Hi there. As you know, your position as a director for your company requires you to perform to the best of your abilities all the director’s duties which are set out by the Corporations Act 2001 (Cth).

Among these duties is the duty to avoid conflicts of interest. The duty to avoid conflicts of interests is serious and breaches of this duty can have consequences for both you as a director and the company. The duty to avoid conflicts of interest is set out in the Corporations Act and applies even when a director acts honestly and does not stand to make a profit. Because of this, it is possible to breach the duty by accident and without any intention to do so. As such, a director can never be too cautious in their actions. Consequences for a breach of this duty include both serious civil and criminal outcomes such as large fines.

The duty to avoid conflict of interest is based on the fact that every decision made by directors must be in the best interests of the company. When a conflict of interest arises, the decision making ability of the director may be compromised. A conflict of interest may arise in a situation that puts a director in a position where they are able to take advantage of their role for personal or business gain. You mentioned that the new role concerns a company which is in the same line of work your current company. You need to ask yourself if there is a possibility that a potential conflict might arise if your current company forms any kind of relationship with the new company. For example, is there a possibility that one company might supply the other company or one day be a customer of the other and stand to make a profit from any transaction. If this is possible, there is a chance it could lead to a conflict of interest for you.