Duty to avoid conflicts of interest this is

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Duty to avoid conflicts of interest This is particularly the case for a business opportunity which the Company is unwilling to exploit {Cook v Deeks; Peso Silver Mines} However where a company is financially unable to exploit an opportunity then this breach cannot be ratified {Regal (Hastings)} Or where the director has made a secret profit but has not misappropriated property of the company {Furs} Or where the Company purports to enter into a contract with entity which the director has a personal interest (2) Types of Breaches which Shareholders CANNOT Ratify Majority of shareholders cannot ratify the following breaches o Duty to act in good faith and in the best interests of the Company For example a transaction by an insolvent (or nearly insolvent) company that prejudices creditors of the Company cannot be ratified by the majority of shareholders {Kinsela; Sycotex} o General law duties to creditors Where a company is insolvent or near insolvency creditors interests “are paramount” {Walker v Wimbourne} So shareholders would be wanting to get as much as possible before insolvency because after creditors get priority, however you cannot ratify this o Duty to exercise powers for a proper purpose If the majority shareholders ARE directors as well involved in the breach then the purported ratification amounts to: Fraud on the minority {Ngurli} Oppression of the minority {Residues Treatment} o Statutory Directors Duties Breaches of statute cannot be ratified {Miller v Miller} because of the underlying impression that civil penalty provisions and criminal sanctions mean that the offence is against stakeholders not just company shareholders 12
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Shareholder Remedies (3) How can Shareholders Ratify a Breach? Ratification has to be made by shareholders voting in a general meeting In order for ratification to be effective it must not be brought about by unfair or improper means o Therefore the general meeting must be fully informed about the relevant conduct before the resolution is passed o Only disinterested shareholders can vote {Miller v Miller} 13
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