No Director Or Officer Of This Corporation

A conflict of interest exists when an employee’s duty to give his or her individual business loyalty to the Company may be prejudiced by actual or potential personal benefit arising from another source. While not presuming to restrict the right of individuals to passively invest or participate in other business ventures, the Company is concerned where those interests might lead to conflicting interests on the part of the individual. For example, a conflict of interest may arise when a director takes actions or has interests that may make it difficult to perform his/her work for the Company objectively and effectively. These conflicts of interest arise when a director, or member of the director’s family, receives improper personal benefits because of the director’s position with the Company. These benefits may include Gifts, Entertainment and Gratuities.

Based on the case scenario, Doris, Betty, and Charlie formed a company called Bechdo Pty Ltd. The three members are the directors and Betty who is major shareholder holds 40% followed by Charlie and Doris who hold 20% each while the 20% is held by the rest. Based on the company constitution, a managing director has capacity to enter into a contract o behalf of the company up to a maximum of $100,000. Moreover, he/she can enter into contracts to the value of $900,000 upon getting consent for the board of directors. In this case, Bechdo Pty Ltd operates without a managing director since none was elected. The major issue is that Betty being the majority shareholder went ahead and entered into contract with BB Ltd, Jillo Pty Ltd, and

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.

2) “Section 16(b) seeks to prevent officers, directors, and 10-percent owners of public companies from

The Directors and officers shall perform the duties enjoined on them by law and the by-laws of the corporation. They act as agents or representatives of the Corporation in carrying out its rights and obligations provided by law. Directors who directed the affairs of the Corporation in bad faith, gross negligence, and those involving a conflict of interest with their duty to the Corporation shall be liable to the Corporation, its stockholders & other persons. The Board of Directors are not justified to purchase the stocks.

Issue: whether the directors have breached their duties. It is questionable that whether the directors breached their fiduciary duty towards the company by not putting first the interests of the company.

Rationale: The court found extreme negligence concerning fiduciary duty on the part of the corporate directors because they did

The confidentiality and concerns of the company are addressed in a clear and concise manner. What the company expects or restricts is clearly defined in the work relationship, personal fees and commissions, service with outside organizations and conduct with competitors. Securities and investment are allowed to invest in company stock and their view on insider trading, violations and the response to outside requests for information concerning the companies’ finances.

Misuse the company funds: Any directors supposed to use the company funds for its legitimate business purpose under a fiduciary duty. Besides, directors have duty to prevent any mixture of the company and private funds. Ralph in this case used the company’s fund to purchase a diamond ring for his fiancée. There is no defense for Ralph as he obtain the company funds for private use.

A voting member of the governing board who receives compensation, directly or indirectly, from the corporation for services is precluded from voting on matters pertaining to that member 's compensation.

If the business were to operate as a closely held business and Robert was a shareholder and a director, what are his legal rights and obligations? Which of his goals could he realistically achieve? Explain. (Hint: directors have statutory

If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the governing board or committee shall determine by a majority vote of the disinterested directors whether the transaction or arrangement is in the Organization's best interest, for its own benefit, and whether it is fair and reasonable. In conformity with the above determination it shall make its decision as to whether to enter into the transaction or arrangement.

1.) What does the Institute of Supply Management code of ethics say about financial conflicts of interest?

S.183 states, “a Director of a corporation must not improperly use the information to gain an advantage for themselves or someone else” (slides). In this case of Vidler, the courts found there was a breach of s.183 as Vidler had used company information gained as a director to invest in shares to make profit for himself. Similar but different to this case, Patricia has breached s.183 of the CA as she has improperly used company information to gain advantage for someone else through advising her sister to buy shares in order to make a profit.

Provision B.1.1 states “The Board should state its reasons if it determines that a director is independent notwithstanding the existence of relationships or circumstances which may appear relevant to its determination, including if the director: has received or receives additional remuneration from the company apart from