What is a conflict of interest?

A conflict of interest is a situation in which a person is in a position to gain personal benefit from actions taken in a professional role. In corporate law, this can involve corporate officers or directors who partake in activities that could be seen as a personal gain. For example, if a Delaware-based CEO makes a decision that benefits their own company, but not other companies within the same industry, then there is a potential conflict of interest. When a conflict of interest is present in Delaware corporate law, the legal system seeks to protect the company’s interests. If the conflict was not known prior to making the decision, then the company’s Board of Directors can review the decision and seek to make changes if necessary. If the decision was made with knowledge of the conflict of interest, then the courts can step in and void the decision. The presence of a conflict of interest can lead to further legal action in the form of lawsuits, as well as the removal of the officer or director from the company due to breaches of fiduciary duty. Whether or not there were conscious attempts to obtain personal benefit, the law must be followed to protect the interests of all parties involved.

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