What is the first step in addressing a conflict of interest?

• A. Make full and complete written disclosure of all relevant facts to the board.
• B. Obtain specific authorization from the board in writing before proceeding with any action.
• C. Record the authorization in the minutes of the board meeting.
• D. Even after full disclosure, avoid any actions which are—or may be perceived as—a conflict of interest.

Answer: (A)

Disclose the conflict in writing to the board with all relevant facts. Making a full, written disclosure first is essential because it surfaces potential self-dealing to the people charged with fiduciary duty, ensuring transparency and giving the board a clear basis to assess risk and decide how to proceed. Once the conflict is disclosed, the board can determine whether a formal authorization is required or other steps are needed; minutes can then reflect any action taken. Even after disclosure, actions that could be a conflict should be avoided unless the board explicitly authorizes them and documents that decision, but the critical starting point is the thorough written disclosure.