This is an extract of our Management The Board Of Directors document, which we sell as part of our Company Law Notes collection written by the top tier of University Of Otago students.
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Company Law Section 2: Management: The Board of Directors: Directors have fiduciary duties. (Not for profit, no conflict of interests allowed) Special rules developed, in which duties are owed to the company (Percival v Wright) Coleman v Myers:
- Special, for closed companies only
- Family company
- Breached fiduciary duty, had to make extra payments to other family members. Directors may owe a fiduciary duty to an individual shareholder or shareholders. General duties: s131 good faith, s133 proper purpose, s134 comply with Act and constitution, s135 no reckless trading, s136, s137 duty of care. Specific duties: s140 personal interests, s145 misuse of company information, disclose share dealings. S298, 299, s301, supervision of the share register. Taurus Transport:
- Plaintiff argued directors owed a fiduciary duty of care that was slightly different from the Act.
- Case struck out. Manukau City Council:
- Court held Act wasn't a code, just gave "additional rights" Benton v Priore:
- Held not a code, statement of basic duties only. Mako Holdings:
- Specific duties over ride equitable inconsistent duties, but the Act is not a code. Saunders:
- Clear breach of fiduciary duties, conflict of interest. Held liable. Sojourner v Robb approved Saunders: The Act is not a code, directors owe common law fiduciary duties. S126 Who is a Director: Fatupaito v Bates:
- Mr Bates in the business of offering accounting and business advice
- Was appointed receiver
- Breach of s135 s135, s136 - not to risk creditors' money s126(1) Director, subject to all directors duties. Held not caught under s126(1)(b)(iii) "whether Mr Bates exercised, or was entitled to exercise, or controlled, or was entitled to control the exercise of powers which would fall to be exercised by the board" Held caught under s126(1)(c). Attracts all the duties. "stringent duty on directors to avoid substantial risks of serious loss to creditors."
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