Correctional Facilities: History, Structure, and Alternatives
Corporate Law & Practice
Major Assignment
CASE STUDY OF BREACHES OF DUTIES OF DIRECTORS
ⅠINTRODUCTION
As a general rule, directors and other officers owe their duties to the company.[1] The persons, who act as directors or other officers in a company, are bound by common law duties, fiduciary duties under the law of equity, and statutory duties under the Corporations Act 2001 (CA). According to the facts given, this essay aim to examine and find out whether Popper, Jones and Brown have breached their duties as directors of Electrics Ltd, and what their potential liabilities for the breaches are under CA.
ⅡCASE ANALYSES
Duty not to misuse position or information
Under CA section 182 (1), directors owe the company a duty not to improperly use their position to gain any profits for themselves or for any other person or to cause damage or loss o the corporation. Section 183 (1) of the CA prohibits directors, officers or employees from making a gain for themselves or someone else or causing damages to the corporation. The duty not to misuse position or information is involved in the fiduciary principle applied in Regal (Hastings) Ltd v Gulliver, and governed by the fiduciary duty as well, which asks directors to avoid actual and potential conflicts of interest situations between the company and themselves. The directors’ duty not to improperly use position or information has wider[2] and overlaps[3] with both their fiduciary duty to act in good faith in the best interests of the company and the section 181 of CA.
There are two terms needed to be considered carefully while judging whether a director has breached the duty under section 182 or not. The first term is “improper”. The term of “improper” refers to a number of meanings, among which the best definition is to commit not conforming to the obligations, duties, and responsibilities of a directors or officers.[4] In other words, directors may conduct improperly regardless of whether they were
Major Assignment
CASE STUDY OF BREACHES OF DUTIES OF DIRECTORS
ⅠINTRODUCTION
As a general rule, directors and other officers owe their duties to the company.[1] The persons, who act as directors or other officers in a company, are bound by common law duties, fiduciary duties under the law of equity, and statutory duties under the Corporations Act 2001 (CA). According to the facts given, this essay aim to examine and find out whether Popper, Jones and Brown have breached their duties as directors of Electrics Ltd, and what their potential liabilities for the breaches are under CA.
ⅡCASE ANALYSES
Duty not to misuse position or information
Under CA section 182 (1), directors owe the company a duty not to improperly use their position to gain any profits for themselves or for any other person or to cause damage or loss o the corporation. Section 183 (1) of the CA prohibits directors, officers or employees from making a gain for themselves or someone else or causing damages to the corporation. The duty not to misuse position or information is involved in the fiduciary principle applied in Regal (Hastings) Ltd v Gulliver, and governed by the fiduciary duty as well, which asks directors to avoid actual and potential conflicts of interest situations between the company and themselves. The directors’ duty not to improperly use position or information has wider[2] and overlaps[3] with both their fiduciary duty to act in good faith in the best interests of the company and the section 181 of CA.
There are two terms needed to be considered carefully while judging whether a director has breached the duty under section 182 or not. The first term is “improper”. The term of “improper” refers to a number of meanings, among which the best definition is to commit not conforming to the obligations, duties, and responsibilities of a directors or officers.[4] In other words, directors may conduct improperly regardless of whether they were
References: Chew v R (1992) 173 CLR 626. Commonwealth Bank of Australia v Friedrich (1991) 9 ACLA 946. Daniels v Anderson (1995) 37 NSWLR 438 Grove v Flavel (1986) 43 SASR 401. Lipton, Herzberg, Understanding Company Law, (2008) Thomson Legal & Regulatory, NSW. McNamara v Flavel (1988) 6 ACLC 802 Pamela Hanrahan, Ian Ramsay, Geof Stapledon, Commercial Applications of Company Law, (2004) Sydney, NSW. Southern Real Estate Pty Ltd v Dellow (2003) SASC 318. ----------------------- [1] Pamela Hanrahan, Ian Ramsay, Geof Stapledon, Commercial Applications of Company Law, (2004) Sydney, NSW, 214. [2] Southern Real Estate Pty Ltd v Dellow (2003) SASC 318. [3] Lipton, Herzberg, Understanding Company Law, (2008) Thomson Legal & Regulatory, NSW, 332. [4] Grove v Flavel (1986) 43 SASR 401. [5] Chew v R (1992) 173 CLR 626. [6] Lipton, Herzberg, Understanding Company Law, (2008) Thomson Legal & Regulatory, NSW, 334. [7] McNamara v Flavel (1988) 6 ACLC 802. [12] Commonwealth Bank of Australia v Friedrich (1991) 9 ACLA 946. [13] Pamela Hanrahan, Ian Ramsay, Geof Stapledon, Commercial Applications of Company Law, (2004) Sydney, NSW, 214. [14] Daniels v Anderson (1995) 37 NSWLR 438 [15] Corporations Act 2001 (Cth) s1317E. [16] Lipton, Herzberg, Understanding Company Law, (2008) Thomson Legal & Regulatory, NSW, 367.