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Section 146 of The Companies Act No. 17 of 2015: Duty of director to avoid conflicts of interest

    

(1) A director of a company shall avoid a situation in which the director has, or can have, a direct or indirect interest that conflicts, or may conflict, with the interests of the company.
(2) Subsection (1) applies in particular to the exploitation of—
(a) any property;
(b) confidential information of the company; (c) the director's position in the company; or (d) opportunities in or for the company:
Provided that it does not matter whether the company could take advantage of the property, confidential information or opportunity.
(3) The duty of a director under subsection (1) is not infringed—
(a) deleted by Act No. 28 of 2017, s. 12(b);
(b) if the matter has been authorised by the other directors.
(4) An authorisation under subsection (3)(b) may, in the case of a private company, be given by the directors by the matter concerned being proposed to and authorised by them, so long as nothing in the company's constitution invalidates the giving of such an authorisation.
(5) An authorization under subsection (3)(b) may in the case of a public company be given by—
(a) a majority of members of the board of directors who do not have a personal interest; or
(b) a majority of the votes of members who do not have a personal interest, in the case of a transaction valued at an amount that is ten percent or more of the value of the assets of the company.
(6) An authorisation given under subsection (3)(b) is effective only if—
(a) any requirement relating to the quorum at the meeting at which the matter is considered is satisfied without counting the director concerned or any other interested director; and
(b) the matter was agreed to without that director or any other interested director voting.
(7) Any reference in this section to a conflict of interest includes references toa conflict of interest and duty and to a conflict of duties.
(8) A director or member referred to in this section has a personal interest if the director or member or their family member—
(a) is a party to the transaction or has material financial interest in the transaction; or
(b) has material financial interest in the transaction that could be expected to affect their judgment adversely to the company.
(9) An arrangement entered into by a company in contravention of this section and any transaction entered into in accordance with the arrangement, whether by the company or any other person, is voidable at the instance of the company, unless
—
(a) restitution of any money or other asset that was the subject matter of the arrangement or transaction is no longer possible;
(b) the company has been indemnified in accordance with this section by other persons for the loss or damage suffered by it; or
(c) rights acquired in good faith, for value and without actual notice of the contravention by a person who is not a party to the arrangement or transaction would be affected by the avoidance.
(10) Whether or not the arrangement or any such transaction has been avoided, each of the persons specified in subsection (11) is liable-—
(a) to account to the company for any gain that the person has made (directly or indirectly) as a result of the arrangement or transaction; and
(b) jointly and severally with any other person so liable under this section, to indemnify the company for any loss or damage resulting from the arrangement or transaction.
(11) The persons liable under subsection (10) are—
(a) any director of the company or of its holding company with whom the company entered into the arrangement in contravention of this section;
(b) any person with whom the company entered into the arrangement in contravention of this section who is connected with a director of the company or of its holding company;
(c) the director of the company, or of its holding company, with whom any such person is connected; and
(d) any other director of the company who authorised the arrangement or a transaction entered into in accordance with such an arrangement.
(12) A director who contravenes this section commits an offence and is liableon conviction to disqualification for a period not exceeding five years.

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