Conflict Of Interest Policy Template For Startups

Startups move quickly, and it's common for people around the business to wear a few hats. Your developer might have a side project, your adviser might invest in a supplier, or one of your directors might be connected to a company you're about to hire.

Most conflicts aren't a sign that anyone has done the wrong thing. The problem is when interests are hidden, handled inconsistently or dealt with too late.

A clear conflict of interest policy helps you set expectations early, make fair decisions and keep a paper trail if a question comes up later. This doesn't have to be complicated, but it should be practical enough for your team, board and advisers to actually use.

Do You Need A Conflict Of Interest Policy In Australia?

Yes, if your startup has employees, directors, advisers, contractors or investors who could influence business decisions, a conflict of interest policy is a smart legal and governance tool.

There's no single Australian law that says every startup must have a standalone conflict of interest policy. However, several legal duties can make conflicts a serious issue if they aren't managed properly.

For example:

• Directors have duties under the Corporations Act 2001, including duties to act with care and diligence, act in good faith in the best interests of the company, and avoid improperly using their position or information.
• Directors with a material personal interest generally need to disclose that interest to the other directors, unless an exception applies.
• Employees owe duties to your business, which can include duties of loyalty, confidentiality and following lawful and reasonable directions.
• Privacy laws may apply if you collect personal information in conflict declarations, especially if your business is covered by the Privacy Act 1988.
• Grant, investor or customer requirements may require written procedures for conflicts, procurement and related party dealings.

If you're searching for a conflict of interest policy template Australia-wide, the main thing to remember is this: a generic template can be a useful starting point, but it should be tailored to how your business actually makes decisions.

A two-person startup won't need the same process as a venture-backed company with a board, investor directors, contractors and formal procurement. Your policy should match your risk level without slowing every decision to a halt.

What Should A Conflict Of Interest Policy Template Include?

A good template should explain what counts as a conflict, how people disclose it, who decides what happens next and what records you'll keep.

Here is a practical outline you can adapt. Treat this as a fill-in structure, not a finished legal document. A lawyer should tailor it before you use it, especially if you have directors, investors, regulated clients or government contracts.

1. Purpose Of The Policy: Explain that the policy protects the business, supports fair decisions and helps people raise conflicts early.
2. Who The Policy Applies To: List employees, directors, advisers, consultants, contractors, interns and anyone else who can influence your business decisions.
3. What Counts As A Conflict: Cover actual, potential and perceived conflicts, with examples that fit your business.
4. Disclosure Rules: State when and how people must disclose a conflict, such as before a decision is made or within a set number of business days of becoming aware of it.
5. Approval Process: Name who reviews disclosures, such as a founder, manager, CEO, board chair or the non-conflicted directors.
6. Management Options: Set out what the business can do, such as approve the conflict with conditions, exclude someone from a decision, change reporting lines or decline the arrangement.
7. Record Keeping: Explain where declarations, approvals and meeting minutes will be stored, and who can access them.
8. Confidentiality And Privacy: Make clear that disclosures will be handled carefully, but may need to be shared with people who are responsible for managing the conflict.
9. Consequences Of Breach: Link the policy to your employment contracts, contractor agreements, board documents or disciplinary process.
10. Review Date: Say when the policy will be reviewed, such as annually or after a major funding round, restructure or new procurement process.

Try to avoid language that sounds impressive but is hard to apply. If your team can't tell whether they need to disclose something, the policy isn't doing its job.

How Should Staff Disclose Side Hustles And Supplier Relationships?

Staff should disclose side hustles, investments, family connections and supplier relationships if they could affect, or appear to affect, their work for your business.

This is often where an employee conflict of interest policy becomes useful. You don't need to ban every outside activity. In fact, many startup employees have useful networks, freelance history or small side projects. The risk is where those interests compete with your business, use your confidential information or influence workplace decisions.

Side Hustles

Your policy can require staff to disclose outside work where it:

• Competes with your business or targets the same customers
• Uses your code, designs, processes, data, contacts or confidential information
• Affects the employee's ability to perform their role
• Creates a risk that customers or suppliers will be confused about who they're dealing with
• Involves work during paid working hours or using company equipment

Be careful with blanket bans. In many cases, you can manage the risk with written approval and conditions, such as no use of company materials, no contact with your customers, and no work during business hours. The right approach depends on the role, your industry and the actual risk.

Supplier And Customer Relationships

Your policy should also cover situations where an employee or manager has a personal connection to a supplier, customer or referral partner.

For example, say Priya runs a SaaS startup in Melbourne. Her operations manager wants to engage a design agency for a website refresh. The agency is owned by the manager's brother and has quoted $18,000. That doesn't automatically mean the agency can't be used. But Priya should require the manager to disclose the relationship, step back from the selection decision, and keep records showing why the agency was or wasn't chosen.

A practical policy might require at least 3 quotes for supplier engagements over a set internal threshold, such as $10,000, and approval from someone who isn't connected to the supplier. That threshold is a business rule you choose, not a legal rule, but it can make decisions much easier to defend.

How Do You Manage Director And Board Conflicts?

Director conflicts need a more formal process because directors have legal duties to the company under the Corporations Act 2001.

In a startup, director conflicts often come up when a director:

• Invests in or works with a supplier, competitor or customer
• Has shares in another company your startup wants to partner with
• Is also a director of an investor, parent company or related business
• Wants the company to enter into a contract with their family member or business associate
• Receives a personal benefit from a transaction being approved

Under the Corporations Act, a director who has a material personal interest in a matter that relates to the affairs of the company generally needs to give notice of that interest to the other directors, unless an exception applies. The company constitution and any shareholders agreement may also set extra rules.

For proprietary companies, the rules about whether an interested director can vote may depend on the constitution, replaceable rules and how the interest has been disclosed. For public companies, the restrictions are stricter. If your startup has investor directors, a board charter or plans to raise capital, it's worth getting advice on the wording.

A Practical Board Process

Your director conflict process can be simple, but it should be documented. A good process is:

1. The director discloses the interest before the board discusses or decides the matter.
2. The disclosure is recorded in the board minutes, a directors' resolution or a conflicts register.
3. The non-conflicted directors decide whether the director can receive papers, join the discussion or vote.
4. Any approval conditions are recorded clearly.
5. The company checks the constitution, shareholders agreement and any investor documents before finalising the decision.

For example, if your director owns 10% of a company that wants to supply software to your startup, your board might record the interest, ask that director to leave the room for the discussion, obtain competing quotes, and have the remaining directors decide whether to proceed.

What Should Be In A Conflict Of Interest Declaration Form?

A conflict of interest declaration form should capture the key facts, the person's proposed involvement and the decision made by your business.

The form doesn't need to be long. In practice, a one or two page form is often enough if it asks the right questions. You can use it when someone joins the business, when a new conflict comes up, and as part of an annual declaration process.

Your form should usually include:

• Name And Role: Who is making the declaration and what influence do they have?
• Type Of Interest: Is it a side business, family connection, shareholding, directorship, advisory role, referral fee, gift or other benefit?
• Details Of The Conflict: What is the relationship, who is involved and how might it connect to your business?
• Timing: When did the person become aware of the conflict, and is a decision already pending?
• Potential Impact: Could the interest affect hiring, purchasing, pricing, customer work, product decisions or access to confidential information?
• Proposed Management Plan: Should the person be excluded from a decision, have access restricted, stop the outside activity or follow conditions?
• Approval Outcome: Who approved it, when, and on what terms?
• Signatures Or Acknowledgement: The person confirms the information is accurate and agrees to follow the decision.

Make sure the form doesn't ask for more personal information than you need. If you collect personal information, store it securely and only share it with people who need it to manage the conflict. If your business is covered by the Privacy Act 1988, your handling of this information should fit with your privacy policy, data retention rules and internal access controls.

How Do You Roll Out And Enforce The Policy?

You should roll out the policy in writing, explain it in plain English and connect it to the contracts and governance documents your people already follow.

A policy sitting in a folder won't help much if nobody knows when to use it. The aim is to make disclosure feel normal, not dramatic.

Rollout Steps

1. Approve The Policy Internally: Have the founders, CEO or board approve the final version, depending on your structure.
2. Update Related Documents: Check your employment contracts, contractor agreements, adviser agreements, confidentiality documents, board charter, shareholders agreement and any AI governance policy that affects decision making.
3. Give The Policy To Your Team: Ask employees and contractors to acknowledge that they have read it and will follow it.
4. Collect Initial Declarations: Ask relevant people to disclose current outside roles, investments, related party relationships and side businesses.
5. Create A Conflicts Register: Keep a secure record of declarations, approvals, conditions and review dates.
6. Review It Regularly: Annual declarations are common, but you may need updates when roles change, new suppliers are engaged or new investors come in.

If Something Has Already Gone Wrong

If you discover a conflict after a decision has been made, deal with the records first. Gather the contract, emails, meeting notes, approvals, invoices and any relevant messages before you start making decisions.

Then work through these steps:

1. Identify who knew about the conflict and when.
2. Check whether any policy, contract, director duty or board rule was breached.
3. Assess whether the business suffered a practical loss, such as overpaying a supplier or sharing confidential information.
4. Decide whether the arrangement can continue with conditions, needs to be renegotiated or should be ended.
5. Get tailored advice if a director is involved, the value is significant, confidential information has been misused or employment action may be needed.

For employees, any enforcement should be fair and consistent. If disciplinary action is on the table, check the employment contract, workplace policies and your obligations under the Fair Work Act 2009 before acting.

Key Takeaways

• A conflict of interest policy helps your startup manage outside roles, personal interests and related party dealings before they become disputes.
• Your policy should cover employees, directors, advisers and contractors, with clear disclosure and approval steps.
• Side hustles don't always need to be banned, but they should be disclosed if they compete with your business or create confidentiality risks.
• Director conflicts need extra care because the Corporations Act 2001, your constitution and your shareholders agreement may all affect the process.
• A simple declaration form and conflicts register can make your decisions much easier to explain later.
• Templates are useful starting points, but your policy should be tailored to your team, board structure, investors and supplier arrangements.

If you'd like help with your conflict of interest policy, declaration forms, director approval process or related employment and contractor documents, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.