One way to test conflict of interest is as follows: If there is any seed of doubt, then it is said to be a conflict of interest that requires disclosure.

In this case and to avoid any seed of doubt, the board member in question should abstain from being an offficer of the corporation, i.e., abstain from being president, treasurer (the most dangerous of the positons since management controls the checking book) and secretary (second most dangerous position as the custodian of the corporate records). Finally, the shareholder should abstain from any discussion relating to the performance of the management company and the person should be protected by the management company by not being named manager of the property in which the person holds shares.

The other shareholders and board members must recognize that the shareholder in question has a large financial interest in the builidng and just like the other shareholders expect the builidng to remain financial stable and well-managed.


Many read great problems relating to this situation; however, it is well known that the CEO of major American corporations, in addition to being the top manager of the company and an employee of the corporation, sits on the Board of Directors and holds a substantial shareholder interest by virtue of holding shares of the corporation by way of compensation or even individual purchase.

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