Thursday, 6 October 2011

AirAsia & MAS: conflict of interest?

A long and interesting article from the Wikipedia website about the Board of Directors, their powers, duties and responsibilities, etc.

One paragraph in particular looks interesting:

"Competing with the company
Directors cannot compete directly with the company without a conflict of interest arising. Similarly, they should not act as directors of competing companies, as their duties to each company would then conflict with each other."

On August 11, 2011 Tony Fernandes, Group CEO of AirAsia, was appointed director of Malaysia Airline System, the direct competitor of AirAsia. Is there no conflict of interest there?

Whenever angel investors invest in a company they will put in special conditions for the founders: founders are not allowed to work for another company, they are not allowed to invest in another company in the same industry and after quitting the curent company they are not allowed to work in the same industry for a few years. All will be written down in the shareholders agreement and the employment contract with the founders. To balance things out, angels often promise not to invest in other companies in the same industry without prior permission.

To me these rules are completely normal and generally accepted, I never had any problem dealing with founders regarding the above, I never met a founder who had problems with these restrictions.

But when companies are a thousand times larger (like AirAsia and MAS) these restrictions don't apply anymore?

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