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Law change on directors' interests.

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New UK legislation governing directors' conflicts of interest comes into force on October 1. Every director must comply with three new statutory duties and with a separate obligation relating to conflicts of interest between a director and the company.

To comply, publicly owned companies must amend their articles of association to allow the non-conflicted directors to authorise a particular director's conflict. Private companies can make similar constitutional amendments, but will also comply if most shareholders pass a resolution authorising the independent directors to approve the conflict of interest, according to law firm Dundas & Wilson.

"There are countless potential situations in which directors may encounter conflicts of interest, so this legislation has real challenges," said Shan Shori, head of corporate know-how at Dundas & Wilson. But he added that the law could be good news for well-governed organisations. "Businesses will be able to avoid the time-consuming and inconvenient process of getting shareholder consent for conflicts of interest, so those that make the necessary changes now may actually find it to their advantage."

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