---

Company Law Reform Bill [HL]

moved Amendment No. 171:"Page 70, line 11, leave out paragraph (a) and insert—" ““(a)   if the director reasonably and in good faith believes the situation is not likely to give rise to a conflict of interest;”” The noble Lord said: In moving Amendment No. 171, I shall speak also to Amendment No. 172. The purpose of Amendment No. 171 is to alleviate the problems of conflicts of interest for directors of more than one company. It will help to address in part the difficulties described in our other amendments to Clause 159 in relation to the conflicts of interest which would be faced by a director of several companies. The purpose of Amendment No. 172 is to address the problems created by the formulation of the duty to avoid conflicts of interest. Clause 159 goes beyond the requirement of the current law which provides some scope for the sensible management of conflicts by directors in ways which are not damaging to their company—for example, by absenting themselves from meetings at which a matter is to be discussed. In practice, Clause 159 is likely to require a director to obtain express approval of all additional directorships as almost any such appointment ““possibly may”” conflict with his duties to the company at some stage. The safe harbour in Clause 159(4)(a) offers limited protection, since it would be very difficult to judge objectively whether or not a situation was likely to give rise to a conflict in the future. It would be particularly difficult for a director where the matter in respect of which the conflict arises is one in relation to which he owes a duty of confidence to a third party—for example, another company of which he is a director—since in those circumstances, it would be very difficult for him to obtain informed board approval. I beg to move.