Director Duties
INTRODUCTION
Shareholders and members of the company always own the number of remedies to against the wrong in process of managing company. It can be seen that in the different situations will be applied different remedies for each members and officers of the company.
On the facts available, there are two issues to be discussed. The first issue is what have Don breached his directors’ duties under the act in good faith and best interest of the company as well as disclosure personal interest. The second issue is possible remedies for Bryan while he has been conducted unfair and oppressive.
ISSUE 1: WHAT HAS DON BREACHED?
Fiduciary duties to disclose personal interests
Directors are under both fiduciary and statutory duties to avoid conflicts between their personal interests and the interests of the company. The director is to declare the “nature and extent of the interest” and the relation of the interest to the affairs of the company. “The amount of detail must depend in each case upon the nature of the contract or arrangement proposed and the context in which it arises”: Gray v New Augarita Porcupine Mines Ltd.1 Director who is entered a self-interested transaction with a company which might take a breach of their fiduciary must disclose the details of their interest to avoid liability for the breach.2 In other words, the duty is to prevent directors from contracting with the company without making full and proper disclosure of their contracts and making secret profit through the position of the directors. A breach of the fiduciary duty arises if the director’s undisclosed interest in the contract is direct or indirect. An indirect interest in a contract arises when the director is a director or shareholder of another company 3: Transvaal Lands Co v New Belgium (Transvaal) Land & Development Co.4
In our case, by undisclosed private interest of the transaction as well as position of a shareholder of the supplier, Don has breached his fiduciary duty to disclose
Shareholders and members of the company always own the number of remedies to against the wrong in process of managing company. It can be seen that in the different situations will be applied different remedies for each members and officers of the company.
On the facts available, there are two issues to be discussed. The first issue is what have Don breached his directors’ duties under the act in good faith and best interest of the company as well as disclosure personal interest. The second issue is possible remedies for Bryan while he has been conducted unfair and oppressive.
ISSUE 1: WHAT HAS DON BREACHED?
Fiduciary duties to disclose personal interests
Directors are under both fiduciary and statutory duties to avoid conflicts between their personal interests and the interests of the company. The director is to declare the “nature and extent of the interest” and the relation of the interest to the affairs of the company. “The amount of detail must depend in each case upon the nature of the contract or arrangement proposed and the context in which it arises”: Gray v New Augarita Porcupine Mines Ltd.1 Director who is entered a self-interested transaction with a company which might take a breach of their fiduciary must disclose the details of their interest to avoid liability for the breach.2 In other words, the duty is to prevent directors from contracting with the company without making full and proper disclosure of their contracts and making secret profit through the position of the directors. A breach of the fiduciary duty arises if the director’s undisclosed interest in the contract is direct or indirect. An indirect interest in a contract arises when the director is a director or shareholder of another company 3: Transvaal Lands Co v New Belgium (Transvaal) Land & Development Co.4
In our case, by undisclosed private interest of the transaction as well as position of a shareholder of the supplier, Don has breached his fiduciary duty to disclose
Bibliography: Books Burnett, A resource book in: Company Law & Corporate Governance, B.A Burnett, Sydney, Australia, 2007 Ford, Austin and Ramsay, Ford’s Principles of Corporations Law, LexisNexis, Butterworths, 2010 Lipton, Herzberg and Welsh, Understanding Company Law, Lawbook Co, Australia, 2010 Our community, ‘Overview of Board Meetings’, (2013) Tunstall, Corporations Law Compliance Guide, Pitman, Australia, 1996 Cases: Foss v Harbottle (1843) 2 Hare 461; 67 ER 189 Gray v New Augarita Porcupine Mines Ltd[1953] 14 ACSR 437 at 441 Jenkins v Enterprise Gold Mines NL (1992) 6 ACSR 539 Re Cumberland Holdings Ltd & The Companies Act (1976) 1 ACLR 361 Re Jermyn Street Turkish Bath Ltd [1971] 1 WLR 1042 the English Court of Appeal