Law of Directors' Duties

Issue: Have the directors of the company breached their duties mainly related to the company’s insolvent trading.

Smith should have disclosed his share information with the board of directors and voted in favor of Johnsons Skyhooks Limited. Being a board of director of a competing company, he failed to execute his duty in good faith with best interest of the corporation. According to the act, he should be fined up to 5000$ and can go to jail for at least six months.

Throughout the case, it can be analyzed and expected to say that Deloitte & Touche have committed a breach to its fiduciary duty to Vertical Pharmaceutical at the end. Vertical Pharmaceuticals Inc., realized a huge loss as a result by Deloitte & Touche. Therefore, this shows that Deloitte & Touche did indeed breach their fiduciary duties. All the falsified reports and malpractices that were said to be revealed by Deloitte & Touche would be said to not be real by the forensic audit that was conducted. At the end, the court can rule that Deloitte & Touche did indeed breach their fiduciary duty to Vertical Pharmaceuticals.

each of the non-executive directors are disqualified for 5 years from managing a company and are to pay a fine of $30,000 each, and

ISSUE: Was the decision to hire and fire Ovitz purposefully exercised by the directors within the scope of the business judgment rule and their fiduciary duty of due care?

B) Analyse the conflicts of interest that have been illustrated by the CBA financial planning scandal and the obligations of financial planners and CBA management in relation to conflicts of interest

Another aspect the courts should consider lifting the veil is the personal conduct of directors. These conducts may perform as no positive misrepresentation or negligent misrepresentation. In terms of no positive misrepresentation, creditors may be confused by directors through their acts without explicit wrong words. For example, in the case of My Bread Baking Co. v. Cumberland, Inc. mentioned above, the director made statement in parent corporation on behalf of the subsidiaries to bargain with defendant. However, this conduct mislead creditor that he dealt with the parent company rather than the subsidiaries. This case shows that no positive misrepresentation can also be one form contribute to pierce.

Directors’ duties power for engaging phoenix activities are regulated by ASIC and companies’ liquidators under s 180-184 of Corporation Act. For example, Somerville’s case illustrates the eight directors have acted in breach of ss181 (1), 182(1) and 183(1) of the Corporations Act caused by the fraudulent phoenix activities. When directors breach their duties recklessly or intentional dishonesty, heavy consequences will occur which involve up to AU$220 000 penalties, five years imprisonment or

Duty- a) Reasonable Person Standard: Members of society have to behave so as to avoid unreasonable risk or harm to others, b) Reasonable Foreseeability of Harm: The concept that a reasonable person acts to avoid reasonably foreseeable risks of harm to others.

Duty to not benefit from a third party based on the being directors of the company or for just doing something or not doing something.

Directors may be of three kinds: de jure directors, that is to say, those who have been validly appointed to the office; de facto directors, that is to say, directors who assume to act as directors without having been appointed validly or at all; and shadow directors who are persons with whose directions of instructions the directors of the company are accustomed to act (cite Re Hydrodam). De Jure directors are easy to recognize as they have officially been appointed as a director and there is no uncertainty that they are a director of the company. This is not the case with de facto and shadow directors. Although de facto and shadow directors appear mutually exclusive, there is some overlap and it can be a difficult task proving that a person is a de facto or a shadow director. As these persons may be liable for making negligent decisions in the management of the company it is important that the law is clear in identifying them. The Trinidad and Tobago Companies Act s.85 provides that “An act of a director or officer is valid notwithstanding any irregularity in his election or appointment, or any defect in his qualification.” It is not necessary for a director to be validly appointed for their actions to be valid therefore making their actions liable for any malfeasance perpetrated by their instruction. This essay is solely interested

Due to the fact, the board dismissed Steven Sewell from CEO because his characteristics are not suitable with the characteristics of new board. This reason is very subjective and unreasonable. This paper would not examine the unreasonable reason from the board of FDC as above, but will observe the fact that the removal of a director by the board is not the first time happened. There are some previous cases which are similar to the FDC case in which directors were dismissed by the board, such as in the case of Allied Mining & Processing Ltd v Boldbow Pty Ltd (“Allied v Boldbow”), Central Exchange Ltd v Rivkin Financial Services Ltd (“Central v Rivkin”), and Scottish & Colonial Ltd v Australian Power & Gas Co & Ltd (“Scottish v Australian Power”). In those three cases, the decision by the judges is considerably different. In Allied v Boldbow and Central v Rivkin, the judges state that Section 203D does not replace any other power of removal possessed by the company. Therefore, a company could regulate in their constitution to dismiss a director without the need for a vote of shareholders (in defined circumstances). Conversely, in Scottish v Australian Power, the judges emphasise that Section 203D is mandatory, and therefore, the process of removal a director must follow Section 203D. Due to those cases, it is clear that there are pro and contra about the dismissal of a director as stipulated in the Section 203D. One side argues that

The second issue that should be highlighted was the concern shown by the accountant hired by Temasek regarding the company’s financial decision and management. She doubts that the company’s decisions are aligned with the shareholders’ interest. When ABC Learning Centre overpaid their acquisition of other learning centre and also made business with the companies that are owned by the member of its own Board of Director, or when they took another loan or debt without considering their capabilities to cover the overall liabilities, this will lead to the problem of conflict of interest between the company and the shareholders.

Even though there are 3 key strands in the reasoning of majority, the most satisfactory test is whether there was an assumption of responsibility by the person to act as director. The majority in Paycheck stated that Mr Holland had not assumed any fiduciary duties in respect of the companies, although he had taken decisions for the company and discharged his obligations as director of the corporate director. The law remains unclear because while

For example, a fiduciary relationship exist between two parties, when a party expects the other to act for him in such a manner as he would act in absolute honesty, faithfulness and diligence, not minding the fact that he is acting for someone else. If he cannot steal his personal money, then he cannot steal the money put in his care. Common law provides quite a number of duties of a director to a company, however, only few of them relates with insider dealings. Some of these duties include: