Fiduciary duty


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  • Created by: mellon
  • Created on: 28-04-14 17:46
What is the obligation?
One of loyalty
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What are the exceptions to s173 duty to exercise independent judgement?
1) when pursuing an agreement by company 2) acting when authorised by constituion
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Can you enter a situation with a conflict of interests?
No, not even a possibility
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What happened in Aberdeen v Blaikie Bros
A was partner and director of a comapny. Partnership and comapny entered contract. As director, accepted that they only supplied 2/3rds of chairs. VOIDABLE.
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What does s177 cover?
Dealing with the company
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What must the director do?
Declare nature and extent of his interest to other directors before entering into the transaction
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Where are the remedies found?
s178
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What section forbids secret profits?
s176, duty not to accept benefit from third party from being a director or doing anything as director.
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Who does s176 apply to?
Directors and also former directors s170
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What happens in Royal Hastings v Gulliver?
Director of a company made a profit from share capital as security on cinemas, should have got consent
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What does s175 relate to?
Director has interest that conflicts or possibly conflicts with the Company, competing against them
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Who does it apply to?
Directors and former directors s170
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Can you be a director of competing companies?
Technically yes
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What happened in IDC v Cooley?
Architects firm, D was meant to get business for company but client just wanted to deal with him. Pretended he was ill and was released from company and worked for client. It was a breach.
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What happened in Commenwealth Oil and Gas?
Was director of both companies, signed a memorandum of understanding that for one about access to oil, other said he should have signed it for them. Conflicting interests as director of both
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What are substantial property transactions?
Acquisition of substantial non cash asset by director from company or vice verse s190
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What do you need to approve spt?
Shareholder approval
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What does non-cash mean?
Property or interest in property other than cash. Includes discharge of liability
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What counts as substantial?
Worth at least £100 000 or 10% of the company's asset value (at least £5000)
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How is the asset value determined?
At value to director, not market value. Value from last accounts.
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When is the transaction valued?
At the time of entering the arrangement
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Dies this rule also apply to connected persons to the director?
Yes, which includes family and connected directors and controlling directors.
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What are the exceptions in s192-3?
If he transacts as shareholder, if director is parent or subsid company, or if winding up
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Can they be ratified?
Yes, by shareholders if within a reasonable time s196
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Are there any defences?
Yes, the director did not know the relevant circumstances of the circumvention or he took all reasonable steps to ensure compliance by company
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What is the effect of not seeking approval? or doing it without approval?
Account for gain, joint and several liability of all ds who approved. Also voidable exept if no restitutio in integram or 3rd party affected
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Card 2

Front

What are the exceptions to s173 duty to exercise independent judgement?

Back

1) when pursuing an agreement by company 2) acting when authorised by constituion

Card 3

Front

Can you enter a situation with a conflict of interests?

Back

Preview of the front of card 3

Card 4

Front

What happened in Aberdeen v Blaikie Bros

Back

Preview of the front of card 4

Card 5

Front

What does s177 cover?

Back

Preview of the front of card 5
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