What is a conflict of interest?

A conflict of interest is a situation in which a person has a duty to more than one person or organization, but has divided loyalties because of the multiple relationships. For example, a lawyer may have an obligation to both a client and a court, but the interests of the two may conflict. This can also be the case in certain business relationships. In California, corporate law stipulates that directors, officers and shareholders of a business cannot use their positions to gain personal advantage. This means they must act in the best interests of the company, not in their own interests. Any disagreement or competition between their interests and those of the company is considered a conflict of interest. An example of this may be when a shareholder uses their position to get a job from the company or to gain a business contract. California corporate law is designed to ensure that no one in a business is advantaged because of their role in the company. In order to uphold this, shareholders and directors must be aware of the concept of a conflict of interest and be aware of their own interests. They must understand that if any activities are deemed to be in conflict with the interests of the company, the law is there to protect the business and its shareholders.

Related FAQs

What is the process for corporate liquidation?
What are the disadvantages of forming a LLC?
What is a proxy vote?
What are the responsibilities of corporate officers?
What is the process for corporate dissolution?
What is the Sarbanes-Oxley Act?
What are the legal liabilities of corporate directors?
What is the purpose of a corporate compliance policy?
What is the role of corporate accounting?
What is a shareholder class action?

What is a conflict of interest?

Related FAQs

Related Blog Posts