Directors' Duties Flashcards
Number of Directors’ General Duties
7
List the General Directors’ Duties
Act within powers, promote success of the company for benefit of members as a whole, independent judgment, reasonable care skill and diligence, avoid conflicts of interest, avoid accepting benefits from 3rps, declare interests in proposed transactions
Act within powers
ultra vires and improper purposes
What does ‘success’ mean?
long-term increase in value
Considerations relevant to promoting success
long-term consequences of a decision, employees’ interests, relationships with suppliers and customers, impact on community and environment, maintaining reputation for high standards of conduct, fairness between company members
Independent Judgment
Do not fetter discretion
Three exceptions to avoid conflicts of interests duty
Situation cannot reasonably be regarded as likely to give rise to a conflict, directors have given authorisation, the director is transacting with the company
When does the duty to avoid accepting benefits from 3rp kick in?
Director is offered benefits because of his position
Exception to duty not to accept 3rp benefits
Acceptance cannot reasonably be regarded as likely to give rise to a conflict
How to declare interest in proposed/existing transaction
At BM or in writing ahead of BM
When to declare interest in proposed transaction
Before transaction begins
Four exceptions to duty to declare interest in proposed/existing transaction
Not ought to reasonably have been aware of interest or transaction, interest cannot reasonably be regarded as giving rise to conflict, the other directors ought to have known about the conflict, the conflict arises because it concerns the director’s service contract
How can the company ensure the director exists for vote and quorum purposes in a BM about a proposed transaction they have an interest in
Disapply rule by ordinary resolution
The remedy for a breach of which general duty is only damages?
Use reasonable care skill and diligence
What are the 5 remedies for breach of general duties?
Injunction, setting aside transaction, restitution and account of profits, restoration of company property, damages
