consequences of breach of directors duties Flashcards
remedies for breach of s171 - 177 and s 182
the contract will be voidable > the directors can choose within a reasonable time to rescind (get out of) the contract or affirm it
the director needs to:
- account for any profits made as a result of the breach
- return any company property
- pay equitable compensation
the company may also be entitled to an injunction
a majority shareholder can bring a derivative claim (a claim under the company’s name), however, this is expensive and time consuming and any remedy would go to the company and not the shareholder
practical solutions to breach of directors duties
could remove (fire) the director from the board by passing an OR (would need over 50% of shareholders to do this) or ask them to resign (which may be cheaper, easier)
if shareholder is unhappy, they could look to sell their shares back to the company or another buyer and therefore exit the company
remedies for breach of s 174
breach of s 174 = damages for negligence (company will be entitled to damages for the contract not being performed)
can also bring a derivative action by the shareholders or remove the director by OR
