Wagon Wheels Limited (WWL) is a private company limited by shares. WWL has three directors, Pauline (Managing Director), John (Finance Director) and Will (Sales and Purchasing Director).

The board will be discussing three matters at today's board meeting: the renewal of John's service contract, the purchase of a new computer system from a company wholly owned by Pauline's husband, and the purchase of stock from a new supplier, Heron Limited. Which ONE of the following statements is CORRECT?

Correct answer: (C)
John does not have to make a declaration of interest in relation to the award of his service contract due to the exception in s177(6)(c) Companies Act 2006.

The purchase of stock is likely to be related to Will's role but there is no indication that he has a personal interest in the transaction.

Pauline may have to make a declaration: she certainly has a personal interest in the contract with her husband's company but does not have to declare it if the other directors are already aware of her interest (s177(6)(b) CA06). We do not know whether this is the case so cannot say for sure if she is obliged to make a declaration.

Note that advice to clients is always that it is best practice to make a declaration in any event, but that is not the same as being under a legal obligation to make a declaration.