Conflicts of interest include situations:http://www.associationtimes.com/articles2006/conflictinterest0506.htm?zoom_highlight=conflict+of+interestWhere the director's private affairs or financial interests are in conflict with their duties and responsibilities or result in a perception that a conflict exists;
Where a director's actions compromise or undermine the trust which the other members place in the association;
Which could impair or appear to impair the director's abilities to act in the association's interest rather than his own.
Conflicts of interest can include both financial and material interests. In addition to actual conflicts of interest, there can also be apparent or potential conflicts of interest. An apparent conflict of interest occurs when the answer to the following questions can be answered “yes”. Would a reasonably informed person perceive that the performance of the director's duties and responsibilities could be influenced by their financial or material interest?
For example, any time a director is also directly engaged in a project sponsored or supported by the association, there is the possibility of an apparent conflict of interest.
A potential conflict of interest is a situation that may develop into an actual conflict of interest.
Procedure when a conflict of interest arises: It is the responsibility of each director to immediately disclose in writing to the chair of the board of directors the existence of any conflict of interest.
It is the duty of the board of directors to decide whether such individual may participate in any discussion or vote on the issue that has given rise to the conflict.
Directors must withdraw from participation in any way in those decisions in which they have a financial or material interest. When a potential conflict is identified, the director with the conflict should be removed from the decision making process. However, if such persons must remain in meetings in order to fulfill their administrative responsibilities, they shall not participate in any discussion regarding the issue that has given rise to the conflict of interest.
Any proposal for funding submitted by directors in which they, their relatives or their friends have a financial interest, must be fully disclosed and forwarded to a minimum of two (2) directors for evaluation.
Should a director be found to be in a conflict or interest that has not been disclosed to the board as required in point one (1) above, the board may:
require the director to provide full disclosure of the nature of the conflict of interest;
by special resolution, remove said director from the board.
When in doubt as to whether a conflict exists, advice from legal counsel should be obtained.
