casemark/conflict-of-interest-policy

Conflict of Interest Policy

Produces an adoptable policy for identifying, disclosing, evaluating, and resolving conflicts in U.S. corporate or nonprofit governance.

Prerequisites

Gather before drafting:

1. Organization type and jurisdiction (e.g., Delaware corp, California nonprofit)
2. Governing documents — bylaws, charter, committee charters
3. Board/management structure and covered-persons list
4. Current related-party transactions and disclosure history
5. Industry-specific rules, if any (healthcare, education, financial services)

Quick Start

1. Confirm entity type (corporate vs. nonprofit) and jurisdiction.
2. Identify covered persons (board, officers, key employees, committee members).
3. Draft policy sections using the assembly checklist below.
4. Attach disclosure form and annual acknowledgment as appendices.
5. Obtain board adoption and schedule annual certification cycle.

Policy Assembly Checklist

• [ ] Scope and applicability
• [ ] Definitions
• [ ] Disclosure obligations
• [ ] Review, recusal, and approval procedure
• [ ] Documentation and recordkeeping
• [ ] Training and annual certification
• [ ] Enforcement and remedies
• [ ] Appendices: disclosure form + annual acknowledgment

Section Requirements

| Section | Required Content | |---|---| | Purpose & Scope | Integrity, fiduciary duties, decision-making protection; applies to board, officers, key employees, committee members, covered persons | | Definitions | Conflict of interest, interested person, disinterested/independent director, financial interest, family member, material interest | | Disclosure | Timing (annual + ad hoc), written form, recipients, record retention | | Review & Resolution | Recusal rules, quorum handling, decision standard, approval options, documentation | | Monitoring | Annual training, conflicts register, periodic related-party review | | Enforcement | Consequences, remedial actions; nonprofit tax-status risk | | Records | Minutes detail, disclosure forms, approvals, retention period |

Key Definitions

• Conflict of Interest — Personal, financial, or professional interests that could impair impartial decision-making on behalf of the organization.
• Interested Person — Any covered person with a direct or indirect interest in a transaction or arrangement involving the organization.
• Financial Interest — Ownership, investment, compensation, or prospective employment with a party to a transaction; includes indirect interests through family or affiliated entities.
• Family Member — Spouse/domestic partner, parents, children, siblings, in-laws; extend if jurisdiction requires [VERIFY].

Conflict Review Workflow

1. Determine whether a conflict exists.
2. Interested person recuses from discussion and vote.
3. Disinterested decision-makers assess materiality and fairness.
4. Approve only if in the organization's best interest and on fair terms.
5. Document the basis for decision and voting results.

Approval safeguards (select as appropriate):

• Competitive bids or alternatives review
• Independent valuation or third-party benchmarking
• Written terms approved by disinterested directors
• Conditions or limitations to mitigate influence

Quorum and Voting

• Define how quorum is calculated when conflicts exist.
• If quorum fails, refer to alternate committee or independent directors.

Recordkeeping

Maintain and retain:

• Disclosure forms
• Meeting minutes with recusal and voting details
• Rationale for each approval or rejection
• Related-party transaction register

Appendix Templates

Disclosure Form

Fields: Name, Role/Title, Date, then:

1. Does the person, their family, or affiliated entities have a financial or personal interest in any transaction involving the organization? (Yes/No; if yes: parties, nature of interest, estimated value, dates/terms, organization involvement)
2. Awareness of any other potential conflicts? (Yes/No; if yes: describe)
3. Certification that disclosure is complete and accurate; signature and date.

Annual Acknowledgment

One-page form confirming the person has received, read, and understands the policy; agrees to comply and disclose conflicts; certifies all known conflicts disclosed or none to disclose. Signature and date.

Pitfalls and Checks

• Use U.S. governance standards consistent with IRS guidance (Form 990, Pub 557, Form 1023 instructions) and state corporate/nonprofit norms.
• If citing model acts (MNCA, RMBCA), avoid section numbers unless verified [VERIFY].
• Align policy with bylaws, committee charters, and related-party transaction rules.
• Require written disclosures and documented approvals — never informal verbal-only processes.
• For nonprofits, flag tax-exempt risk and intermediate sanctions exposure [VERIFY].
• Never approve transactions without disinterested review, documented rationale, and recorded vote.