Director's duty to notify other directors of material personal interest when
conflict arises
(1) A director of a company who has a material personal
interest in a matter that relates to the affairs of the company must give the
other directors notice of the interest unless subsection (2) says
otherwise.
(2) The director does not need to give notice of an interest under
subsection (1) if:
- (a)
- the interest:
- (i)
- arises because the director is a member of the company and is held in
common with the other members of the company; or
- (ii)
- arises in relation to the director's remuneration as a director of the
company; or
- (iii)
- relates to a contract the company is proposing to enter into that is
subject to approval by the members and will not impose any obligation on the
company if it is not approved by the members; or
- (iv)
- arises merely because the director is a guarantor or has given an
indemnity or security for all or part of a loan (or proposed loan) to the
company; or
- (v)
- arises merely because the director has a right of subrogation in relation
to a guarantee or indemnity referred to in subparagraph (iv); or
- (vi)
- relates to a contract that insures, or would insure, the director against
liabilities the director incurs as an officer of the company (but only if the
contract does not make the company or a related body corporate the insurer);
or
- (vii)
- relates to any payment by the company or a related body corporate in
respect of an indemnity permitted under section 199A or any contract
relating to such an indemnity; or
- (viii)
- is in a contract, or proposed contract, with, or for the benefit of, or
on behalf of, a related body corporate and arises merely because the director
is a director of the related body corporate; or
- (b)
- the company is a proprietary company and the other directors are aware of
the nature and extent of the interest and its relation to the affairs of the
company; or
- (c)
- all the following conditions are satisfied:
- (i)
- the director has already given notice of the nature and extent of the
interest and its relation to the affairs of the company under
subsection (1);
- (ii)
- if a person who was not a director of the company at the time when the
notice under subsection (1) was given is appointed as a director of the
companythe notice is given to that person;
- (iii)
- the nature or extent of the interest has not materially increased above
that disclosed in the notice; or
- (d)
- the director has given a standing notice of the nature and extent of the
interest under section 192 and the notice is still effective in relation
to the interest.
- Note: Subparagraph (c)(ii)the notice may be given to the person
referred to in this subparagraph by someone other than the director to whose
interests it relates (for example, by the secretary).
(3) The notice required by subsection (1) must:
- (a)
- give details of:
- (i)
- the nature and extent of the interest; and
- (ii)
- the relation of the interest to the affairs of the company; and
- (b)
- be given at a directors' meeting as soon as practicable after the director
becomes aware of their interest in the matter.
The details must be recorded in the minutes of the meeting.
Effect of contravention by director
(4) A contravention of this section by a
director does not affect the validity of any act, transaction, agreement,
instrument, resolution or other thing.
Section does not apply to single
director proprietary company
(5) This section does not apply to a
proprietary company that has only 1 director.