The general meeting is the only appropriate organ to

Info icon This preview shows pages 9–10. Sign up to view the full content.

View Full Document Right Arrow Icon
Can Shareholders General Meeting allow director to keep profit? The general meeting is the ONLY appropriate organ to determine whether the director should be release from what otherwise would be a breach of duty It would be approved under the process of ratification by shareholders If the Directors are also shareholders they cannot vote if they hold the majority of votes {Cook v Deeks per Lord Buckmaster} However it is hard to organise a general meeting to get this approved, therefore the most recent question in relation to this issue is whether just board approval can be enough? C.4 Can just a Board allow the director to keep profit? Unless the constitution makes the board the appropriate organ to excuse a breach of duty by a director it is unlikely that the Board can allow director to keep profit (you would need a general meeting instead) HOWEVER there are some instances where the Board can approve the director’s taking up of opportunity in a personal capacity {Peso Silver Mines; Queensland Minds v Hudson} Firstly based on Peso Silver Mines the court would have regard to the following factors to find that director has not breached duty: 9
Image of page 9

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

View Full Document Right Arrow Icon
o Person does not obtain opportunity by his position as director (rather it is obtained in a personal capacity) o Person participates in good faith as director when the board rejects the plan o The opportunity sought the person out o Person had not acquired any additional information as director that put him at an advantage to other potential investors – just an “individual member of the public” However it should be noted that {Peso Silver Mines} the Board did not approve the opportunity, however the court gives regard to allowing the director to keep profit {Queensland Mines} is the case that is authority for allowing board approval to allow directors to keep profits o However its important to note that in this case, 2 major shareholders were also directors on the board – therefore board approval was effectively shareholder approval o Here also the court emphasised the fact that the director had obtained the opportunity outside the scope of his role as director as soon as they rejected the proposal {Queensland Mines per Lord Scarman} Particularly {Queensland Mines} has been criticised for seemingly conflicting with {Regal (Hastings)} This has led most commentators to conclude that for there to be no issue – there needs to be a general meeting of shareholders where majority shareholders (who want the opportunity) cannot vote 10
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern