Interesting developments in Company law
A recent case shows the importance of a director declaring an interest to the board of directors so that he is then able to vote on a business decision.
This might seem a bit "over the top" if there is only one director but the process is clear - the box is there and it needs to be ticked.
Most private companies (whether the Articles of Association are "old" and written under the Companies Act 1985 or newer under the Companies Act 2006) will have provisions that enable a director, once he or she has declared an interest, to be able to vote and count in any relevant quorum for that board meeting.
So, let's be absolutely clear about this, then - even if there is only 1 director, that director must still declare any interest in a decision being considered by the board (i.e. declare the interest to him or herself), and then the director is free to consider the issues and make the decision.
A good example is where is single shareholder/sole director company arranges finance. The loan agreement may well involve agreements issued to the company or to the director with a guarantee also being required. If the company is guaranteeing the director's personal borrowing, then the director will declare his personal interest in that arrangement and then vote to approve and authorise the company to execute the security documents.
But don't just leave it there - make sure that the process is properly minuted. This is not only a legal requirement under the Companies Act (old and new) but s your best evidence of compliance.
Are you more interested now?