+86 21 658 939 33 support@translegal.com.cn

Officers and directors of companies have a duty of loyalty to the company in their dealings with the company. This means that their actions must promote the interests of the company and not be intended for their personal gain at the expense of the company. A conflict of interest may arise where the company contracts with one of its directors or officers or with a company in which he or she has a financial interest. In such cases, the self-interest may be an adverse interest to the company. In some jurisdictions, transactions by such interested directors or officers are automatically voidable by the company while in other jurisdictions they are merely voidable only upon a showing that the contract is unfair to the company under the relevant circumstances. The question of fairness often involves evidence of whether full disclosure was made by the director or officer to the board of directors, eg the potential profit to the interested director/officer and whether the board was independent of the interested officer/director, ie a majority of the board was ‘disinterested’.