Conflict of Interest Policy (New Zealand)

A New Zealand Conflict of Interest Policy is a formal governance document adopted by an organisation — including companies, charities, incorporated societies, and not-for-profit entities — to establish a framework for identifying, disclosing, and managing conflicts of interest among its directors, officers, and employees. A conflict of interest arises when a person's personal interests — financial, professional, or otherwise — could actually or potentially influence, or appear to influence, their decisions or actions on behalf of the organisation.

The legal foundation for managing conflicts of interest in New Zealand is primarily set out in the Companies Act 1993. Section 131 of the Companies Act 1993 requires directors to act in good faith and in what they believe to be the best interests of the company. Section 137 requires directors to exercise the care, diligence, and skill that a reasonable director would exercise in the circumstances. Section 140 of the Companies Act 1993 imposes a specific mandatory obligation on directors to disclose interests in transactions or proposed transactions with the company, including the nature and extent of those interests. Section 189 requires the company to maintain a register of interests in which all disclosed interests are recorded.

A director who fails to disclose an interest under section 140 of the Companies Act 1993 is not relieved from liability by their failure to disclose — the board may treat the transaction as voidable at the option of the company. A director who fails to comply with section 140 may also be personally liable under section 174 of the Companies Act 1993.

For employees, the good faith obligation in section 4 of the Employment Relations Act 2000 requires employees to act honestly and openly with their employer and not to place themselves in a position where their personal interests conflict with the interests of their employer. Outside employment with a competitor, undisclosed financial interests in suppliers or clients, and acceptance of improper gifts are all examples of conduct that may breach the good faith obligations of an employee.

For charities registered under the Charities Act 2005, a Conflict of Interest Policy is essential for maintaining charitable status and for demonstrating to Charities Services that the charity is governed in the public benefit. The Incorporated Societies Act 2022 similarly requires incorporated societies to address conflicts of interest among their officers and committee members.

All personal information disclosed under a Conflict of Interest Policy — including disclosures recorded in the Register of Interests — must be handled in accordance with the Privacy Act 2020 and the 13 Information Privacy Principles. This Policy is governed by the laws of New Zealand.

A Conflict of Interest Policy is needed by any New Zealand organisation that has directors, officers, trustees, or employees who make decisions on behalf of the organisation and whose personal interests could conflict with those of the organisation. Having a written policy in place is essential for good governance and is required by law or regulation in several contexts.

Companies governed by the Companies Act 1993 need a Conflict of Interest Policy to give practical effect to the disclosure obligations in sections 140 and 189 of the Companies Act 1993. While the Companies Act 1993 does not expressly require a written policy, maintaining a thorough Conflict of Interest Policy — with a clearly defined disclosure process and a Register of Interests — is recognised established standards for New Zealand companies of all sizes. It protects directors from allegations of self-dealing and provides a clear process for managing conflicts before they become disputes.

Charities registered with Charities Services under the Charities Act 2005 are effectively required to have a Conflict of Interest Policy. Charities Services expects registered charities to demonstrate that their governance frameworks prevent trustees from benefiting personally from the charity's resources, which is the fundamental prohibition under the Charities Act 2005. A written policy with a Register of Interests is the primary mechanism for demonstrating this.

Incorporated societies registered under the Incorporated Societies Act 2022 must comply with the Act's governance requirements, which include managing conflicts of interest among officers. The Incorporated Societies Act 2022 came into force on 5 October 2023 and imposes updated governance standards that require incorporated societies to have clear conflict of interest provisions.

State sector organisations — including Crown entities governed by the Crown Entities Act 2004 — are specifically required to have and comply with conflicts of interest policies as part of their statutory governance obligations.

Any organisation that engages in procurement, grant-making, or contracting — and where there is a risk that decision-makers have personal interests in the outcome — needs a Conflict of Interest Policy. This includes schools, sports clubs, professional associations, and companies involved in public procurement. A well-implemented policy protects the organisation's reputation and confirms that its decisions are defensible.

A well-drafted New Zealand Conflict of Interest Policy should include the following key elements to comply with applicable law and meet governance established standards expectations.

Purpose and Scope — Define the purpose of the policy and who is subject to it. The policy should expressly reference the legal framework: sections 131, 137, 140, and 189 of the Companies Act 1993 for directors; section 4 of the Employment Relations Act 2000 for employees; and the Privacy Act 2020 for the handling of disclosed information.

Definition of Conflict of Interest — Define actual, potential, and perceived conflicts of interest clearly. Provide practical examples of each type of conflict to assist covered persons in identifying whether a conflict exists. The definition should cover financial interests, related party relationships, outside employment, dual roles, and gifts and hospitality.

Financial Conflicts — Address the obligation to disclose all personal financial interests in transactions or decisions of the organisation. Reference section 140 of the Companies Act 1993 for directors and the general good faith obligation for employees under the Employment Relations Act 2000.

Related Party Transactions — Set out the requirements for disclosing and managing transactions between the organisation and related parties (including family members, business associates, and entities in which covered persons hold an interest).

Outside Employment and Dual Roles — Address the obligations of employees and directors to disclose outside employment and secondary roles that could conflict with their duties to the organisation.

Gifts and Hospitality — Set a clear monetary threshold above which gifts, hospitality, and entertainment must be disclosed. Prohibit the acceptance of cash gifts and the solicitation of gifts from any person with whom the organisation does business.

Disclosure Process — Define the process for disclosing conflicts: when to disclose, how to disclose (written declaration, declaration at board meeting, or both), and to whom to disclose. Specify who is responsible for maintaining the Register of Interests under section 189 of the Companies Act 1993.

Register of Interests — Describe the Register of Interests, its contents, who maintains it, and how it can be inspected. Directors' disclosures must be entered in the register in compliance with the Companies Act 1993.

Managing Conflicts — Set out the range of options for managing disclosed conflicts, from monitoring to removal from decision-making.

Consequences of Breach — Clearly state the consequences of failing to disclose a conflict of interest, including disciplinary action, directors' liability under the Companies Act 1993, and reputational harm.

Privacy — Confirm that information disclosed under the policy is personal information protected by the Privacy Act 2020.

Governing Law — The policy is governed by the laws of New Zealand. The forms-legal.com Conflict of Interest Policy (New Zealand) provides a ready-to-use template that meets New Zealand legal requirements.