This essay is consisted of Part A and Part B, includes three tasks in total. In Part A it will discuss the feature of a fiduciary relationship and disclosure some duties owned by company directors, such as the duty to act in good faith in the best interests of the company, the duty to avoid conflicts of the interest, the consequences of breaching a duty by directors and some defences for the company’s director. After that, in Part B the article will talk about some issues arise from the duties owned by partners in a partnership. In the following parts this essay will discuss and analyse all the issues above in details.
Part A: task 1:
According to the fact situation, Simone is a managing director of the Youth Unlimited Pty. Ltd which is a profitable company carry on selling anti-aging products for business. The company is a proprietary company limited by shares and the managing director is also known as a chief executive officer (CEO) of the company. Also, it can be seen in this way, Youth Unlimited gives Simone a particular opportunity to in charge of the day-to-day management of the company, to exercise the power or discretion to the damage of that person, who is accordingly vulnerable to abuse by Simone of her position — the fiduciary relationship. However, CEO of the company will also be in a fiduciary relationship. As a result, Simone can be regarded as fiduciary. The critical feature of a fiduciary relationship is that the fiduciary on behalf of another person in the exercise of a power which will influence the interest of that other person in a legal sense. Meanwhile, fiduciaries cannot use their knowledge or position to benefit themselves rather than the person on whose behalf the fiduciary is required to act. (Butt, 2004, p173).See also case: Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41; 55 ALR 417. Moreover, because of the personally interested in marketing of ‘Be Blonde’ , a product which is supposed to stop hair from going grey, Simone and Tania set up a company together to be called Bright Spark Pty. Ltd, they are the only shareholders and directors of the company. Bright Spark becomes an overnight success fortunately. As can be seen from the situation, Simone have sited up a new company with Tania without telling any other directors or shareholders or the board of director of Youth Unlimited, at the same time the new company Bright Spark helps Simone earned a lot of material personal interest without disclosing to the other directors in Youth Unlimited neither. Then according to the following fact situation, after several mouths operating the new company, Simone found it is difficult to market its product and there have received some customer complaints. So she suggested to the Board of Youth Unlimited that they should diversify their products and stock Bright Spark products. The Board of Youth Unlimited and the other directors accepted the suggestion and also agree that Simon should receive a commission on each sale of a Bright Spark product by Youth Unlimited stores. However, Simone thought that as she and Tania had been featured in the media, most of the Board of Youth Unlimited would know of her connection with Bright Spark, so she did not disclose this connection to the Board of Youth Unlimited. Since there exist a fiduciary relationship between Simone and Youth Unlimited, Simone the CEO owe her duties to the company logically. It is the same as in Bright Spark. According to section 180, it is requires that directors or other officers to act a reasonable degree of care and diligence.; section 181(1) of the Corporations Act states, directors or other officers of a company must exercise their powers and discharge their duties in good faith in the best interests of the company; section 191 directors’ duty to disclose material personal interest, this section mentions that a director of a company who has a material personal interest in a matter that related to...
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