Three friends legal question
1. Is Alicia a promoter?
According to Jason (2011), the person who is involved in incorporating with either active role or inactive role can be defined as a promoter. The case Tracy v Mandalay Pty Ltd illustrates that a person who agrees to share profit while forming a company is the promoter, in spite of his passive role. In this case, though Alicia played no active role in forming the company, as a shrewd business man, she agreed to share the profits generating form this new organization obviously. Thus, Alicia is a promoter.
2. Does Alicia breach the fiduciary duties?
According to Gluckstein v Barnes, a promoter should be honest and disclose all the information to the independent board of directors to meet his fiduciary duty rather than personal interest. In this case, Alicia hid the fact of converting Pitt Street into a pedestrian mall. In other words, she did not fully disclose the information, which would lead to the loss of the Batco Ltd because of the useless of the petrol station on a no motor vehicle traffic area. Alicia kept the secret to ensure Batco Ltd would purchase this development site. In this way, Alicia herself can make personal profits from the transaction. To some extent, Alicia showed individual interest on this contract other than the company. So, Alicia breached the fiduciary duties.
In this situation, Batco Ltd can sue Alicia and rescind the contract.
3. Is Alicia entitled to retain her profit?
According to Erlanger v New Sombrero Phosphate, a promoter should focus on the benefit of the new company other than it of himself. In this case, though Alicia had made disclose of $220,000 profit to the directors, she got it from the new company. As a promoter and director of Batco Ltd, Alicia should minimize the cost of purchasing this site. By contraries, she maximized her own personal gain by consuming the property of the new company to. To some extent, Alicia can be regarded as a trustee and Btaco Ltd can be thought of the
According to Jason (2011), the person who is involved in incorporating with either active role or inactive role can be defined as a promoter. The case Tracy v Mandalay Pty Ltd illustrates that a person who agrees to share profit while forming a company is the promoter, in spite of his passive role. In this case, though Alicia played no active role in forming the company, as a shrewd business man, she agreed to share the profits generating form this new organization obviously. Thus, Alicia is a promoter.
2. Does Alicia breach the fiduciary duties?
According to Gluckstein v Barnes, a promoter should be honest and disclose all the information to the independent board of directors to meet his fiduciary duty rather than personal interest. In this case, Alicia hid the fact of converting Pitt Street into a pedestrian mall. In other words, she did not fully disclose the information, which would lead to the loss of the Batco Ltd because of the useless of the petrol station on a no motor vehicle traffic area. Alicia kept the secret to ensure Batco Ltd would purchase this development site. In this way, Alicia herself can make personal profits from the transaction. To some extent, Alicia showed individual interest on this contract other than the company. So, Alicia breached the fiduciary duties.
In this situation, Batco Ltd can sue Alicia and rescind the contract.
3. Is Alicia entitled to retain her profit?
According to Erlanger v New Sombrero Phosphate, a promoter should focus on the benefit of the new company other than it of himself. In this case, though Alicia had made disclose of $220,000 profit to the directors, she got it from the new company. As a promoter and director of Batco Ltd, Alicia should minimize the cost of purchasing this site. By contraries, she maximized her own personal gain by consuming the property of the new company to. To some extent, Alicia can be regarded as a trustee and Btaco Ltd can be thought of the