Conflict of Interest Policy Ireland (Charities Governance Code)

A conflict of interest arises when a board member's personal interests, or those of a close relative or business associate, could prevent them, or even appear to prevent them, from deciding only in the best interests of the organisation. The policy defines that situation, tells board members what to declare and when, and sets out how the rest of the board manages the matter: the conflicted member leaves the room, does not vote and is named in the minutes. A good policy also deals with the conflict of loyalty, which is subtler. A director nominated by a local authority, a funder or a parent body may gain nothing personally, yet still feel pulled towards the body that put them on the board. The template covers both, as the Charities Governance Code does.

The policy is different from the code of conduct a board signs, which covers behaviour in general (confidentiality, expenses, respect), and from the constitution, which the board cannot change on its own. The board adopts and reviews the conflicts policy itself, so it cannot authorise anything the constitution forbids, and it works alongside the charity and community group documents a board already relies on.

For a CLG, the starting point is the Companies Act 2014. Under section 228(1)(f), every director must avoid any conflict between duties to the company and other interests, including personal ones, unless released in accordance with the constitution or by a resolution of the members in general meeting. Section 231 then imposes a concrete procedure: a director who is in any way interested in a contract or proposed contract with the company must declare the nature of the interest at a board meeting, and a copy of each declaration must be entered within three days in a book kept for the purpose. You can read the text of section 231 of the Companies Act 2014 on the Law Reform Commission's revised acts. Because section 1173 disapplies section 161(7) to a CLG, an interested director has no statutory right to vote or count in the quorum: the constitution decides, and the policy asks the director to withdraw and abstain. Those duties apply to every Irish company, as our company law documents for Irish businesses reflect.

A registered charity answers to a second set of rules, in the Charities Act 2009 and the Charities Governance Code. The Act's definition of a person connected with a trustee, in section 2(2), now includes cohabitants and step-relatives, and the template uses it. The Code is not a statute: it applies on a comply or explain basis, through a compliance record the Charities Regulator can ask to see. Under its Principle 2 a charity is expected to decide how it will deal with conflicts of interests and loyalties, and under Principle 5 conflicts should be a standing item on every board agenda. Section 89 of the Act, on paying charity trustees for services, has never been commenced, and its replacement in Part 6A, inserted by the Charities (Amendment) Act 2024, is not in force either. The charity versions of the template commit the board to comply once those provisions commence.

The obvious moment is registration. A new charity filling in its first Governance Code compliance record will find the integrity standards hard to meet without a written approach to conflicts. Funding is the second trigger. Many funders, public and philanthropic, ask whether a policy exists, and some ask to see the latest register of interests.

Then come the everyday cases. A charity needs a new roof and the treasurer's brother runs a building firm; the contract may still go to him if his quote is the best, provided the treasurer declares the link and takes no part in the decision. A board member's daughter applies for the coordinator post, which brings in the rules on hiring and managing staff as well as the conflict. A director sits on the board of another charity competing for the same grant. A sports club or residents' association that is not a charity faces the same questions on a smaller scale, which is why the template has a non-charity variant.

The edge case is the board where nearly everyone is conflicted, for example a family foundation deciding whether to buy property from one of its founders. Withdrawal fails when too few unconflicted board members remain for a quorum, so the policy has the board take legal advice and, where needed, refer the decision to the members in general meeting or, for an association or trust whose governing document does not allow that, to the court.

The policy opens with purpose, scope and definitions. "Conflict of Interest", "Conflict of Loyalty", "Connected Person" and "Benefit" are defined once and used consistently. The connected person definition is deliberately wide and covers cohabitants, step-relatives, business partners, an employer and controlled companies. The scope extends to committee members and senior staff who advise the board. The legal framework adapts to your answers: a CLG gets the directors' duties in section 228 and a separate section on company law requirements covering section 231 declarations, general notices, the three-day entry in the book, substantial property transactions under section 238 and the restrictions on loans, quasi-loans and guarantees for directors in section 239.

At its operational core, the policy covers declarations on appointment, every year and whenever something changes, the register kept by a named role, and the procedure at meetings. The conflicted member declares, answers questions, leaves, does not vote and, where the constitution allows, is not counted in the quorum. A further section covers decisions taken by email or written resolution, where undeclared conflicts often slip through. Conflicts of loyalty get their own section, with a variant for boards that include nominees from outside bodies.

Payments come last. Board members are paid under one of two variants: expenses only, or payments expressly permitted by the constitution, subject to six conditions including a written agreement, a fair price and a minority of paid members. Gifts above a threshold you set must be declared, data protection is handled under the GDPR and the Data Protection Act 2018, and directors' insurance is expressly carved out so the board can renew it without a conflict.

You start with the organisation's name and its legal form. Choosing a company adds the CRO number and the Companies Act sections; choosing an unincorporated association or trust swaps in the fiduciary rules instead. The next screen asks whether the organisation is registered, or applying to register, with the Charities Regulator; if so, the Registered Charity Number appears under the title and the Charities Act and Governance Code clauses are added.

The form then asks for the name of the governing body (Board of Directors, Board of Trustees, Management Committee), the name of the governing document and the role that keeps the register. Two questions follow on payments and nominees, and each answer swaps in the matching clause. You then set the gift and hospitality threshold, the number of years entries are kept after someone leaves, and how often the board will review the policy. The adoption date and the chairperson's name come next, and a final screen asks you to check the preview on the right before you click Finish. Other legal templates for Ireland work the same way.

The most common failure is a conflict of interest policy that exists only on paper. Boards adopt it, file it and never put declarations of interest on the agenda, so when a funder or the Regulator asks for evidence there is nothing in the minutes. A close second is the register that was filled in once at registration and never updated. Declarations must be renewed every year, and a director who changes job or joins another board must tell the register keeper in writing straight away, not at the next annual round.

Meetings are the next weak point. The conflicted member stays in the room "to answer questions" and ends up steering the discussion, or abstains from the vote but is still counted in a quorum that would otherwise fail. In a CLG, people forget that the section 231 book has a three-day deadline. Treasurers often overlook lease arrangements: a charity renting a hall or office from a director, or from the director's company, is a classic related party transaction, and the board should compare the rent with the market before signing, as it would for any of its leases and property agreements. Loans are similar. A director or relative who lends money to the organisation has an interest in the terms, which belong in writing, as with the private loans covered by personal and family legal documents. Finally, boards sometimes treat the policy as permission to pay a director whenever the board agrees, when in fact the policy cannot authorise any payment the constitution does not allow.