Section 175 of the Companies Act 2006 requires a director to “avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company”. An actual or potential conflict can be authorised by the Board (in the case of a public company, the articles of association must expressly allow the Board to give the authorisation).
Generally, a director being a member of the company’s defined benefit pension scheme will not be reasonably regarded as likely to give rise to a conflict of interest. The situation is different if the director is also a trustee of the pension scheme, and in that case the Board will need to consider and if thought fit authorise the director in relation to any potential conflict between his role as a director and his role as a pension scheme trustee.
What if a director is already in receipt of his pension from the company’s pension scheme? This will not often arise, but it did recently at Thomas Cook Group plc.