A councillor has a conflict of interest if their decisions as a councillor are, or may be seen to be, influenced by their personal interests.

A conflict of interest exists when a reasonable member of the public with the proper information would think that the conflict is unacceptable and might inappropriately influence a local government’s decision or action or lead to a decision that is not in the public interest.

Conflict of Interest falls into 2 categories:

Prescribed CoI – in this case a Councillor must not take part in any meeting
Declarable CoI – in this case Councillor may stay in meeting subject to a decision of other Councillors to allow it.

The Local Government Department has a very useful Quick Reference Guide to Managing [Councillor] Conflicts of Interest that explains the key issues involved in determining whether a Councillor has a Conflict of Interest, how to determine what type of conflict it is, and how it might be handled:

Managing Conflicts of Interest – Quick Reference Guide

Local Government Act 2009 – relevant section