Interests, if not disclosed, registered and managed properly, have the potential to lead to conflicts that could undermine decisions taken by a board and the confidence held by stakeholders and the public in the actions of the entity. Good governance requires that boards have robust arrangements in place to address perceived as well as actual conflicts. 

In the public sector, there will be a conflict of interest where a “your duties or responsibilities as an employee or office holder in a public organisation conflict, or could be seen to conflict, with some other interest you might have outside of work”.[1]. These “other” interests can take various forms. They may be financial or non-financial. They may relate to a member’s close family or friends, or to something the member has said or done.  

The existence of the interest is not, in itself, what causes the conflict. The key is to identify any overlap or potential overlap between the interests. Also, appearances in this area can be equally as important as reality. It is often this risk of negative public perception that requires management.

The test of whether a disclosed interest amounts to a conflict is whether the other interest creates an incentive to the person to act in a way that may not be in the best interests of the organisation. 

Several factors are relevant when assessing the seriousness of a conflict of interest, including: 

  • the type or size of the member's other interest and the extent to which it could specifically affect, or be affected by, the entity's decision or activity 
  • the nature or significance of the decision or activity being carried out by the entity 
  • the nature or extent of the member's current or intended involvement in the entity's decision or activity. 

Seriousness is a question of degree. Directness or remoteness are about how closely or specifically two interests concern each other. Significance is about the magnitude of the potential effect of one interest on the other. 

Section 55 of the CEA places a duty on board members not to pursue their own interests at the expense of the interests of the entity. This means that members must perform all aspects of their work for the entity impartially, by: 

  • avoiding any situation where actions they take in an official capacity could be seen to influence or be influenced by a private interest that they, family members or close friends may hold 
  • avoiding situations that could impair their objectivity or create personal bias that would, or could reasonably be seen to influence their judgements 
  • ensuring they are free from any obligation to another party. 

The Office of the Auditor-General has issued guidance on managing conflicts of interest in public entities: Managing conflicts of interest: A guide for the public sector. This states that public entities, when making decisions on conflicts, ought to be guided by the concepts of integrity, honesty, transparency, openness, independence, good faith, and service to the public. The Auditor-General’s guidance states that: 

  • “many situations are not clear-cut. If a member is uncertain about whether something constitutes a conflict of interest, it is safer and more transparent to disclose the interest anyway. The matter is then out in the open, and the expertise of others can be used to judge whether the situation constitutes a conflict of interest, and whether the situation is serious enough to warrant any further action. Disclosure promotes transparency, and is always better than the member silently trying to manage the situation by themselves.” 

The Public Service Commission has issued model standards that outline the Commissioner’s minimum expectations for staff and organisations in the State services to support effective reporting and management of conflicts of interest. The standards should be read alongside other relevant rules and standards (for example, the CEA and the Office of the Auditor-General’s guidance). 

Identifying interests 

Members have the fullest knowledge of their own affairs, and will usually be in the best position to realise whether and when there is an overlap between their public and private interests. Members must consider their interests from the entity's perspective, and apply an honest and open approach to considering and keeping under review any potential conflicts. 

Section 62 of the CEA specifies when interests must be disclosed. For this purpose, a ‘matter’ means the entity’s performance of its functions or the exercise of its powers, or an arrangement, agreement or contract the entity has entered into or proposes to enter. A member is “interested” in a matter if the member: 

  • may derive a financial benefit from a matter (s62(2)(a)) 
  • is the spouse, de facto partner, child or parent of a person who may derive a financial benefit from a matter (s62(2)(b)) 
  • may have a financial interest in a person to whom the matter relates (s62(2)(c)) 
  • is a partner, director, officer, board member or trustee of a person who may have a financial interest in a person to whom the matter relates (s62(2) (d)) 
  • may be interested in the matter because the entity’s Act so provides (s62(2)(e)), or 
  • is otherwise directly or indirectly interested in the matter (s62(2)(f)). 

Members must not seek to provide paid services to an entity, nor be involved in developing, supporting or advising on any matter considered by the entity, other than through their role as a board member.  A member’s shareholding or other financial investment in a company which is, or is seeking to be, engaged with the entity represents a direct financial benefit. It is therefore an interest, unless it can be regarded as 'insignificant'. Many entities make decisions that can affect the value of an investment, so the potential impact on a member's interest – or that of a close family member or friend - must be considered when assessing insignificance. 

An interest will arise through a member’s spouse, civil union or de facto partner, child, or parent who may derive a financial benefit from the matter. The CEA regards these interests in the same way as financial benefits of a member. However, if a board member, acting diligently and in good faith, is not aware of the financial involvement of a family member, then the member is unlikely to be interested because it would not be reasonably regarded as influencing their responsibility to the entity. 

A financial interest in another person may give rise to an interest, because of an apprehension of influence. 

An interest may arise when a member is a partner, director, officer, board member, or trustee of a person who has a financial interest in a person to whom the matter relates. Whether it actually comprises an interest depends on whether it is significant enough to be reasonably regarded as likely to influence decision-making. For example, a member may be a trustee or director of an investment business that invests with a party dealing with the entity. As the business will have a financial interest in the participant, the member as an officer of the investment business is likely to be interested. 

Certain exceptions are provided in s62(3) of the CEA, including where the member is a member or officer of a subsidiary, or where the interest is so remote or insignificant that it cannot reasonably be regarded as likely to influence the member in carrying out their responsibilities. 

Making judgements 

The Auditor-General’s guide Managing conflicts of interest: A Guide for the public sector provides useful discussion to help in making judgements in respect of interests: see Managing conflicts of interest: A guide for the public sector — Office of the Auditor-General New Zealand (

Any family connection could give rise to an interest where there is a reasonable apprehension of bias, e.g. if a member has a close relative who may be personally affected by a non-financial decision of the entity that could lead to a conflict for the member. 

A member may have an interest in matters affecting the interests of a friend; someone with whom the member has a close and reasonably long-standing relationship with demonstrable intimacy. If such a relationship existed, that could create strong perceptions of a conflict of interest.

General acquaintanceship, such as a shared involvement in professional or sporting associations, would rarely create an interest. Overlapping directorships, for instance, could mean a member is interested, especially where a relationship is long term or a close collegiality has developed. Where a member’s business partner has acted as an advocate, adviser or material witness in a matter being considered by the entity, the member is likely to be seen as having an interest. 

Where someone had a close association with a business for a significant period before becoming a board member, there may well be a strong perception of a continuing interest even after ending all associations. There is no set time period which establishes remoteness but ending a long business relationship is unlikely to immediately make that interest so remote as to be irrelevant in assessing whether a conflict of interest exists. 

Having a definite point of view about a question of law or legislative interpretation of a policy would not give rise to an interest, nor would prior knowledge of circumstances which are in issue. However, a publicly-stated opinion indicating that the member’s mind is firmly made up on a particular issue could raise issues of apparent pre-judgement and, therefore, the likelihood of a conflict of interest. 

Active involvement by board members in external organisations which lobby or seek government funding is a sensitive matter. Its acceptability would depend on a board member’s role within the organisation concerned and the relationship of that organisation with the Crown entity’s area of responsibility. Board members must ensure that they do not let advocacy of particular interests override or undermine their governance responsibilities or duties as members.  

Disclosing interests 

Prior to appointment, prospective board members will have disclosed in writing the nature and extent of their interests in matters relating to the entity (s31 CEA). Following appointment to a board, members must disclose any interests to the chair as soon as practicable after they become aware of the interest (s63 CEA). 

Members can make a 'standing disclosure' if they have an ongoing interest in a matter which could be the subject of regular discussion by a board, supplemented by a declaration of interest in other matters before the board, as they arise. 

Failure to disclose an interest is a serious matter. It may be a breach of a member’s duties under the CEA and could result in removal from the board. 

Registering and reviewing interests 

Section 64 of the CEA requires that all interests, however disclosed, must be entered into a register of members’ interests. Entries in the register must state the nature and extent of the interest including, where appropriate, its monetary value. Staff who support the board's work need to be aware of all interests disclosed in the register so that they do not give members information relating to a matter on which they have declared an interest. 

Where a member has declared a specific or standing interest in a matter under consideration by a board, this must be recorded in board minutes. All members’ interests should be actively reviewed at each meeting of the board so they can be considered in relation to the matters on the agenda. 

Interests held by a member or his/her family or friends will almost certainly change over time, as will the issues with which an entity deals. Members need to review their interests regularly, update their disclosures, and add or remove the interest to or from the register as soon as the circumstances require it.  

Crown entity board members have a collective obligation to be aware of their colleagues' interests. A board must notify the responsible Minister if it becomes aware that a member has not disclosed an interest, or has taken part in board discussions or decisions despite being conflicted in a matter. 

Managing conflicts of interest 

  • Appropriate action must be taken by the board on the involvement of any member who has declared a conflict. 
  • Generally, a member who is conflicted on a matter before the board: 
  • must not vote or take part in any discussion or decision of the board or any committee relating to the matter, or otherwise participate in activity that relates to the matter 
  • may excuse themselves from a meeting during discussions on an issue where they have a conflict of interest 
  • must not sign any document relating to entry into a transaction or the initiation of the matter 
  • is to be disregarded for the purpose of forming a quorum for that part of a meeting during which a discussion or decision relating to the matter occurs or is made. 

Board members and entity staff must be conscious of any particular requirements relating to conflicts in legislation relating to their entity. For example, for specific skills, knowledge and experience required for appointment to the Board in s12 of the Pae Ora Act 2022 the broader criteria in s29 of the CEA. 

Placing an interest in a blind trust is not enough on its own to avoid a conflict. It would be unlikely to establish sufficient remoteness to avoid what would be regarded as an interest until a period of time has passed. The perception will remain that the member has an interest which could influence decision-making unless a professional and disinterested trustee is appointed with the power to trade trust assets. 

Conflicts can be further managed in various ways. For instance, an agreement by the member to divest the interest (e.g. selling shares or putting them into a trust arrangement), to sever the connection that causes the interest (e.g. relinquishing membership of an organisation), or a mutual decision that the interest affects only a narrow part of the board's operations. 


Section 68 of the CEA provides for a member to take part in discussion or decision-making relating to a matter in which they have declared an interest, by enabling the chair or deputy chair to give prior notice in writing to the board that one or more members, or members with a specified class of interest, may do anything otherwise prohibited under s66. The permission to act can be amended or revoked.

'Specified class of interest' is not defined in the legislation but could be taken to refer to any class of interest that the chair specifies in a notice to the board. It is a broad power: it probably would, for example, allow the Chair of the Securities Commission to permit (subject to conditions) all the members of that Commission who have shares in listed companies to form part of a quorum when the Commission considers applications for exemptions in respect of listed companies. 

A member who has disclosed any possible influences on their participation in the entity's activities can take part in a board discussion where the connection is so remote or insignificant that it cannot reasonably be regarded as an interest likely to influence the member in carrying out their responsibilities. 

[1]Managing conflicts of interest: A guide for the public sector. Office of the Auditor-General

Summary: Members’ interests and conflicts: identification, disclosure and management 

At a minimum a good governance manual should cover: 

  • the fact that interests, if not disclosed, registered and managed properly, have the potential to lead to conflicts that will undermine decisions taken by a board and the confidence held by stakeholders in the actions of the entity 
  • the importance of board members taking a broad and honest approach to identifying their interests and when considering potential conflict of interest situations 
  • the need for both perceived and real interests to be identified 
  • the importance of fully exploring ways to manage an interest, looking beyond compliance with legal requirements to whether anything more needs to be done 
  • any legislative requirements specific to the entity relating to conflicts of interest 
  • the process by which board members must declare their interests to the chair. This should include: 
  • both standing disclosures and specific interests 
  • the need for declarations to be recorded in board minutes 
  • the need for all interests to be recorded in the board’s register of members’ interests, including the nature and extent of the interests, and where appropriate, their monetary value 
  • the processes and mechanisms for managing a declared interest, including: 
  • how the board and entity staff will preclude a member’s access to information on any declared interests 
  • how the board will preclude a member’s participation in matters relating to any declared interests 
  • the process for members to keep their interests under regular review, and making amendments to previously declared interests if required.