Conflicts of interest and trimmed fiduciary duties

In a recent post to his Conflict-of-Interest.Net blog (which is mostly about COIs in the university context), Prof Bryn Williams-Jones of the Université de Montréal writes about a story from earlier this year regarding “changes to [a certain university’s] COI bylaw for its board of governors; the critique being made by the University is that student representatives on the board were in a COI when discussing issues of student tuition. What’s odd about this move is that it seems to assume that all members of the board are neutral with regards to all subjects. And so because students can’t be neutral about issues regarding students, then they probably shouldn’t be on the board. The problem, though, is that the very reason that students are and should be representatives on boards or committees of various sorts, is to represent student interest – they are explicitly not disinterested, nor should they be!”

This is a good point, and there are indeed other situations like the one with the board of governors where interests can differ but are not seen as conflicting, for the very reason that the individuals in question are not seen as representing all relevant parties.  One example occurs with the boards of joint ventures – where a JV’s owners typically waive their respective fiduciary duties of loyalty with regard to JV board members.

However, when going down this path – not only in the board context, but in any other involving what might be called a trimmed fiduciary duty – it is critically important to have clear governance documentation, to avoid the type of confusion of which Prof. Williams-Jones writes.