If a director has a personal financial interest in a matter or knows a related person has a personal financial interest in the matter the director must disclose the interest and its general nature before the matter is considered at the board meeting. The existence, nature and extent of the interest must be disclosed openly and in good faith. The circumstances will determine the extent of the detail disclosed, however, it must be sufficient to inform the board of the real state of affairs.
The company secretary must record this declaration in the registrar of directors’ interests, and it is also recommended that the company has a standard clause in its minutes requiring the disclosure of all financial interests by directors at board meetings.
The director must disclose all material information known to him and relating to the matter. The director may give observations or pertinent insights to the directors regarding the matter, if so requested, and must excuse himself from the meeting after making any such disclosure as he may not partake in the consideration of the matter.
The director will be present for the purposes of a quorum, however, he will not be able to vote and will not be considered present for voting purposes to adopt the resolution.
The director may not, unless specifically requested to do so by the board, execute any document relating to the matter.
If a director acquires a personal financial interest in any matter in which the company has a material interest, or a related person acquires an interest in the matter, after the transaction has already been agreed to by the company, the director must disclose to the board and shareholders the nature and extent of the interest and the circumstances relating to the acquisition of that interest.
The director may disclose a general personal financial interest in advance by delivering same to the board or shareholders of the company, in writing, setting out the nature and extent of the interest.
When there is a conflict between the interests of a director and the company, whether direct or indirect, in fact or appearance, a conflict of interest occurs.
All financial, economic, and other interests of each member should be declared to the board at least annually, alternatively when there are important changes.
At the beginning of each meeting all members should be required to declare any conflict of interest pertaining to any matter on the agenda so there is ongoing disclosure. The JSE Listing Requirements requires directors to make certain disclosures upon their appointment.
The company secretary must keep a register of directors’ interests and retain all declarations made by directors for 7 years.
Prepared by Attorney Shelley Du Plessis
Jurgens Bekker Attorneys
Managing Attorney Cape Town Branch
www.jurgensbekkerattorneys.co.za