Interest conflicting or which possibly may conflict

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interest conflicting, or which possibly may conflict with the interest of those whom he is bound to protect. Transvaal Lands Co. v New Belgium (Transvaal) Land and Development Co. (1914) 2 Ch 488 – Co mpany A and company B entered into a contract. One of the directors of company A held shares in company B on trust for someone else. It was held that the contract was invalid because of the conflict of interest as director and trustee. Download free eBooks at bookboon.com
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BUSINESS ORGANISATIONS AND AGENCY COMPANY DIRECTORS 438 24.11.3.1 The corporate opportunity doctrine A particular application of the conflict of interest rule is the “corporate opportunity doctrine”. This is the requirement that all corporate opportunities, information or property must be applied for the benefit of the company. Directors must not unduly profit from these in the course of their employment – s. 175 (2 ). This duty subsists whether or not the company would take advantage of the property, information, or opportunity. If a director uses corporate opportunity, etc., for their own benefit or if they make secret profits, they must render account of the transaction or profits to the company. The principle remains applicable even after a director’s resignation. The following cases illustrate: C ook v. Deeks (1916) 1 AC 554 – Directors of a company became aware that a lucrative contract was about to be awarded to the company. They resigned and formed a new company which they used to get the contract for themselves. It was held that the directors were in breach of their duty and liable to account to their former company. Download free eBooks at bookboon.com Click on the ad to read more .
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BUSINESS ORGANISATIONS AND AGENCY 439 COMPANY DIRECTORS Regal Hastings v. Gulliver (1942) 1 All ER 378 – The claimant company which owned one cinema formed a subsidiary to buy two more cinemas in order to sell all three together. Because the company could not raise all the money needed for the purchase, the directors of the company bought personal shares in the subsidiary. They later sold these shares at a large profit. It was held that the directors were in breach of their fiduciary duty and should account to the company for the profits. Industrial Development Consultants Ltd. v. Cooley (1972) 1 WLR 443 – Cooley was a director of IDC involved in the negotiation of a lucrative deal with the Eastern Gas Board. The EGB later approached Cooley and offered him a lucrative consultancy contract without involving IDC. Cooley retired from IDC on the pretence of being ill and entered into a contract with EGB. It was held that Cooley must account to IDC for the profits he made because he became aware of the opportunity by virtue of his position as its director. 24.11.3.2 Exceptions to the corporate opportunity doctrine There are a number of exceptions to the corporate opportunity doctrine. First, the doctrine would be inapplicable where the articles of a company allows transactions in conflict of interest or provide that the rule will not apply. However, the director first has to disclose
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  • Fall '19
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