.
For more details on dealing with issues on payments to Trustees, see The Charity Commission for NI guidance.