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Company Law Reform Bill [HL]

I agree with what my noble friend Lord MacGregor has said. It seems to me that the current position works on the basis of accepting that there may well in practice be conflicts of interest that arise in the ordinary course of the way companies develop and directors’ own circumstances or interests develop. But companies operate on the basis that there are defined protocols for dealing with situations once they have arisen; that is, by a board director declaring any interests and normally withdrawing from any board discussion which involves those interests. By trying to codify the law in this way we are creating a bigger problem than exists because companies and directors are already well aware of the need to deal with—not to avoid because avoidance is in practical terms probably not on—situations of conflict when they arise. All we need to do is to recognise that companies have to have systems and procedures for dealing with conflict.