{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

3 directors on multiple boards of unrelated companies

Info iconThis preview shows pages 6–8. Sign up to view the full content.

View Full Document Right Arrow Icon
(3) Directors on Multiple Boards of Unrelated Companies Directors may be on multiple boards as long as there is no conflict of interest between the boards, as seen in {Fitzsimmons v R} If the director is also director of a company that is related and stands to gain from a transaction this would be a conflict {Marcus Clark} (4) Nominee Directors A nominee director is one who is appointed to represent the interests of a particular person or group on the board (ie. A creditor) There can be problems if there is a divergence between the interests of the company and the interests of those whom the person is acting for Strict view adopted in {Bennetts v Board of Fire Commissioners of NSW} where the Court held that ‘ a board member must not allow himself to be compromised by looking to the interest of the group which appointed him rather than to the interest for which the board exists” T herefore the nominee director will be conflicted if he represents interests of group that appointed him C. Curing a Conflict of Interest It is possible for a conflict of interest to be cured and not be a breach if the director does certain things There is a general law approach and the statutory approach C.1 Curing a Conflict under General Law The general law sets out expectations for a director who finds themselves in a position of conflict (as determined previously) The existence of a personal interest conflicting with duties to the company can be cured by three acts: (1) Full Disclosure At the very least, the director must make full disclosure of his personal interests to the board This involves: o Making full disclosure as to the ‘nature and extent of your interest {Fitzsimmons v R per Lord Cairns} o In some situations you must advise fellow directors of the risks of the proposed dealing that you are aware of {Fitzsimmons v R per Lord Cairns} o There is no precise formula as to disclosure, but the disclosure must make the other directors “ fully informed of the real state of things” {Gray v New Augarita per Lord Radcliffe} o If the director knows that a company has financial incapacity then this is a matter which must be disclosed to the board { Permanent Building Society per Anderson J} 6
Background image of page 6

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
(2) Abstaining from Voting Having made your disclosure the director must absent themselves from voting in the decision Director should abstain from voting {Imperial Mercantile v Coleman; Gray v New Augarita} Director should also not take part in contract negotiations where such negotiations would place him in a conflict {Jenkins & Enterprise Gold Mines} (3) Further Positive Steps In { ASIC v Adler, Santow J} asked in what circumstances is “ mere disclosure of a conflict and abstaining from voting… insufficient to satisfy a director’s fiduciary duty?’ Therefore the Director may be required to ‘take steps to protect the company’s interest by using such power and influence as he [has] to prevent the transaction going ahead” {Marcus Clark}
Background image of page 7
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}