The question
Ava is a director of Brightline Ltd, a private company limited by shares with unamended Model Articles. She has been offered the chance to buy a property that Brightline might also want to buy. She wants to make sure she doesn't breach her duty to avoid conflicts of interest.
Which of the following is the best answer?
Show the answer and explanation
The best answer is C: The conflict can be authorised by the other directors, provided Ava does not count in the quorum and her vote is not counted.
Section 175 of the Companies Act 2006 requires a director to avoid situations where her interests conflict, or may conflict, with the company's, including over property or opportunities. The duty is not breached if the directors authorise the matter (s 175(4)(b)). In a private company, the directors can do this unless the constitution invalidates it (s 175(5)(a)), and the Model Articles don't. The interested director doesn't count in the quorum and her vote doesn't count (s 175(6)).
Shareholders can also authorise a conflict, but it isn't the only route, so A and E are wrong. A declaration of interest under s 177 deals with proposed transactions with the company itself, not with conflicts like this one (option D).