When a conflict arises, what is the responsibility of a director or senior officer?

The responsibility of a director or senior officer when a conflict arises is to disclose the conflict in writing. This written disclosure is crucial because it ensures a clear and formal record of the conflict for both the organization and its stakeholders. Written documentation is essential for transparency and accountability, allowing the board or relevant parties to assess the situation appropriately and determine the best course of action.

Written disclosure helps protect the director or officer by demonstrating their commitment to ethical standards and governance practices. It can also help in mitigating potential legal liabilities associated with conflicts of interest, as the act of disclosing the conflict—especially in writing—shows that the individual is acting in good faith and maintaining the organization’s integrity.

In contrast, simply ignoring the conflict would not fulfill the legal and ethical duties owed to the company and its shareholders. A verbal disclosure may lack the necessary formality and clarity of writing, which is why it is insufficient on its own. Consulting legal counsel could also be a prudent step, but it does not replace the obligation to formally disclose the conflict to the board or the relevant body within the organization.