States that those directors are satisfied that the

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States that those directors are satisfied that the interest should not disqualify the director from voting or being present {s 195(2)(b) Corporations Act} ASIC permits the director to be present and vote by a declaration made under s 196 {s 195(3) Corporations Act} D. Consequences for Transaction o Under {s 191(4) Corporations Act} a contravention of s 191 does not affect the validity of any act, transaction, agreement, instrument, resolution or other thing DUTY TO NOT PROFIT FROM POSITION A. Fiduciary Obligations of Directors As {Boardman v Phipps per Lord Upjohn } explained: o a fundamental rule of equity that a person in a fiduciary capacity must not make a profit out of his trust which is part of the wider rule that a trustee must not place himself in a position where his duty and his interest may conflict” Therefore there are two limbs of fiduciary obligations: o 1) Duty to avoid conflicts of interest o 2) Duty to not profit from your position B. Content of the Duty Not to Profit The fiduciary duty of a director to his company not to obtain an unauthorized profit exists in general law and in statute in relation to the improper use of a director’s position or information {Chan v Zacharia per Deane J} Under {s 182 and 183 Corporations Act} the director, secretary or officer must not: o Improperly use their position to gain advantage personally or cause detriment to the company {s 182 Corporations Act} o Improperly use information to gain advantage personally or cause detriment to the company {s 183 Corporations Act} Note that the duties apply to directors, secretary, officers, employees This duty has strong links to the duty of good faith in that a director who uses his position/information to his own benefit will probably not be acting in the bests interests of the company B.1 Improper Use of Position Under {s 182(1) Corporations Act} it provides that a director, secretary, other officer or employee of a corporation must not improperly use their position to: o (a) gain an advantage for themselves or someone else; or o (b) cause detriment to the corporation (1) Test of Impropriety is objective: There “has been a breach of the standards of conduct that would be expected by a reasonable person in the position of the director” {R v Byrnes} A director can still act improperly even when he acts honestly or has not intention to act other than in the best interests of the company {R v Byrnes} – ie. He would be a crap director A relevant consideration is consistency with the officers “proper” discharge of duties, obligations and responsibilities and their actual conduct {Grove v Flavel per Jacobs J} (2) Causal Link Once impropriety is made out, a causal link will need to be established between the director’s improper conduct and the gaining of some personal advantage or detriment to the company {ASIC v Adler per Santow J} NOTE: If it shown that the director’s conduct was explicitly carried for the purpose of gaining a material advantage
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