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{s 191(2(a(i corporations act o director’s

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Unformatted text preview: {s 191(2)(a)(i) Corporations Act } o Director’s remuneration { s 191(2)(a)(ii) Corporations Act} o A contract requiring shareholder approval {s 191(2)(a)(iii) Corporations Act } o A director giving a guarantee, indemnity or security in relation to loan to the company {s 191(2)(a)(iv) Corporations Act} o Insurance of the director against liabilities incurred in that capacity {s 191(2)(a)(vi) Corporations Act} o Contracts with a related body corporate where the directors interests arise merely because the director is a member of both boards {s 191(2)(a)(viii) Corporations Act} o In proprietary companies, it is also unnecessary for a director to disclose interests where the other directors are aware of the nature and extent of the interest ad its relation to the company {s 191(2)(b) Corporations Act} Therefore if the director has a material personal interest then move forward to how to cure that conflict (below) If NOT then there is no requirement for the director to give notice B.2 Duty to Avoid Conflicts under General Law The general principle under general law is that Directors must not place themselves in a position where there is an actual conflict or a substantial possibility of conflict between: o (1) Director’s duties to the company and 5 o (2) the director’s personal interest or duties to another Company TEST: Would a reasonable person looking at the facts and circumstances conclude that there is a ‘real sensible possibility of conflict’ {Lord Upjohn in Boardman v Phipps} Therefore in arguing that a director is conflicted – look at what the reasonable person would think of the situation and draw conclusions from that Also can look to particular examples of conflict below and draw comparisons (1) Director Contracting with the Company (that he is director of) From {Aberdeen Railway Company v Blaikie Bros} a contract between a director and the company itself raises a conflict of interest because it deprives the company of the director’s impartial deliberation o (such as the director sells property to or buys property from the company) In {Imperial Mercantile Credit Association v Coleman} the director of the company received a secret commission for convincing the company to subscribe to debentures and this was a conflict (2) Director on Board of Competing Companies If a director is on the board of competing companies the general position of the law is that this is permissible as long as: o No confidential information is divulged o It is not contrary to the constitution and o It is not contrary to the express or implied agreement that the company has with the director (ie. No employment agreement clause saying “you must be devoted to us”) This is considered a relaxation of the ‘no conflicts’ rule {London and Masonaland Exploration Company} However there are disclosure requirements The rationale of this approach is so as not to reduce the pool of potential good directors by providing further incentive not to...
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{s 191(2(a(i Corporations Act o Director’s remuneration s...

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