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MSWG Weekly Newsletter 16 November 2018 (English)
MESSAGE FROM THE CEO
Conflicts of Interest – Directors of PLCs Who Sit on Boards of Institutional Investors that Invest in the Directors’ PLCs
The concept of ‘conflict of interest’ is premised on one of the limbs of natural justice…’no man shall sit in judgment of his own course’ (Nemo judex in causa sua in Latin).
When it comes to ‘conflict of interest’, it is equally important to avoid both actual and perceived ‘conflict of interests’. This is because perception shapes reality and sometimes, that very perception becomes the reality.
It is a conflict of interest when directors of Public Listed Companies (PLCs) sit on boards (or committees) of institutional investors, who in turn have shareholdings in the said PLC, from which that director comes from.
It does not matter whether that director can influence the institutional investors’ dealings decisions when it comes to the said PLC’s shares…it is the perception that matters. Of course, that director can abstain from the institutional investors’ deliberations when discussions are held pertaining to that PLC.