Director's declaration of interest - general notice

Use this Director’s declaration of interest – general notice to declare a director’s personal interest in a transaction or arrangement your company is entering into. For example, the director might hold shares in a company that your business regularly does business with, or a director’s relative might be intending to work for your business. By completing this template notice, a director of your company notifies the board of their interest in a transaction or arrangement, and any future transactions or arrangements with the relevant person or company. This helps the board decide what to do about the director’s personal interest and make fully informed decisions. By declaring their interest correctly, the director fulfils their legal duty to the company. This notice is drafted for a company with model articles of association. If your company does not have the model articles, you will need to review your articles of association carefully as the director may be required to take different steps. You should also check any shareholders’ agreement in place.
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Director's declaration of interest - notice in writing

This Director's declaration of interest - notice in writing can be used by a director of your company to make a written declaration of their personal interest in a transaction or arrangement that the company is entering into. Directors have a duty to declare such interests to allow their fellow directors to decide how best to proceed. It might also be referred to as a declaration of directors’ interests. A conflict of interest can arise if a director has a personal interest in a transaction or arrangement entered into by their company (called a transactional conflict). For example, the director might hold shares in a company that your business plans to enter into a contract with, or they may have a relative who is applying for a job at your company. If the other directors are not already aware of the interest, wherever possible, the director must make a declaration before the transaction or arrangement is entered into. This letter can be used to provide specific notice in writing to the other directors. This notice is drafted for a company with model articles of association. If your company does not have the model articles, you will need to review your articles of association to check if your director is required to take any different steps to declare their interest. You should also check any shareholders’ agreement in place.
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See all solutions
Directors' conflicts of interest
Managing situational conflicts of interest
Q1:What situations cause a conflict of interest for a director?

A conflict of interest can arise when a is placed in a situation in which their interests, or those of someone connected to them (such as a family member), could conflict with the 's. These are known as situational conflicts.

The following are all examples of this:

  1. a is appointed to the of a competitor;

  2. a buys a business which is an important supplier to their ;

  3. a 's son owns a competitor;

  4. a owns a majority stake in a key customer of their .

See Q&A 2 for what a needs to do in this situation.

Note that more specific conflicts of interest can arise if a has an interest in a particular transaction or arrangement with their . Separate rules apply to these ; see Q&A 5.


Q2:What must a director do if they have a situation that causes a conflict of interest?

Before they are placed in a position in which they have a situational conflict, a must get approval from their fellow or . Make sure you are certain that the conflict is situational rather than transactional, as there are separate rules for ; see Q&A 1 for examples of situational conflicts and Q&A 5 for examples of transactional conflicts.

If your has the , the easiest way for a to seek and obtain approval of a potential situational conflict is to call a and ask their fellow for approval. However, this can only be done if you have enough to form a , excluding the conflicted . If your has the , you will need at least three , as the for is two and a who has a conflict cannot generally count in the or vote. If you can't form a , the matter will need to be referred to the .

See Q&A 3 for information about asking the to authorise the conflict and Q&A 4 for information about asking the to do so.

If your has the , there are no further steps to take once the board (or ) have approved the situation; but if you have bespoke , and/or a , you must check these as they may require the to take additional steps.


Q3:How does the board decide whether to authorise a fellow director's situational conflict of interest?

First, the should check that they have the power to authorise the conflict and that the non-conflicted can form a (see Q&A 2).

Assuming they can proceed, the decision about whether to authorise the conflict is best made at a so that all relevant factors can be properly discussed and minuted. When deciding what to do, the non-conflicted must bear in mind their general legal duties including:

  1. to promote the success of the for the benefit of all rather than any particular group of ; and

  2. to exercise independent judgement (so they should not, for example, be swayed by the arguments of the conflicted ).

Once they've made a decision, there is no fixed rule as to what form the decision should take; it could be a refusal to authorise the conflict, a simple to authorise, or a to authorise but with conditions (such as a time-limit or a requirement that the conflicted update the at regular intervals).

Minutes of a which considers a conflict should include full details of the conflict, of the discussions that take place and, if authorised, any conditions which are attached.


Q4:How do my company's shareholders decide how to handle a director's situational conflict of interest?

The most straightforward method to obtain ' authorisation for a situational conflict is to circulate and pass a written . In order to do so, your 's must agree the wording of the necessary (either at a or by unanimous consent) and then circulate it to the for signature.

The must also ensure that the is accompanied by full details of the conflict situation, as provided by the conflicted to the board.

Upon receipt of the and details of the conflict situation, the will then have freedom to decide whether or not to authorise the situational conflict and on what terms. They may attach any conditions to the authorisation that they deem appropriate; these could include setting a time limit on the authorisation, or requiring the conflicted to provide regular updates on the situation.


Managing transactional conflicts of interest
Q5:When will a director have a personal interest in a transaction or arrangement?

A conflict of interest can arise if a (or someone connected to them, such as a family member or another in which the holds ) has a personal interest in a transaction or arrangement with their . These are known as transactional conflicts.

The following are all examples of this:

  1. a sells a property to your ;

  2. a borrows money from your ;

  3. a in which a holds sells a business to your ;

  4. a 's daughter buys a property from your ; or

  5. your is considering a job application from a 's partner.

If your has the , the following are specifically excluded and won't require your to take any specific action in relation to the :

  1. a given by or to the for an obligation incurred for your ;

  2. if the is subscribing for or securities in your ; or

  3. if the 's interest concerns benefits which are not just available for .


Q6:What must a director do if they have a personal interest in a transaction or arrangement?

This depends on whether the other are already aware of the interest which may, for example, be the case if the has previously sought authorisation for a situational conflict involving the or person on the other side of the transaction or arrangement (see Q&A 2). If this is the case, the does not need to take any further steps to declare their interest again although the fellow will still need to decide whether the can participate in decisions about the transaction or arrangement (if they have not already done so); see Q&A 11.

If the is not already aware, a with a personal interest in a transaction or arrangement involving their must declare it to their fellow before the transaction or arrangement is entered into where possible or (if it's already happened) as soon as they can after they become aware of it. It is a specific offence to fail to declare an interest in an existing transaction or arrangement.

See Q&A 7 and following for how a should make the declaration and Q&A 11 for how the should deal with it once received.

If your has the , there are no further steps to take; but if you have bespoke , and/or a , you must check these as they may require the to take additional steps.

Note that if the , or somebody connected to them, is buying from or selling to the , they may also need approval from your (see Q&A 15); this will also be the case if they are borrowing money from your (see Q&A 17).


Q7:How does a director declare a personal interest in a transaction or arrangement?

Your must make a declaration which sets out full and frank details of the precise nature of their interest so that the other can properly assess the interest and decide how best to proceed.

A can make their declaration in one of the following ways:

  1. At a ; their declaration must be recorded in the .

  2. By notice in writing to the other (this can be sent by email if the receiving it has agreed).

Note that it is possible for a to give a general notice of an interest in another or firm or of a connection with a family member or someone else. This will satisfy the 's obligation to declare their interests to their fellow each time the deals with that person or entity in the future; see Q&A 8 for more information.

If a declaration of interest becomes inaccurate or incomplete at any time, the must make a further declaration; see Q&A 10.

For guidance on how your other should proceed after they receive such a notice, see Q&A 11.


Q8:Can a director make a general declaration to cover their personal interests in all future transactions or arrangements with a particular person or company?

Yes, they can.

Instead of giving a specific declaration every time they have a conflict arising from a transaction or arrangement (see Q&A 7) can give a general notice of an interest in another or firm or of a connection with a family member or someone else. This will satisfy the 's obligation to declare their interests to their fellow each time the deals with that person. It may be appropriate if, for example, they are a or of another you deal with regularly or if they have a relative who works for your .

General declarations are often asked for an given when a new joins a ; bear in mind that the situation declared may well be a and would need to be authorised by the board or (see Q&A 1 and following).

See Q&A 9 for information about making the declaration.


Q9:How does a director make a general declaration about personal interests?

A must give the other as full and accurate a description as possible of the interest and include a statement that, as a result of this interest, the is to be regarded as interested in future transactions or arrangements with the , firm or other person.

A must make sure their general notice is raised at a .

For a template declaration, see Director's declaration of interest - general notice.

If a declaration of interest becomes inaccurate or incomplete at any time, the must make a further declaration; see Q&A 10.

For guidance on how your other should proceed after they receive such a notice, see Q&A 11.


Q10:What should a director do if the position changes after they have made a declaration about their personal interest in a transaction or arrangement?

If a 's declaration of interest becomes inaccurate or incomplete at any time, the is under a duty to give a further corrected or updated declaration; failure to do so is an offence.

The should make their declaration before a proposed transaction or arrangement is entered into or, if it has already happened, as soon as possible afterwards.

If your has the (or bespoke with no additional requirements about how to deal with conflicts), you can use one of the following:

  1. Director's declaration of interest - notice in writing for the form of a written notice the can give to your other in which details of the interest are declared; or

  2. Director's declaration of interest - general notice for a general notice about future conflicts.


Q11:How does the board deal with a director's transactional conflict of interest?

The answer below assumes that the transaction or arrangement which gives rise to the potential conflict has not yet happened; if it has and the are required to give approval after the event, the process is slightly different (see Q&A 12).

If your has modified or bespoke of association, the must check these as well as any to identify the necessary process to follow once the interest has been declared. The process below is for a with and no extra requirements under a 's agreement.

If possible, the most straightforward solution to a is to exclude the conflicted from decisions about the matter; this means they will not be able to participate in any deliberations or decisions by your other . Your should consider the transaction in question without the conflicted present.

This will, however, only be possible if the non-conflicted are able to form a ; to do so, your will need at least three , as under the the for is two .

If you can't form a without the conflicted being present (or want them to participate in the decision-making process for some other reason) you will need to obtain the approval of your first. Your are free to attach any conditions to their approval. See Board and shareholder decisions for general guidance about obtaining approvals.


Q12:What should the board do if a director declares a conflict of interest in a transaction or arrangement that has already happened?

In this situation, it will usually be appropriate for the non-conflicted to hold a to consider the situation and decide on next steps. If your has the , this will only be possible if your has at least three , as the for is two . If the can't form a , the matter should be referred to the 's .

In considering the conflict and how to proceed, your must always bear in mind their duties to your , in particular the duty to promote the success of your for the benefit of all and not just one (such as the conflicted , if a ) or one group of . Your will have rights and powers under the relevant transaction, and the way it chooses to exercise these may be affected by knowledge of the interest. It may, therefore, be appropriate for your to direct that the conflicted should no longer participate in discussions and decision-making about the matter in question.


Specific conflicts of interest
Q13:Are directors permitted to accept gifts or hospitality?

This depends on whether doing so might give rise to a conflict of interest. Your must not accept any benefit from a (such as money, a gift or hospitality) if it might risk a conflict of interest. See Q&A 14 for guidance about how to tell whether there's a potential conflict or not.

In deciding whether to accept any gift or hospitality, it is important to bear in mind that:

  1. Your ’s might contain provisions allowing a to accept certain specified benefits, without their duty to not accept benefits from third parties. There are no such provisions in the , but if your has bespoke then you should check these.

  2. As well as the duty not to accept a benefit that might cause a conflict of interest, there are strict rules prohibiting both the offer and acceptance of bribes and other benefits under the Bribery Act 2010; accepting money, a gift or hospitality could be considered a bribe. This is a criminal offence which, in serious cases, can lead to custodial sentences and unlimited fines. If you do not have one, you should consider having an anti-corruption and bribery policy in place, particularly if corporate hospitality and gifts are a common feature in your business or if you are concerned about the risks. See the template Staff handbook and HR policies; you can choose to generate the policy either on its own or as part of a full .

A who is in any doubt about a benefit should make full disclosure to their fellow , who should consider the matter very carefully. If in doubt, don't accept the benefit or, where necessary, take legal advice before doing so. For access to a specialist lawyer in a few simple steps, you can use our Ask a Lawyer service.


Q14:When will accepting gifts or hospitality create a conflict of interest?

A should not accept gifts or hospitality if doing so may create a conflict of interest. To assess whether there's a conflict of interest, you should look at:

  1. the amount and nature of the benefit (very small or insignificant gifts are unlikely to cause a conflict);

  2. the circumstances under which the benefit is provided and what the giver expects in return, if known; and

  3. the nature of the giver's business and whether it generally offers benefits like this.

For example:

  1. a payment into the personal bank account of your in return for business will almost certainly cause a conflict and will probably count as an illegal bribe (see Q&A 13);

  2. accepting a box of chocolates which a grateful supplier sends as a Christmas present will not cause a conflict, although receiving a very expensive case of wine may do;

  3. accepting a week's holiday from a prospective supplier bidding for a key contract is likely to cause a conflict, as it would be difficult for the to be objective about competing bids.

A who is in any doubt about a benefit should make full disclosure to their fellow , who should consider the matter very carefully. If in doubt, don't accept the benefit or, where necessary, take legal advice before doing so. For access to a specialist lawyer in a few simple steps, you can use our Ask a Lawyer service.


Q15:Is a director allowed to buy from or sell to their company?

Yes, but only if they have taken the following steps first:

  1. they must declare their interest to their fellow , who must then decide how to proceed (see Q&A 7 for the process they must follow); and

  2. they must also obtain approval from the 's if the value of what the or is buying or selling is:

    1. more than £100,000; or

    2. more than £5,000 and over 10% of the 's net assets; or

    3. part of a series of purchases or sales which add up to more than either of the above.

Approval can be given by the passing an either as a or at a . See Board and shareholder decisions for guidance on how to pass a .

If your has bespoke and/or a agreement, you should also check these for any additional requirements. There are not any in the .

There can be complications about whether a sale or purchase needs ' approval and how to calculate whether or not the asset concerned exceeds 10% of the 's net assets. Bear in mind that there can be serious consequences if ' approval is required but not obtained; your can declare the transaction and require the , plus any other who approved the deal, to pay compensation.

Therefore if in doubt, seek approval in any event and if the transaction is significant, consider obtaining expert legal advice. For access to a specialist lawyer in a few simple steps, you can use our Ask a Lawyer service.


Q16:Can a director's family, or another business they are involved with, buy from or sell to their company?

Yes, but only if the follows the same steps that they themselves must follow when buying from or selling to their ; see Q&A 15 for what they must do. The rules apply to the following:

  1. a 's spouse, partner, children, stepchildren and parents;

  2. a in which the or any of their close family holds at least 20% of the or votes;

  3. the of a trust which has the , any of the people specified at point a above or a specified at point b above as a ; and

  4. a partnership in which the , any of the people specified at point a above or a specified at point b above is a partner, and any other partners within that partnership.

For example: A in which a and his wife together own 25 per cent of the wants to buy a business with a value of £50,000 from your . The will need the approval of your and also your if the value of the business is more than 10% of your 's net assets.

For example: A 's son wants to buy a computer worth £2,500 from your ; the will need the approval of your board.


Q17:Is a director allowed to borrow money from their company?

A cannot borrow from your , or be given a or from your for a loan from someone else, without ' approval by .

A memorandum must be sent to before they vote giving details including the amount of the loan, why it is needed and your 's liability. If the are to approve by , the memorandum must be sent to them at the latest when they receive the . If they are to vote at a , it must be made available to them at your 's for at least 15 days before the meeting and at the meeting.

See Board and shareholder decisions for guidance on how to pass a .

There can be serious consequences if approval is not obtained as your can declare the loan, or and require the , as well as any other who approved it, to pay compensation. For this reason, separate legal advice for this type of transaction should always be considered. For access to a specialist lawyer in a few simple steps, you can use our Ask a Lawyer service.

You should also check your and, if you have one, , for any additional requirements. There are not any in the .


Q18:Is a director's family member allowed to borrow money from their company?

There is nothing to prohibit this, but the would need to ensure they declared an interest in the transaction so that their fellow members could decide how to handle it; see Q&A 6 and following for how this process works.


Q19:Can one of my directors also be a director of other companies?

Yes in principle but a who is also a of another , or wants to be, should bear in mind that:

  1. There may be rules in your 's of association, and if you have one , about whether or not this is allowed. There are no such rules in the .

  2. There may be restrictions in the 's , if there is one, or under rules if the is a member. You should check both if relevant.

  3. They must not accept an appointment which will lead to a situational conflict without obtaining authorisation first (see Q&A 1 and following). It will for example be a of duty to accept an appointment as of a competing without authorisation.

  4. The must have the time to carry out the role as of your properly and discharge their legal duties.


Q20:What should a sole director do if they have a conflict of interest?

If your has the , a does not have to declare a conflict of interest and there is nothing to stop them making decisions on the matter they are conflicted over

However, a (as with all ) is under a duty to promote the success of the for the benefit of all the and will need to ensure that they do not allow their personal circumstances to cloud their judgement. With this in mind, if the is not a or not the only , it would be prudent to seek ' approval before entering into any transaction or arrangement in which they have a personal interest.

For example, a , who is one of a number , wishes to pay a to all . Although ' approval is not strictly required under the and may not be required if your 's are in another form, it would be prudent to seek it to avoid claims from the other that the is acting improperly in their own interests and not your 's.

Similarly, your would be well advised to give formal notice to your as soon as they become aware of a personal interest in a transaction or arrangement already entered into by your . This will also help to avoid accusations of impropriety.