Why Board Conflicts Matter Even in a Small Business

You may think boardroom conflicts are a concern only for large technology companies, venture capital firms, or publicly listed corporations. For a Malaysian SME, the issue can appear in a much simpler form: an adviser serving two competing businesses, a shareholder receiving sensitive updates from multiple companies, or a director helping one supplier while advising another.

These arrangements often start innocently. A trusted person may have useful experience, industry contacts, and a strong understanding of your operations. But as businesses grow, their products, customers, suppliers, and markets can begin to overlap. Information shared in one meeting may become relevant to another business without anyone intending to misuse it.

A recent report says the United States Department of Justice has been investigating board arrangements involving Andreessen Horowitz partners who sit on boards of companies that now compete with one another. The report discusses possible concerns under a US antitrust law that dates back more than a century. Read the source article.

TL;DR

When one person advises or directs competing businesses, confidential information and decision-making can become difficult to separate.

Your SME should identify conflicts early, document recusals, restrict sensitive information, and review board or adviser roles whenever your market changes.

What This Means

A board seat gives a person access to important company information and influence over decisions. That may include sales plans, customer lists, supplier terms, product roadmaps, hiring plans, operational problems, and expansion priorities.

If the same person sits on the boards of two businesses that compete, there is a potential conflict. The person may not intend to share information, but they still know information from both sides. Even the appearance of unfair access can damage trust between shareholders, customers, employees, and business partners.

This problem becomes more complicated because competition can develop over time. Two companies may begin in different markets, then introduce similar services, target the same customers, or use the same suppliers. A board arrangement that seemed harmless at the beginning may become unsuitable later.

The TechCrunch report describes this kind of changing boundary. Andreessen Horowitz partners Ben Horowitz and Martin Casado reportedly hold board positions at Databricks and Fivetran, companies that now compete in some areas. The report says the DOJ has been examining the arrangement for almost a year. Source: TechCrunch.

Key insight: A conflict is not defined only by bad intentions. It can arise whenever one person’s responsibilities make it difficult to protect two businesses fairly.

How This Applies to Malaysian SMEs

For a Malaysian SME, the most common example may involve a director who owns or advises several related companies. Imagine you operate a food distribution business while your director also advises another distributor serving the same restaurants in Selangor and Kuala Lumpur. That director could learn about your planned customer targets, delivery routes, supplier negotiations, and stock levels. Even if nothing is deliberately shared, the arrangement creates a clear governance concern.

Another example involves agencies and service providers. A digital marketing consultant may handle campaigns for two competing clinics, tuition centres, property agencies, or online sellers. If both clients are targeting the same audience, the consultant may see confidential campaign data from each business. You should not assume a verbal promise to “keep things separate” is enough. Define what information is confidential, who may access it, and what happens if the client base begins to overlap.

Family-owned SMEs also need to pay attention. A family member may sit as a director in your company while running a separate business. This is common and not automatically wrong. However, if both businesses buy from the same suppliers or sell similar products, you need a clear process for declaring interests. The interested director should not participate in decisions where their other business could benefit.

Technology creates another layer of risk. A software developer, automation consultant, or fractional chief technology officer may serve several businesses using similar systems. Your workflows, customer data structures, sales processes, and internal reports could reveal how you operate. Use role-based access and separate accounts so an external person receives only the information required for their assignment.

Malaysian SMEs should also consider local governance and competition obligations. The Competition Act 2010 is Malaysia’s main competition law, and the Malaysia Competition Commission, or MyCC, is responsible for enforcing it. See MyCC’s legislation resources. You should obtain professional legal advice for specific situations, especially where competing companies share directors, sensitive information, or commercial decision-making.

A Simple Risk Check for Your Business

Situation	Possible concern	Practical response
One adviser serves two competing companies	Confidential information may overlap	Use written confidentiality duties and separate meeting access
A director owns a supplier used by your company	Purchasing decisions may not be independent	Declare the interest and obtain independent quotations
A family member manages a similar business	Customers, staff, or suppliers may be diverted	Document related-party rules and approval procedures
An agency handles rival campaigns	Pricing, customer, and strategy data may mix	Separate accounts, files, teams, and access permissions
Your market expands into a partner’s market	An old arrangement may become unsuitable	Review the relationship whenever products or customers overlap

Practical Takeaways

• Create a conflict register: Record directors’ outside businesses, advisory roles, shareholdings, and close supplier or customer relationships.
• Ask for declarations regularly: Review conflicts at board meetings and whenever a major supplier, competitor, or investment decision arises.
• Record recusals: If someone has a conflict, note that they left the discussion and did not vote on the decision.
• Limit information access: Give advisers and directors only the documents needed for their role. Use separate folders, accounts, and permission groups.
• Use written agreements: Confidentiality, non-use, data handling, and conflict procedures should be documented rather than left to assumptions.
• Review advisers as your market changes: Revisit every important external relationship when you launch a new product, enter a new state, or target a new customer segment.
• Keep decisions evidence-based: Maintain quotations, meeting notes, evaluation criteria, and approvals for related-party purchases.
• Escalate serious concerns: Ask your company secretary, accountant, or lawyer for advice when a conflict involves competitors, substantial customer data, or control of strategic decisions.

How Automation Can Help

You do not need a complicated system to improve oversight. A shared conflict register can contain the person’s name, outside role, related business, date declared, affected decision, and action taken. Set a recurring review so the register is not forgotten after the first meeting.

Approval workflows can also help. When a purchase involves a related supplier, the system can automatically request an independent review before approval. When a director declares a conflict, the meeting record can capture the declaration and prevent the person from approving the related item.

Access controls are equally important. Your customer database, supplier records, payroll files, and sales pipeline should not be visible to every adviser or director by default. Assign access according to responsibility, review it when someone leaves, and keep an audit trail of important changes.

The Bigger Picture

The broader lesson is that governance must develop alongside your business. Informal trust may work when you have a small team and a narrow market. It becomes less reliable when you add directors, investors, advisers, branches, partners, and competing product lines.

The reported DOJ investigation also shows that regulators may pay attention to relationships that appear ordinary on the surface. The legal framework discussed in the report is US-based, so it should not be treated as a direct statement of Malaysian law. However, the management lesson applies broadly: overlapping responsibilities deserve review before they create suspicion or operational harm.

For you as an SME owner, good governance is not about producing paperwork for its own sake. It is about making sure decisions are fair, information is protected, and your business can explain how important choices were made.

Start with one practical step this week: list every director, adviser, consultant, and major shareholder, then identify their outside business interests. Next, mark where customers, suppliers, products, or systems overlap. That simple exercise can reveal conflicts while they are still manageable.

As your company grows, treat every new market, partnership, and product launch as a reason to revisit the list. A relationship that supports your business today should not quietly become a risk tomorrow.

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