Corporation law

Essay by windskierUniversity, Master's November 2004

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I. Whether directors have breached their duties?


Whether Jay, Paul or Bill has breached their duties as directors owed to Goo Pty Ltd and the shareholders.


Directors of a company involved in the management of the company have extensive powers to control the activities of the company. They are subject to both general law and statutory law. It is a fundamental principle of corporate governance that the relationship between a director and the company is fiduciary in: Fitzsimmons v R (1997) CSR 355 at 357. The law imposes strict fiduciary and statutory obligations on a director in the performance of the duties of office. The fiduciary duties owed by a director include a duty to

*Avoid a conflict of interest

*Act in good faith in the best interest of company

*Act in proper purpose


Chu-Chem Pty Ltd, which is one of the suppliers of Goo Pty Ltd, is solely owned by Jay, and Jay is the director of Goo.

Paul is the director of Chu-Chem Pty Ltd. Bill will be offered a share of Paul's bonus if the amendment proceeds. As for Jay, Paul and Bill there exists an actual conflict of interest or a substantial possibility of conflict. The first issue to be resolved is whether all of them have breached the duty to avoid the conflict of interest as the directors of Goo Pty Ltd.

There exists a relation of interest between Jay and Chu-Chem Pty Ltd. However, Jay has made full disclosure of his interest at the meeting. Section 191 imposes a duty upon directors of both public and proprietary companies to disclose particular interests. Queensland Mines Ltd v Hudson (1978) 18 ALR 1 the Privy Council held that the directors had not breached their duties because, the company had fully informed as to...