As the daily headlines make clear, issues associated with governance conflicts of interest are very much "on the front burner" and the focus of media scrutiny. These types of issues typically incorporate not only duty of loyalty concerns, but also other key legal and tax considerations relevant to the board's decision making process (and to the sustainability of specific board actions).
In that context, the recent National Association of Corporate Directors publication, "Avoiding Conflicts of Interest," is worthy of attention by the health system governance committee. The publication (written to apply to directors of both for profit and nonprofit companies), sets forth a series of basic principles regarding the duty of loyalty and director obligations with respect to the identification, disclosure and resolution of conflicts of interest. Included within the publication is a set of "Key Questions for the Board" with respect to compliance with elements of the traditional conflicts protocol, and a series of related action steps designed to increase attentiveness to conflicts matters. As such, the publication serves as a credible supplement to advice the general counsel and the compliance officer are likely already providing the board with respect to the conflicts review process.
In this regard, it is important to recognize that for nonprofit corporations, the types of relationships and arrangements that are traditionally associated with conflicts of interest also implicate a series of other, related governance and regulatory requirements that may require attention—and each of which applies a different legal standard or definition. Careful coordination of these differing standards to the requisite facts is necessary in order to assure compliance with applicable law.
Corporate Law and Governance UpdateThe content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
