1 Introduction

Conflict of interests occur because the many persons associated with the company should be expected to have, and do in fact generally have multiple interests and affiliations and various positions of responsibility within the community.   In these situations, a person will sometimes owe identical duties of loyalty to two or more companies.  A director must not enter into a transaction in which he has a personal interest nor profit from a transaction in which he is concerned on behalf of the company unless he has disclosed such matter to the company and obtained the approval of the company. If the director obtains a benefit in his capacity of director in circumstances where there could be a conflict of interest, he is accountable to the company for that benefit.

The Singapore Companies Act makes disclosure of certain conflicts of interest mandatory. (Appendix A)

The purpose of the conflict of interest policy is to protect Litecoin Foundation’s (“LF”) interest when it is contemplating entering into a transaction or arrangement that might benefit the private interest of an officer or director of the company.   In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial interest and be given the opportunity to disclose all material facts to the directors considering the proposed transaction or arrangement.

2 Definitions

2.1 Interested Person

Any director or managing director who has a direct or indirect financial interest, as defined below, is an interested person.

2.2 Financial Interest

A person has a financial interest if the person has, directly or indirectly, through business, investment, or family:

(a) An ownership or investment interest in any entity with which LF has a transaction or arrangement,

(b) A compensation arrangement with the corporation or with any entity or individual with which LF has a transaction or arrangement, or

(c) A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which LF is negotiating a transaction or arrangement.

Compensation includes direct and indirect remuneration as well as gifts or favours that are not insubstantial.  A financial interest is not necessarily a conflict of interest.  A person who has a financial interest may have a conflict of interest only if the appropriate governing board or committee decides that a conflict of interest exists.

  1. Procedures

3.1 Duty to disclose

In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial interest and be given the opportunity to disclose all material facts to the directors considering the proposed transaction or arrangement.   The annual declaration of interest template is set out in Appendix B.

3.2 Determining whether a conflict of interest exists

After disclosure of the financial interest and all material facts, and after any discussion with the interested person, he/she shall leave the governing board or committee meeting while the determination of a conflict of interest is discussed and voted upon.  The remaining board or committee members shall decide if a conflict of interest exists.

3.2 Procedures for addressing the conflict of interest

(a) An interested person may make a presentation at the governing board or committee meeting, but after the presentation, he/she shall leave the meeting during the discussion of, and vote on, the transaction or arrangement involving the possible conflict of interest.

(b) The chairperson of the governing board or committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.

(c) After exercising due diligence, the governing board or committee shall determine whether the company can obtain with reasonable efforts a more advantageous transaction or arrangement from a person or entity that would not give rise to a conflict of interest.

(d) If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the governing board or committee shall determine by a majority of vote of the disinterested directors whether the transaction or arrangement is in the company’s best interest, for its own benefit, and whether it is fair and reasonable.  In conformity with the above determination it shall make its decision as to whether to enter into the transaction or arrangement.

3.4 Violations of the conflict of interest policy

(a) If the governing board or committee has reasonable cause to believe a member has failed to disclose actual or possible conflicts of interest, it shall inform the member of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose.

(b) If, after hearing the member’s response and after making further investigation as warranted by the circumstances, the governing board or committee determines the member has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.

  1. Records of Preceedings

4.1 Minutes

The minutes of the governing board shall contain:

  • The name of the interest person who is an officer or a member of a specified corporation, a member of a specified firm, or a partner or officer of a specified limited liability partnership who has a transaction or potential transaction with LF;
  • The nature and extent of the interested person’s interest in the specified corporation, firm or limited liability partnership;
  • Any action taken to determine whether a conflict of interest was present, and the governing board’s decision as to whether a conflict of interest in fact existed.;
  • The names of the persons who were present for discussions and votes relating to the transaction or arrangement, the content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection with the proceedings.
  1. Compensation

5.1 A voting member of the governing board who receives compensation, directly or indirectly, from the corporation for services is precluded from voting on matters pertaining to that member’s compensation.

5.2 A voting member of any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the corporation for services is precluded from voting on matters pertaining to that member’s compensation.

5.3 No voting member of the governing board or any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the corporation is prohibited from providing information to any committee regarding compensation.

  1. Annual statements

Each director and managing director shall annually sign a statement which affirms such person:

(a) Has received a copy of the conflict of interest policy,

(a) Has read and understands the policy, and

(c) Has agreed to comply with the policy.

  1. Periodic Reviews

To ensure LF operates in a manner consistent with its objectives, periodic reviews, at the minimum annually, shall be conducted to assess if this conflict of interest policy is adequate or requires any updates.

 

Appendix A – Extract from Singapore Companies Act (CHAPTER 50)

 Disclosure of interests in transactions, property, offices, etc.

156.—(1)  Subject to this section, every director or chief executive officer of a company who is in any way, whether directly or indirectly, interested in a transaction or proposed transaction with the company shall as soon as is practicable after the relevant facts have come to his knowledge —

(a) declare the nature of his interest at a meeting of the directors of the company; or

(b) send a written notice to the company containing details on the nature, character and extent of his interest in the transaction or proposed transaction with the company.

2)  A notice under subsection (1)(b) shall be given as soon as is practicable after —

(a) the date on which the director or chief executive officer became a director or chief executive officer (as the case may be); or

(b) (if already a director or chief executive officer, as the case may be) the date on which the director or chief executive officer became, directly or indirectly, interested in a transaction or proposed transaction with the company, as the case requires.

(3)  The requirements of subsection (1) shall not apply in any case where the interest of the director or chief executive officer (as the case may be) consists only of being a member or creditor of a corporation which is interested in a transaction or proposed transaction with the first-mentioned company if the interest of the director or chief executive officer (as the case may be) may properly be regarded as not being a material interest.

(4)  A director or chief executive officer of a company shall not be deemed to be interested or to have been at any time interested in any transaction or proposed transaction by reason only —

(a) in the case where the transaction or proposed transaction relates to any loan to the company — that he has guaranteed or joined in guaranteeing the repayment of the loan or any part of the loan; or

(b) in the case where the transaction or proposed transaction has been or will be made with or for the benefit of or on behalf of a corporation which by virtue of section 6 is deemed to be related to the company — that he is a director or chief executive officer (as the case may be) of that corporation,

and this subsection shall have effect not only for the purposes of this Act but also for the purposes of any other law, but shall not affect the operation of any provision in the constitution of the company.

(5)  A declaration given by a director or chief executive officer under subsection (1)(a), or a written notice given by a director or chief executive officer under subsection (1)(b), shall be treated as a sufficient declaration or written notice under those provisions in relation to a transaction or proposed transaction if —

(a) in the case of a declaration, the declaration is given at a meeting of the directors or the director or chief executive officer (as the case may be) takes reasonable steps to ensure that it is brought up and read at the next meeting of the directors after it is given;

(b) the declaration or written notice is to the effect that —

(i) he is an officer or a member of a specified corporation, a member of a specified firm, or a partner or officer of a specified limited liability partnership; and

(ii) he is to be regarded as interested in any transaction which may, after the date of the declaration or written notice, be made with the specified corporation, firm or limited liability partnership;

(c) the declaration or written notice specifies the nature and extent of his interest in the specified corporation, firm or limited liability partnership; and

(d) at the time any transaction is made with the specified corporation, firm or limited liability partnership, his interest is not different in nature or greater in extent than the nature and extent specified in the declaration or written notice.

(6)  Every director and chief executive officer of a company who holds any office or possess any property whereby, whether directly or indirectly, any duty or interest might be created in conflict with their duties or interests as director or chief executive officer (as the case may be) shall —

(a) declare at a meeting of the directors of the company the fact and the nature, character and extent of the conflict; or

(b) send a written notice to the company setting out the fact and the nature, character and extent of the conflict.

(7)  A declaration under subsection (6)(a) shall be made at the first meeting of the directors of the company held —

(a) after he becomes a director or chief executive officer (as the case may be); or

(b) (if already a director or chief executive officer, as the case may be) after he commenced to hold the office or to possess the property,

as the case requires.

(8)  A written notice under subsection (6)(b) shall be given as soon as is practicable after —

(a) the date on which the director or chief executive officer became a director or chief executive officer (as the case may be); or

(b) (if already a director or chief executive officer, as the case may be) after he commenced to hold the office or to possess the property,

as the case requires.

(9)  The company shall, as soon as practicable after the receipt of the written notice referred to in subsection (1)(b) or (6)(b), send a copy of the notice to —

(a) in the case where the notice is given by a chief executive officer, all the directors; or

(b) in the case where the notice is given by a director, all the other directors.

(10)  Where a chief executive officer or a director of the company declares an interest or conflict by a written notice referred to in subsection (1)(b) or (6)(b), respectively, in accordance with this section —

(a) the making of the declaration is deemed to form part of the proceedings at the next meeting of the directors after the notice is given; and

(b) the provisions of section 188 (minutes of proceedings) shall apply as if the declaration had been made at that meeting.

(11)  The secretary of the company shall record every declaration under this section in the minutes of the meeting at which it was made and keep records of every written resolution duly signed and returned to the company under this section.

(12)  The directors of a company shall permit a chief executive officer of the company who is not a director to attend a meeting of the board of directors where such attendance is necessary for the chief executive officer to make a declaration for the purpose of complying with this section.

(13)  For the purposes of this section —

(a) an interest of a member of a director’s family shall be treated as an interest of the director and the words “member of a director’s family” shall include his spouse, son, adopted son, step-son, daughter, adopted daughter and step-daughter; and

(b) an interest of a member of a chief executive officer’s family shall be treated as an interest of the chief executive officer and the words “member of the chief executive officer’s family” shall include his spouse, son, adopted son, step-son, daughter, adopted daughter and step-daughter.

(14)  Subject to subsection (4), this section shall be in addition to and not in derogation of the operation of any rule of law or any provision in the constitution restricting a director or chief executive officer from having any interest in transactions with the company or from holding offices or possessing properties involving duties or interests in conflict with his duties or interests as a director or chief executive officer (as the case may be).

(15)  Any director or chief executive officer of a company who fails to comply with any of the provisions of this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 12 months.

 

Appendix B – Annual Declaration of Interest

I, (insert full name)_______________ , Director of Litecoin Foundation Limited declare my private interests as at (date) __________.

Potential Conflict of Interest Yes/ No If Yes, Provide Details
Other Substantial Sources of Income: Do you receive substantial income from outside this organisation that could reasonably raise an expectation of a conflict of interest with your duties here?    
Office Holder: Do you hold office in a public or private organisation that reasonably raise an expectation of a conflict of interest with your duties here?    
Trusteeships: Are you a Trustee or a Director of any trustee company in which a member of your family is a beneficiary that could reasonably raise an expectation of a conflict of interest with your duties here?    
Agreements: Are you, or a member of your immediate family, party to any contract, agreement or understanding that gives rise to an obligation or an expectation of reward that could reasonably raise an expectation of a conflict of interest with your duties here?    
Other Interests: Do you, or any member of your immediate family, hold any other substantial financial or other interest that could raise an expectation of a conflict of interest with your duties in this role?    

 

I (insert name) ____________________________ am given a copy of and has read and understand the Litecoin Foundation Limited’s Conflict of Interest policy and my obligations under it.  I declare that to the best of my knowledge the information I have provided is true and correct. I undertake to advise Litecoin Foundation Limited in writing if a conflict or potential conflict of interest arises in the future and to stand down in any decision-making process in which I may be compromised.

 

Signature of declarant ……………………………… Date …………………………..