AC208 Business Law Job
Name: Wong Kai Jun
Tutorial Group: T14
Teacher: Assoc/P Gan Lay Hong, Pauline
Firm Law Project
The law needs that administrators not take company opportunities with no permission with the company. The first part of the essay can touch on the ambit of this duty, then I will embark on to discuss whether the law imposes too harsh a burden about directors on this factor.
First of all, " corporate opportunity" refers to a company opportunity that the company can be considering or one which the company might be moderately expected to be interested, given the current line of business.
An example of a director breaching her duty by taking a corporate opportunity is given in the Compaq case. Compaq had organized to engage Personal Automation Mart for its " GEMS" project. However , an internal dispute arose between Tan - Compaq's managing overseer - and many shareholder. This dispute prompted Tan to resign, and she brought along a few of the Compaq's staff who helped in the JEWELS project to build another company Newstead. Personal Automation Mart later transferred the project to Newstead. The the courtroom held that Tan breached her fiduciary duties by setting up a competitive firm to be given a contract which should have gone to the company.
The above case also prospects one to think about, since company directors are not permitted to take business opportunities with no permission in the company, can the director step down from the company to take up a company opportunity? Is going to his the liability be absolved then?
The courts have got held that when directors resign from a business to take up a corporate opportunity, he can breach his duty by taking up the prospect without the permission of the firm where: 1 ) The resignation was motivated or affected by a prefer to acquire the option sought by company or 2 . it absolutely was the director's position with the company rather than a new project that led the movie director to the prospect which the movie director later acquired.
The above principal can be clearly illustrated in the Canadian Aero Assistance case. In such a case, O'Malley and Zarzycki - both officers of Canadian Aero Service В– resigned from Canadian Aero and set up Terra Surveys Ltd. Terra Study ultimately prevailed in acquiring the contract - which Canadian Aero had wanted -- for topographical mapping in Guyana. Canadian Aero sued, and the the courtroom held that both of them breached their responsibility. Even though they'd resigned by Canadian Aero, it was their particular positions with Canadian Aero rather than virtually any new projects that led them to the corporate opportunity that they can later bought.
What happens if the company struggles to take in the corporate chance? Will the company directors be allowed to take up the company opportunity in that case? There are two opposing sights with regards to this kind of circumstance. These different views are illustrated in the Balanza Silver Puits Ltd case and the Royal (Hastings) Limited case.
In Peso Sterling silver Mines case, a prospector approached Sobrecarga to buy several of his mining claims. Peso's board of director rejected the present after account. Cropper was a member of the board of Peso if the offer was considered and rejected. Afterwards, Cropper shaped a ligue to acquire the claims which in turn had been initial offered to Influencia. Peso's control changed at some time later and Cropper was dismissed. Peso sued Cropper for break of duty and the the courtroom held that Cropper hadn't breached his duty. This is so mainly because Peso experienced, for good industrial reasons, rejected the offer made to that by the prospector. Cropper has not been in a position of conflict of interest and duty mainly because Peso experienced decided completely no interest in these exploration claims.
The Peso circumstance suggests that a director will take up an opportunity that the remaining board, in good faith features decided not to pursue. The opportunity will no longer belongs to the company as the board offers decided to forego it.
However , in...
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