Directors Duties & Responsibilities Flashcards
Lectures 8,9,10 and Tutorial 4
Derek is a director of Haddock Ltd which runs fish and chip shops in North Down. He sees a fish and chip for sale in his home-town Bangor while he is out shopping at the weekend and decides to purchase it for himself. Derek is aware that Haddock Ltd has been seeking to expand its business into Bangor, but it does not have the funds to do so. What is most likely to be true:
Derek could be in breach of section 175 CA2006 if he completes the transaction.
The board of directors of Crescent plc resolve that the company should allot new shares to Crescent plc’s employees in order to raise capital, and also to block a hostile takeover bid which they believe will be contrary to the company’s interests. The constitution places no restrictions on the purposes for which the directors can allot shares. What is most likely to be true:
The directors will nevertheless be in breach of section 171 CA2006 if the dominant reason for allotting shares was to block a takeover bid.
If an ex-director exploits an opportunity that would have been of interest to his former company, what happens?
An ex-director who learns, after he resigns, of a business opportunity that would be of interest to his former company is not in breach of section 175 CA2006 if he exploits it.
After a director breaches a duty owed to the company he might be excused provided:
The eligible shareholders vote to pass a resolution to ratify it.
Aoife is the director of Petra Ltd and she is married to Arif who is the Managing Partner of a local firm of architects, Castles & Co. Mei Ling, a fellow director makes a contract on behalf of Petra Ltd with Castles & Co. Arif ensures that the price is a very fair one to Petra Ltd. Aoife knows nothing about this until after the contract is made. When she finds out she says nothing to the board of Petra Ltd. What is the situation here:
Aoife is in breach of section 182.
If the board of directors are sued for breach of their duty of care to the company under section 174, what is true?
Executive directors are most likely to be found liable than non-executive directors because of their role in the company.
Which of the following statements is correct about director’s loans?
A company must not guarantee a loan to a director without approval by a majority of the members of the company.
What describes a director’s long-term service contract which would require approval from the members:
2 years or more in duration.
What statement correctly describes the value of a substantial property transaction entered into with a director that would require member approval?
A non-cash asset that exceeds 10% of the company’s asset value or £100,000.
What is correct in respect of the general duties specified in section 171 to 177:
The general duties are owed by a director of a company to the company.
