(1)A director of a company must avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company.
(2)This applies in particular to the exploitation of any property, information or opportunity (and it is immaterial whether the company could take advantage of the property, information or opportunity).
(3)This duty does not apply to a conflict of interest arising in relation to a transaction or arrangement with the company.
(4)This duty is not infringed—
(a)if the situation cannot reasonably be regarded as likely to give rise to a conflict of interest; or
(b)if the matter has been authorised by the directors.
(5)Authorisation may be given by the directors—
(a)where the company is a private company and nothing in the company's constitution invalidates such authorisation, by the matter being proposed to and authorised by the directors; or
(b)where the company is a public company and its constitution includes provision enabling the directors to authorise the matter, by the matter being proposed to and authorised by them in accordance with the constitution.
(6)The authorisation is effective only if—
(a)any requirement as to the quorum at the meeting at which the matter is considered is met without counting the director in question or any other interested director, and
(b)the matter was agreed to without their voting or would have been agreed to if their votes had not been counted.
(7)Any reference in this section to a conflict of interest includes a conflict of interest and duty and a conflict of duties.
Cases considering section 175 (151)
[2025] UKSC 10 · 19 March 2025Limits
The subsection states the director’s duty to avoid a situation involving an actual or possible direct or indirect conflict with the company’s interests. The judgment used it as the statutory expression of the corresponding common-law conflict duty (see paras [109]; [264]).
The subsection applies the conflict duty particularly to exploitation of property, information or opportunity and makes the company’s ability to exploit it immaterial. The court treated it as reflecting the common law, though it did not directly govern the foreign company involved (see paras [109]-[110]; [325]).
The subsection was used to show that Parliament expressly accommodated authorisation of conduct which would otherwise breach the conflict duty, including authorisation by directors in specified circumstances (see para [327]).
[2026] EWCA Civ 719 · 9 June 2026Interprets
The judgment interprets section 175 as codifying the conflict rule, including exploitation of a company opportunity. The company’s inability to exploit the opportunity does not answer the director’s duty to account. (see paras [56]; [64]-[68])
[2023] EWCA Civ 1433 · 29 November 2023Interprets
The court held that the alleged informal agreement gave Mr Bennett a realistic prospect of establishing authority to pursue the development outside the company. Sufficient disclosure was fact-sensitive and did not necessarily require disclosure of the corporate vehicle or anticipated profit. Summary judgment was therefore inappropriate. (see paras [57]-[59])
131 more judgments, and what each says about section 175, are in the
case-law panel in the full Act.
338.This duty replaces the no-conflict rule applying to directors. Under the current no-conflict rule, certain consequences flow if directors place themselves in a position where their personal interests or duties to other persons are liable to conflict with their duties to the company, unless the company gives its consent. A conflict of interest may, in particular, arise when a director makes personal use of information, property or opportunities belonging to the company or when a director enters into a contract with his company. Conflicts of interest may also arise whenever a director makes a profit in the course of being a director, in the matter of his directorship, without the knowledge and consent of his company.
339.This duty covers all conflicts, actual and potential, between the interests of the director and the interests of the company. This includes conflicts relating to the exploitation of the company’s property, information or opportunity for personal purposes. The only conflicts not covered by this duty, are those relating to transactions or arrangements with the company (interests in transactions or arrangements with the company must be declared under section 177 in the case of proposed transactions or under section 182 in the case of existing transactions unless an exception applies under those sections).
340.Section 180(4) preserves any current ability of the members of a company to authorise conflicts that would otherwise be a breach of this duty.
341.Under subsections ( 4) to ( 6) the duty is also not infringed if:
the situation cannot reasonably be regarded as likely to give rise to a conflict of interest;
in the case of a private company, unless its constitution prevents this, authorisation has been given by directors who are genuinely independent (in the sense that they have no direct or indirect interest in the transaction);
similarly, in the case of a public company, but only if its constitution expressly permits this, authorisation has been given by the independent directors.
342.The present law is that in all cases, conflicts of interest must be authorised by the members of the company, unless some alternative procedure is properly provided. The CLR were concerned that this strict requirement might stifle entrepreneurial activity; and therefore recommended that, in the case of a private company, it should be possible for conflicts to be authorised by independent directors unless the company’s constitution prevents this.
343.Under subsection ( 6) , board authorisation is effective only if the conflicted directors have not participated in the taking of the decision or if the decision would have been valid even without the participation of the conflicted directors: the votes of the conflicted directors in favour of the decision are ignored and the conflicted directors are not counted in the quorum.