Mr Key said Mr Williamson had served on Holyoake Industries' board for four years while Construction Minister without conflicts of interest becoming an issue.
It was for each individual minster to determine
There were no rules to say ministers could not serve on the boards of companies working in industries connected with their portfolios.
"They obviously have to seek my approval and I make that decision whether they can or they can't."
Mr Key confirmed he gave his approval for Mr Williamson to take on the Holyoake Industries directorship.
Ministers in that position took advice on managing conflicts of interest.
"Obviously they have to manage them carefully. If they get that wrong then that has serious implications for them, but there's no indication at all that he's either mismanaged that position or done anything wrong.
"The Labour Party must be very bored or have nothing going on if they think that's a story."