OVER the last few weeks, we have covered various aspects of conflicts of interest: why it is important, how directors need to fully disclose any conflicts and act appropriately, and the differences between Interested Persons Transactions and Related Party Transactions.

The key challenge that directors and companies face before even making the necessary disclosures is this: how would they know that a conflict even exists in a particular situation?

Answering this question requires not just an understanding of the situations in which a conflict can arise, but also having a process that identifies a conflict. These two elements may appear to be the same, but they are not.