Conflicts of interest: Perception is reality
All boards should implement a conflict of interest policy that goes beyond legal compliance to ensure good governance and maintain a positive public image.
LAST week's column, "Conflicts of interest: Duties and consequences", explored the duty of directors in dealing with conflicts of interest, and how full disclosure and appropriate actions are necessary to discharge a director's fiduciary duties.
But conflicts of interest have an impact that can be felt beyond the legal sphere. Individual breaches often have an equally serious bearing in the court of public opinion that can leave a stain that is difficult to remove.
For example, in the 2011 case of KXD Digital Entertainment Limited, the SGX reprimanded the company and Liu Fusheng, its former chairman and CEO, for their failure to announce and seek shareholders' approval for interested person transactions and other breaches of the Listing Rules.
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