06. Companies: ownership and management. Flashcards
T/F: The duties owed by a de facto director are the same as those of a properly appointed director.
TRUE
A director is any person acting in the capacity of a director, by whatever name called.
The duties of a de facto director …
are the same as those of a properly appointed one.
T/F: If a director’s appointment is subsequently found to be invalid, their actions no longer bind the company nor do they owe any fiduciary duty.
FALSE
see Morris v Kanssen
T/F: A sole director may also act as a company secretary.
TRUE
T/F: A sole director may also act as auditor.
FALSE
The ususal minimum age for a company director is …
16 years
The removal of a director by members in general meeting requires …
an ordinary resolution with special notice of 28 days.
T/F: The removal of a director automatically discharges any separate contract of service that the director has with the company.
FALSE
a director’s service contract as an employee is separate from their statutory role as a director of the company.
T/F: A company’s articles can contain provision for weighted voting rights.
TRUE
see Bushell v Faith
T/F: A company must state its objects within its articles of association in order that directors can be held accountable for any ultra vires acts.
FALSE
An objects clause is no longer requried.
T/F: Directors are agents of the members of the company for the purposes of managing the company’s business.
FALSE
directors are agents of the company, not of its members.
Directors are agents of …
the company.
T/F: As part of their duty to promote the success of the company, a director is required to consider the impact of the company’s operations on the community and the environment.
TRUE
As part of their duty to promote the success of the company, a director is required to consider the impact of the company’s operations on the C&E*
community and environment
T/F: As part of their duty to promote the success of the company, a director is required to consider the desirability of maintaing a reputation of high standards of business conduct.
TRUE
As part of their duty to promote the success of the company, a director is required to consider the desirability of maintaing a reputation of high standards of …
business conduct.
A ‘managing director’ who has not been appointed but has not been prevented from acting as such has … authority.
ostensible or apparent
A ‘managing director’ who has been properly appointed has … authority.
implied usual
T/F: Directors’ statutory duties do not apply to shadow or former directors.
FALSE
A director may only exercise their powers for the …
purrpose for which they were conferred.
An allotment of shares purely to create or destroy a voting majority …
will be deemed invalid by the court unless subsequently ratified by the company.
see Howard Smith v Ampol and Bamford v Bamford
T/F: The directors (as a whole) of a private company may authorise a ‘conflict of interest’ relating to a director.
TRUE
provided that the company’s constitution does not prohibit it.
T/F: The directors (as a whole) of a public company may authorise a ‘conflict of interest’ relating to a director.
TRUE
provided that express provision for such an authorisation exists within the company’s articles.
The default position for a … company is that a ‘conflict of interest’ may be authorised by the directors as a whole provided that no express provision to the contrary is made within its articles.
private
The default position for a private company is that a ‘conflict of interest’ may be authorised by the … provided that no express provision to the contrary is made within its articles.
directors as a whole
The default position for a private company is that a ‘conflict of interest’ may be authorised by the directors as a whole provided that …
no express provision to the contrary is made within its articles.
The default position for a … company is that a ‘conflict of interest’ may be authorised by the directors as a whole provided that express provision is made to that effect within its articles.
public
The default position for a public company is that a ‘conflict of interest’ may be authorised by the directors as a whole provided that …
express provision is made to that effect within its articles.
The default position for a public company is that a ‘conflict of interest’ may be authorised by the … provided that express provision is made to that effect within its articles.
directors as a whole
T/F: The level of personal skill and experience of a director is relevant in determining the standard of care required to satisfy their statutory duties.
TRUE
T/F: A director not playing an active role in the running of the company can never be found in breach of directors’ duties since they haven’t taken any positive action.
FALSE
passivity can of itself be deemed a breach of directors’ duties.
see Lexi Holdings
The statutory duty of a director regarding potential ‘conflicts of interest’ is to …
disclose them to the board.
T/F: A director’s statutory duty regarding conflicts of interest is only to disclose them to the board.
TRUE
T/F: A director involved in a potential conflict of interest needs approval of the board before proceeding.
FALSE
they need only disclose it to the board
T/F: A potential conflict of interest of a director needs to be disclosed to members in general meeting.
FALSE
it need only be disclosed to the board.
A directors’ statutory duties regarding … endure even after they have vacated the office of director.
benefits and conflicts of interest
If a director enters into a contract with a company in breach of their statutory duties …
then the contract is voidable at the option of the company.
T/F: If a director enters into a contract with a company in breach of their statutory duties then the contract is voidable at the option of the company.
TRUE
T/F: The acts of one director are binding upon another.
FALSE
they are only binding on the company.
T/F: A group of directors in breach of statutory duties are jointly and severally liable to make good any loss suffered by the company.
TRUE
however ‘innocent’ directors are not so liable.
T/F: If a group of directors are in breach of statutory duties, the remaining directors may automatically avoid any contracts entered into by them.
FALSE
only the company can avoid a contract.
