SGS 11 (Director's Duties) Flashcards
What is the consequence of a breach of director’s duties?
s.174 –> solely damages
other ss –> remedies outlined in s.178, same as under common law (injunction, setting aside transaction, restitution and account of profits, restoration of company property held by director and / or damages. May also be grounds for termination of an executive director’s service contract. )
To whom do director’s duties apply?
To whom are they owed?
Shadow, exec, non-exec, former (ss.175 and 176 only)
Company (not individual shareholders)
Can acts be ratified?
Yes as per s.239 - requires ordinary resolution
BUT votes in favour cast by director or any person connected to him (provided both shareholders) are disregarded.
Still can attend and count in quorum.
Unlawful acts cannot be ratified.
Interest in a proposed transaction?
Declare interest before company enters into transaction (at BM or by written notice).
BR will be passed by simple majority but interested director is not counted for quorum or voting purposes (MA 14(1)).
For the entry into a transaction in which a director has an interest, what is on the agenda for BM2?
BR to APPROVE ENTRY into the contract with the buyer for the sale of the goods and AUTHORISE A SIGNATORY for the contract.
MA 14(1) - director interested and any person connected cannot count in quorum or vote on BRs to approve entry into and authorise a signatory for the contract in which they are interested.
Who is liable where approval is not obtained to enter an SPT?
director, person connected or any other director who authorised the arrangement (s.195)
Transaction voidable at instance of the company.
What is the effect of a failure to comply with s.188?
Term containing renewal option void
Term company will be able to terminate on reasonable notice (s.189).
What board resolutions must be passed at BM1?
Approve form and notice of GM
Call GM to approve term in service contract
Direct company sec to send notice in accordance with s.308.
Why is short notice an issue for service contracts?
s.188(5)(b) need a memorandum setting out proposed contract to be made available at registered office 15 days ENDING WITH DATE of GM.
What PMMs are relevant to entry into service contracts?
Keep a copy available for inspection at company’s registered office (s.228(2)(a)).
Significance of MA 14?
Refers only to BOARD meetings. Therefore if a director interested in a transaction cannot vote in a BM, he can still vote in the GM.
Only put in BM2
If a holding company is required to pass an OR to approve a transaction, what BRs are relevant?
Approve form and notice of GM
Convene GM
Approve entry into SPT
Instruct Co Sec to deal with PMMs.
