Page 31 - Profmark_2024_Directors Guide

Section 75: Disclosure of Personal Financial Interests
Based on a director’s fiduciary relationship with the company, directors have a duty to
disclose their personal financial interests in the business of the company.
Section 75 applies to an extended definition of ‘director’ and includes:
■ An alternative director, prescribed officer and board committee member (irrespective
of whether the person is also a member of the company’s board)
■ Related persons when used in reference to a director, as defined in Section 1
(including a second company or CC of which a director or related person is a director
or member).
In terms of the Act, “personal financial interest” comprises a direct material interest of a
financial, monetary or economic nature, or to which a monetary value may be attributed,
but does not include any interest held by a person in a unit trust or collective investment
scheme unless that person has direct control over the investment decisions of that fund
or investment.
A director is not only obliged to disclose his own personal financial interests but also
those of parties related to him (including natural and juristic persons).
A director must disclose his interest in advance, before it is considered by a meeting of the
board and must recuse himself by leaving the meeting, without taking part in the discussion.
A director is required to deliver a written notice to the board (or shareholders where there
is only one director, but a number of holders of beneficial interest in issued securities)
setting out the nature and extent of that interest, to be used generally for the purposes of
this section until changed or withdrawn by further written notice from that director.
Consequences of non-disclosure
■ The resolution and the transaction is void
■ Director could be personally liable for losses, damages or costs sustained by the
company, shareholders or third parties.
Section 75 will not apply where:
■ The sole director is also the sole holder of all the company’s securities (including
shares)
■ Where decisions generally affect all of the directors in their capacity as such
■ Where the decision relates to a class of persons even if that director belongs to that
class (exceptions apply)
■ Where there is a proposal to remove a fellow director from office.

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