Definition
In the realm of corporate governance mandated by the Companies Act, a connected person refers to individuals or entities with a close association to a company director, which must be disclosed to prevent conflicts of interest. These include direct family members like a spouse, child, or stepchild (particularly those under the age of 18), as well as bodies corporate where the director might wield influence, trustees of trusts benefiting the director, and business partners directly linked to the director’s ventures.
Context and Importance
Diving into the legislative seas, the term ‘connected person’ plays a pivotal role like the North Star guiding sailors; it lays down the compass for disclosure, ensuring every stakeholder understands who might steer the company ship beneath the surface. This transparency helps shield companies from the turbulent waves of mismanagement or conflicts of interest, ensuring they sail smoothly in the sea of commerce.
Case In Point
Imagine a director, let’s call him Captain Compass, whose spouse owns a significant share in a rival company, SailSmooth Ltd. Under the Companies Act, this cozy relationship must be disclosed faster than one can say “ship ahoy!” This prevents the Captain from possibly navigating company decisions that could peculiarly favor SailSmooth, thereby promoting fair winds in corporate governance.
Related Terms
- Disclosure Requirements: Rules mandating that certain information be shared, aimed to enhance transparency.
- Conflict of Interest: Situations where personal interests could unduly influence one’s professional duties.
- Corporate Governance: Framework of rules, practices, and processes by which a company is directed and controlled.
- Body Corporate: A legal entity created by a process of statutory registration, typically a company or corporation.
Suggested Further Reading
- “Company Law” by Brenda Hannigan - An in-depth exploration of corporate frameworks, offering insights into the governance and legal aspects of operating a business.
- “Conflict of Interest in the Professions” by Michael Davis and Andrew Stark – A deep dive into conflicts of interests in various professional settings, with a focus on prevention and management strategies.
Add a pinch of humor to your corporate governance diet with this read, as you decode the complexities of companies and clans with none other than Penny Wise, signing off this adventurous exploration with a cheeky reminder: Knowing your connected persons is like knowing the ingredients in your dish — it makes it easier to swallow!
