Sixth Form Colleges - The Importance Of Managing Conflicts Of Interest

• Published date: 21 July 2020
• Subject Matter: Corporate/Commercial Law, Consumer Protection, Charities & Non-Profits , Corporate Governance, Education
• Law Firm: Wrigleys Solicitors
• Author: Ms Fiona Wharton

This article touches on governance, charity law and conflicts.

Good governance

The good management of conflicts of interest is key evidence of a college with good management systems in place. Good governance has long been considered to demonstrate a robust organisation, and the converse the opposite. In times of pressure it is equally important for good governance to continue to be at the forefront of the minds of governors to help navigate a clear path.

Definition

A conflict of interest is a situation where the personal interests or loyalties of an individual governor or trustee, or senior college staff member, could influence or affect their decision making. It need not result in a financial benefit being gained by the individual. A governor or trustee must not put themselves in a position where personal interests conflict, or appear to conflict, with the interests of the college.

Charity law

Sixth form colleges run by corporations and academy trusts are exempt charities. The governors of a corporation or the trustees of an academy trust are trustees for the purposes of charity law. The trustees of exempt charities have a legal duty to act in the best interests of their organisation and have fiduciary duties, in other words a duty of care to their charity under charity law. This duty of care includes avoiding, or managing, potential, actual or, indeed potentially perceived, conflicts of interest.

Sector guidance on conflicts of interest

The issue of conflicts of interest is highlighted in all the governance codes appropriate to the college sector: the Charity Governance Code, the UK Corporate Governance Code and the Code of Good Governance for English Colleges. While a corporation is required by its funding agreement to adopt one of these codes, both corporations and academy trusts must make an annual corporate governance statement. The adoption of and reporting against a code can therefore be a useful tool in evidencing compliance with good governance principles, including the effective management of conflicts of interest and loyalty.

Further, as organisations in receipt of public money and holders of notable locally based assets, colleges must comply with the accepted principles of public life, being the Nolan principles of selflessness, integrity, objectivity, accountability, openness, honesty and leadership. Governors or trustees have a duty of care to exercise skill and diligence in the exercise of their duties so that the corporation or academy...