Can a director vote on a matter they are interested in

Usually not, unless the articles or the shareholders allow it. Under article 14 of the model articles for private companies, a director interested in an actual or proposed transaction or arrangement with the company is not counted in the quorum or the vote on it, unless the shareholders have disapplied the rule by ordinary resolution, the interest is unlikely to cause a conflict, or it falls within a permitted cause. Separately, the Companies Act 2006 itself excludes interested directors when the board authorises a conflict under section 175, and that rule cannot be relaxed by the articles.

Where do the voting rules come from?

Mostly from the articles. The Companies Act requires a director to declare an interest in a proposed transaction with the company (section 177), but it does not say whether the director may then vote. The explanatory notes to the Act (paragraph 354) state that conflicted directors may, subject to the company’s articles, take part in decisions on such transactions. Declaring is covered in declaring an interest in a proposed transaction; this page deals with what happens at the vote.

Which articles apply depends on the company. Companies incorporated under the 2006 Act use the model articles unless they adopted their own. Older companies are usually governed by the version of Table A in force when they were incorporated; Companies House guidance confirms later versions do not affect them. Many companies have bespoke articles that replace both, so always read the actual articles filed at Companies House.

What does model article 14 say?

Article 14(1) of the model articles for private companies limited by shares says that if a proposed decision of the directors is concerned with an actual or proposed transaction or arrangement with the company in which a director is interested, that director is not counted as participating for quorum or voting purposes. Article 14(3) then lets the director count in three cases:

• the company has, by ordinary resolution, disapplied the provision that would otherwise exclude the director;
• the director’s interest cannot reasonably be regarded as likely to give rise to a conflict of interest; or
• the conflict arises from a permitted cause.

The permitted causes in article 14(4) are a guarantee given by or to a director for an obligation of the company or a subsidiary; subscribing for, or underwriting, shares or other securities of the company or a subsidiary; and employee benefit arrangements that do not give directors special benefits. Article 16 of the model articles for public companies is in almost identical terms.

The restriction reaches beyond the vote itself. Under article 8, a unanimous decision without a meeting can be taken only by directors who would have been entitled to vote, and not at all if those eligible directors would not have formed a quorum. Under article 13(2), a chair who is excluded from counting also loses the casting vote.

Who decides whether a director can vote?

If a question arises at a board or committee meeting about a director’s right to count for quorum or voting, article 14(6) lets it be referred to the chair before the meeting ends, and the chair’s ruling on any other director is final and conclusive. If the question concerns the chair, article 14(7) requires the other directors to decide it, with the chair not counted.

Why does this cause quorum problems?

Under model article 11(2), the quorum for board meetings is two unless the directors fix a higher number, and it can never be less than two. In a company with two directors, excluding one interested director leaves only one who counts, so no quorum, and article 11(1) then prevents any vote except a proposal to call another meeting. The same arithmetic catches larger boards where several directors share the interest, for example when they all hold shares in the counterparty.

A company with a single director is different. Article 7(2) disapplies the collective decision making rules where the company has only one director and nothing in the articles requires more, so the sole director can decide without regard to the provisions on directors’ decision making. See sole director decisions.

How can the shareholders or the articles relax the rule?

There are three main routes.

1. An ordinary resolution under article 14(3)(a). The shareholders can disapply the exclusion by simple majority (section 282). The resolution can be framed for a particular transaction or more generally.
2. Amending the articles. A company can change its articles by special resolution, which needs at least 75% (sections 21 and 283), for example to let a director vote on any transaction once they have declared their interest. Section 180(4)(b) provides that where the articles contain provisions for dealing with conflicts of interest, the general duties are not infringed by anything done in accordance with them, and section 232(4) confirms articles can make provision previously lawful for dealing with conflicts.
3. Shareholder approval of the transaction itself. Some transactions need member approval anyway, such as long service contracts under section 188. See amending articles of association for the process.

Which rules cannot be relaxed?

Two statutory rules apply whatever the articles say.

Authorising a conflict under section 175. Board authorisation of a situational conflict, such as a director taking up a business opportunity, is effective only if the quorum is met without counting the director in question or any other interested director, and the matter was agreed without their votes or would have been agreed if their votes were not counted (section 175(6)). In a private company the board can authorise unless the constitution invalidates it (section 175(5)(a)), but for companies incorporated before 1 October 2008 that power applies only if the members have resolved that it may be used. See directors’ conflicts of interest.

Ratifying a breach under section 239. A resolution to ratify a director’s breach of duty is passed only if the necessary majority is obtained disregarding votes in favour by the director, if a member, and members connected with them. On a written resolution they are not eligible members. They may still attend, count towards the quorum and take part in a meeting.

How do the older Table A rules differ?

Companies with the 1985 Table A have a stricter test. Regulation 94 prevents a director voting on any resolution concerning a matter in which they have, directly or indirectly, a material interest or duty that conflicts or may conflict with the company’s interests, subject to exceptions for guarantees, security and indemnities connected with company obligations, subscriptions and underwriting, and certain other cases. Regulation 95 excludes the director from the quorum on that resolution. Regulation 96 lets the company, by ordinary resolution, suspend or relax the prohibition to any extent, generally or for a particular matter. Regulation 97 allows proposals to appoint two or more directors to offices to be split, so each director votes on the others but not on their own appointment, and regulation 98 gives the chair the final ruling on any other director’s right to vote. The quorum under regulation 89 is two unless fixed otherwise.

How does this work in practice?

Illustration only. Elm Street Ltd has the model articles and two directors, Ann and Ben, who each own half the shares. The company plans to lease a unit owned by Ann’s husband. Ann declares the nature and extent of her indirect interest under section 177.

• Under article 14(1), Ann does not count for quorum or voting. Only Ben counts, so the board is inquorate and cannot approve the lease.
• The shareholders pass an ordinary resolution disapplying article 14(1) for this lease. Nothing in article 14 stops Ann voting her shares on that resolution, and with both shareholders in favour it passes.
• The board then meets, both directors count, and the lease is approved. The minutes record Ann’s declaration, the shareholders’ resolution and the decision. Article 15 requires the record to be kept for at least 10 years.

If the issue had been Ann setting up a competing business, a situational conflict under section 175, a shareholder resolution under article 14 would not help with board authorisation, because section 175(6) still excludes her from the quorum. Authorisation would then need to come from the shareholders.

What mistakes do boards make?

• Treating a declaration of interest as permission to vote. Declaring and voting are separate questions.
• Forgetting that a two director board is inquorate once one director is excluded.
• Assuming the model articles apply when the company has Table A or bespoke articles.
• Using a unanimous written decision to sidestep the rule, when article 8 counts only eligible directors.
• Relying on an article 14 resolution for a section 175 authorisation, which the statute does not allow.

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Related Accountapedia entries

• Non voting shares: how they work
• Settlor interested trusts
• HMRC’s view of the matter letter
• Emphasis of matter and other matter paragraphs
• Proxies and voting at general meetings

Related cover: Directors and officers liability insurance and Management liability insurance.

Sources

• legislation.gov.uk: Act 2006 c. 46, section 177
• legislation.gov.uk: Act 2006 c. 46
• GOV.UK: Model articles of association for limited companies
• legislation.gov.uk: SI 2008/3229, schedule 1
• legislation.gov.uk: SI 2008/3229, schedule 3
• legislation.gov.uk: Act 2006 c. 46, section 282
• legislation.gov.uk: Act 2006 c. 46, section 21
• legislation.gov.uk: Act 2006 c. 46, section 283
• legislation.gov.uk: Act 2006 c. 46, section 180
• legislation.gov.uk: Act 2006 c. 46, section 232

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.