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R ltd purchased 2000 1shares and the directors an

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R Ltd purchased 2,000 £1/shares and the directors, an outsider, and the co’s solicitor took up the remaining shares. All the shares in the two companies were then purchased and the directors made a profit of £2.16/share. The purchasers, acting on behalf of R Ltd, sued for the profit made. It was held: The directors were liable to account for the profits. 2013/2/18 20
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KISHIMOTO SANGYO LTD V AKIO OBA (1996) O was the managing director of KS, a trading corporation, and during 1993 was negotiating, on behalf of KS, with a Taiwanese company for substantial contracts relating to the mass production of liquid crystal displays. In October 1993, O resigned and jointed another company, BOIS. In January 1994, O negotiated, on behalf of BOIS, with the same Taiwanese company for the same production contract. KS claimed that O had used confidential information gained during his directorship of KS for his own benefit and was in breach of the fiduciary duties he owned to KS. 2013/2/18 21
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KISHIMOTO SANGYO LTD V AKIO OBA (1996) However, the Court of Appeal (1996) reversed the decision of the High Court and held that when O was managing director of KS the mass production project with the Taiwanese company was not a maturing business opportunity , at best it was prospective. 2013/2/18 22
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2. Directors’ Fiduciary Duties 2013/2/18 23 To act in the company’s best interest , and not just the interest of some directors or shareholders, even if that is a 99% shareholder. 董事必须以至诚及以公司的最佳利益为首 (Lee Tak Samuel v Chou Wen Hsein et al [1984] HKC 409 这是枢密院审理从香港上诉 的案件 )
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LEE TAK SAMUEL V CHOU WEN HSEIN ET AL [1984] HKC 409 The company’s articles contained a clause providing that the office of a director would be vacated in certain circumstances, including ‘if he is requested in writing by all co-directors to resign’ . P received such a notice signed by all seven of his co-directors. The privy Council affirmed the earlier decisions of the Hong Kong courts and held that the language of the clause was clear and unequivocal and P was bound to vacate the office. The directors were bound to exercise this power in the best interests of the company and not for ulterior (hidden) reasons and the notice was effective even if one or more directors had acted for ulterior (hidden) reasons. 2013/2/18 24
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3. To act for a proper purpose 2013/2/18 25 Howard Smith v Ampol Petroleum Two shareholders, holding 55% of the shares in a co, announced that they would jointly reject any offer from a particular intending takeover bidder, or from any other source. The board of directors then allotted new shares to the intending bidder. Although the co did not need new capital at the time, the directors’ primary purpose in making this allotment was to reduce the proportionate shareholding of the two majority shareholders to less than 50% and thus enable the bidder to make an effective bid.
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