A senior sheriff presided over a court hearing involving Tesco at the same time as he held shares in the multi-national supermarket giant.
Sheriff Principal Dunlop QC did not absent himself because having shares in a company that is party to a court action does not require a member of the judiciary to step down from a case.
A Holyrood committee is considering proposals that would require judges and sheriffs to publish their outside interests, including details of their finances.
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Members of the judiciary, unlike other senior public servants, do not need to give any details of their external sources of income.
A self-regulating system governing the behaviour of the judiciary is in place instead, with judges and sheriffs taking an oath requiring them to "do right" by people "without fear or favour".
The Statement of Principles of Judicial Ethics, issued in 2010, also notes that judges must act impartially and recuse, or remove, themselves in the event of a conflict of interest: "Plainly it is not acceptable for a judge to adjudicate upon any matter in which he, or she, or any members of his or her family has a pecuniary interest," it states.
However, senior members of the judiciary who are board members of the Scottish Courts Service (SCS) do have to submit details of their financial interests.
The rules require disclosure of items including membership of clubs and shareholdings whose value is worth more than £25,000 or greater than 1% of the issued share capital of the company. The value of the holding does not need to be registered.
Sheriff Principal Dunlop, whose territory spans Tayside, Central and Fife, is an SCS board member who declares shares in 29 firms.
These include well-known companies such as Vodafone, Royal Bank of Scotland, G4S, Diageo, Lloyds Banking and Weir Group. He also declares shares in Tesco.
In 2009, Falkirk council licensing board was in dispute with Tesco Stores Ltd - a subsidiary of the PLC - over a premises licence in a service station.
The supermarket giant appealed in 2010 and Sheriff Principal Dunlop, who held the Tesco shares at that time, oversaw a highly technical and procedural hearing in the case.
According to a spokesman for the local authority, the Sheriff remitted it back to the council and the application was subsequently granted by the board. Dunlop is a highly respected legal figure and there is no suggestion of wrongdoing or personal gain. However, the case has again thrown a spotlight on whether the system for declaring and registering judicial financial interests is satisfactory.
Peter Cherbi, a campaigner for judicial accountability, said: "It should be necessary for judges to declare all their interests and in even greater detail than politicians do."
Moi Ali, the outgoing Judicial Complaints Reviewer in Scotland, recently wrote to a Parliament committee to express her support for a register.
"An independent judiciary underpins a civilised society. But with independence goes accountability, and a register of interests is a mechanism for enhancing accountability."
The Judicial Office for Scotland (JOS) recently introduced a register of recusals, which shows cases where judges or sheriffs have absented themselves.
There have been four recusals since March. In a criminal case, Sheriff Veal recused himself as he was "personally known" to a witness.
Lady Wise recused herself from a high court case last week as she had previously acted for a relative of the accused.
A spokesperson for the JOS confirmed the Sheriff Principal held the Tesco shares at the time of the hearing. She added: "In the case involving Tesco and Falkirk Council Licensing Board, Sheriff Principal Dunlop dealt with a procedural issue in order to seek a pragmatic solution to a procedural matter and enable the case to proceed.
"There is well established case law to guide a judge or sheriff on when they should recuse in cases where they may hold shares in a company that is party to an action. Simply being a shareholder is not sufficient to require recusal.
"The Sheriff Principal quite properly dealt with the procedural matter as he was entitled to do and did not consider it necessary to recuse himself."