What is meant by conflict of interest?

Conflict of interest refers to a situation where an individual's personal interests—whether financial, familial, or otherwise—interfere with their obligations and responsibilities towards an organization, particularly in a corporate setting. When corporate officers or employees have personal interests that could potentially influence or compromise their judgment or decisions in the best interest of the company, this creates a conflict.

For instance, if a company executive stands to gain personally from a business deal that the company is considering, their personal financial interest could conflict with their duty to act in the best interests of the shareholders and the organization as a whole. This dynamic underscores the importance of transparency and ethical conduct in corporate governance to ensure decisions are made impartially and without undue influence from personal gain.

In contrast, the other options such as a legal requirement for corporate officers, disagreements among board members, or ethical dilemmas faced by employees do not encapsulate the essence of a conflict of interest in the same way. While they might relate to corporate conduct and governance, they do not specifically define the situation where personal interests conflict with official duties and responsibilities.