Legal Definitions - interlocking director

An interlocking director is a member of the board of directors who serves on the boards of two or more corporations that have related interests or do business with each other. This can create potential conflicts of interest because the director may prioritize the interests of one company over another.

For example, if a director serves on the boards of two competing companies, they may have access to sensitive information about both companies that could be used to benefit one over the other. This is why some companies have policies that limit the number of interlocking directors they can have.

Another example is a director who serves on the boards of a company and a supplier or customer of that company. This director may be more likely to approve deals or contracts that benefit the supplier or customer, even if it is not in the best interest of the company they serve on the board for.