COMPANY AND FINANCIAL LAW

Company and Financial Law

Company and Financial Law

Case 1: Advice

Is what A did in conflict with Director's duties?

No, what A has done is not in conflict with the Director's duties. According to the director's duties act, it is necessary for the directors to stay away from the situations in which any conflict might occur in the interest of the company. Thus, what A has done is not in conflict with the Director's duties.

Is this a conflict of interest - interests as a shareholder vs. director

Yes, this is a conflict of interest i.e. the interests as a shareholder vs. director. According to the section 182, it is necessary not to improperly use the information to their advantage. However, in this case, B has experienced the conflict of interest because he has used the information for his person gain. As a director, B gained the information through being a director and used it for his own advantages i.e. he bought the shares from A at $ 1.5 and sold these shares to the third party at a rate of $3.5 One of the examples of such case is Brunninghausen v Galvanics [1999] NSWCA 199 ; (1999) 46 NSWLR 538. In this case the court has claimed that Brunninghausen is the only director of the company; therefore, Brunninghausen has the liability to an individual shareholder in order to act in a good faith.

Directors, officers and the employees of the company have the valuable information about the company. Therefore, it is necessary for them to keep the information in privacy and not disclose the information. In case of disclosing the information it can be public and shareholders can make their decisions on the basis of these information. The shareholders can misuse this information and sell the shares when their prices are high and buy more shares when their prices are low. Corporations Act 2001 (ss1042A-0430) and ss.183 and 184(3) deal with the duty of directors not to misuse information. Thus, in this case B has leaked the information of the company to the third party and got involved in the secret relations with the third party and disclosed them the information of the shares of the company. One of the examples is the case of ASIC v Adler & Ors [2002] NSWSC 171 in which Adler has failed to perform the director's duties and has contraverted the sections. Therefore, the court has found that it is the director's responsibility to take care of the interest of the privacy of the company's information.

Examples of the related Cases

One of the examples of the related cases is the example of the case of Maryland Company in Australia. The company was running under three directors and one of the directors was leaking the company's secret information to the public. As a result of the leaked information the investors were making decisions on its behalf. Therefore, the company has taken the legal step against that ...