BOT 103: Board of Trustees Conflict of Interest Policy
POLICY NUMBER: BOT 103
POLICY NAME: Conflict of Interest Policy
| Effective Date: | December 6, 2006 |
| Last Review Date: | October 25, 2024 |
| Next Scheduled Review Date: | October 2029 |
I. POLICY STATEMENT
This policy clarifies the parameters surrounding actual and potential conflicts of interest for members of the Board of Trustees. The policy includes an affirmation of a trustee’s fiduciary responsibilities to the University and outlines how actual or potential conflicts of interest are to be managed and disclosed.
II. RESPONSIBLE OFFICE
The Secretary and Chief of Staff to the Board of Trustees (“secretary) and the General Counsel are responsible for advising trustees on this policy.
III. SCOPE
This policy applies to members of the Board of Trustees.
IV. DEFINITIONS
Duty of Care: Requires governing board members to carry out responsibilities in good faith and with the level of diligence, care, and skill which ordinarily prudent persons would reasonably exercise under similar circumstances in like positions. Accordingly, a board member must act in a manner that they reasonably believe to be in the best interests of the institution.
Duty of Loyalty: Requires governing board members to act in good-faith and in a manner that is reasonably believed to be in the interests of the University and its public purposes rather than their own interests or the interests of another person or organization. The governing board member must not act out of expedience, avarice, or self-interest.
Duty of Obedience: Requires governing board members to ensure that the University is operating in furtherance of its stated purposes, operating in compliance with the law, and acting in accordance with its own policies and governing documents.
Fiduciary: A fiduciary relationship is one of trust or confidence between parties. A fiduciary is someone who has special responsibilities in connection with the administration, investment, monitoring, and distribution of assets of the University, including land, infrastructure, funding, reputation of the institution, and its role in the community. Governing board members, as fiduciaries, act in accordance with the duties of care, loyalty, and obedience.
Gift: Any gratuity, favor, accommodation, discount, entertainment, hospitality, loan, forbearance, services, training, transportation, lodging, meals, kickback, or other items if there is reason to believe it was given to or received by a trustee or a trustee’s family member due to the trustee’s official status.
V. POLICY
The people of Michigan, through the State Constitution, established the Board of Trustees of Michigan State University and granted the board general supervision of the University. “The Constitution confers upon the Board of Trustees the freedom, power, and responsibility to develop a free and distinguished university and to promote the welfare of mankind through teaching, research and public service.” Preamble, Michigan State University Board of Trustees Bylaws. In carrying out its public trust, the Board of Trustees has adopted this policy to enhance public confidence in the board.
1.Fiduciary Responsibilities. Trustees will act in a manner consistent with their fiduciary responsibilities to the University. As fiduciaries, trustees have a duty of care, a duty of loyalty, and a duty of obedience to the University. Trustees will place the University’s interests ahead of their private interests. Trustees will exercise their powers and duties in the best interests of the University and for the public good.
2.Conflict of Interest.
(b) A conflict of interest can arise due to the indirect personal financial interests of a trustee that may occur through relationships with third parties such as a trustee’s immediate family, business relationships, fiduciary relationships, professional interests, or investments.
(c) Trustees will remain free from the influence of, or the appearance of, any conflicting interest in fulfilling their board duties. Trustees will exercise care that no detriment to the University results from conflicts between their interests and those of the University.
(d) Trustees will refrain from accepting duties, incurring obligations, or engaging in activities that would be incompatible with, or in conflict with, their board duties.
4. Use of Authority/Information. Trustees will not use their positions, or any privileges or information attendant to their offices, to obtain or provide others with a benefit that is inconsistent with the University’s interests.
5. Outside Influence. No trustee will solicit or accept any gift, loan, or other thing of value, or the promise thereof in the future, from anyone outside the University, which would tend to influence improperly the manner in which the trustee performs their duties.
6. Competition with University. No trustee will knowingly compete with the University for any property, asset, or opportunity, which may be of interest to the University, unless the University has been informed of the opportunity on a timely basis and has declined to act on it. If a trustee may plan to act on the opportunity should the University decline to do so, the trustee will not be part of any University decision to decline the opportunity.
7. Diversion of Opportunity. No trustee will divert to another individual or entity an opportunity which may be of interest to the University, unless the University has been informed of the opportunity on a timely basis and has declined to act on it.
8. Disclosure of Conflicts. Trustees will sign an annual conflict of interest disclosure statement which certifies that, at the time of signing, the trustee is aware of their affirmative duty to disclose any conflicts of interest and is unaware of any material conflict of interest between their private interests and those of the University at the time of signing. If in the course of their duties a potential conflict of interest arises the trustee shall promptly and fully disclose the details of the potential conflict to the secretary and shall refrain from participating in any way in the matter to which the conflict relates until the conflict question has been resolved. This recusal is required for an identified conflict of interest or even the appearance of a conflict of interest. The secretary shall inform the Chair of the Audit, Risk, and Compliance Committee and the General Counsel of all conflict of interest concerns which have been disclosed to the secretary.
9. Trustees Emeriti. Trustees Emeriti must not disclose any privileged or confidential information that they acquired acting as a board member, This provision extends after their term as a board member expires. Trustees Emeriti may not enter into a new or expanded business relationship with the University for a period of one year following the end of their term of office. This section applies to those trustees who leave the board without obtaining Trustee Emeritus status.
10. Interpretation. This Policy is to be interpreted and applied in a manner that will best serve the interest of the University.
VI. PROCEDURES
1. Determining Conflicts. The opinion of the General Counsel will be final with regard to determining compliance with this Policy. The General Counsel uses a ‘reasonable observer' threshold in determining compliance as described below:(a) If a reasonable observer, having knowledge of all the relevant facts and circumstances, would conclude that a trustee has an actual or potential conflict of interest in a matter related to the University, then a conflict of interest is determined to exist.
2. Addressing Conflicts. If it is determined that a conflict of interest exists, the Chair of the Audit, Risk, and Compliance Committee, the secretary, and the General Counsel shall work with the affected trustee to address the conflict and explore arrangements that would resolve or manage the conflict. If after reasonable efforts, it is not possible to reach a mutually acceptable alternative arrangement, the transaction shall be prohibited.
3. Violations. If a trustee fails to disclose a conflict of interest or a conflict is otherwise discovered after the fact, the matter shall be forwarded to the Office of Audit, Risk, and Compliance and General Counsel for review and corrective action.
VII. RELATED POLICIES AND INFORMATION
This Policy is in addition to any obligations imposed on a trustee by the State law on conflicts of interest, P.A. 1968, No. 317, MCL 15.321 et seq.
VIII. HISTORY
Enacted: December 6, 2006
Amended: May 15, 2020
October 25, 2024
Retired Policy No. 01-01-10