Corporate

What are the fiduciary duties of a director

• To act in good faith to the best interest of the company

• To exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances

The duty to act in good faith tot the best interest of the company

Section 99(1)(a) Companies Act

The best interest of the company includes the interest of employees and shareholders

Section 99(2) Companies Act

Case: duty to not earn a profit or obtain financial benefit from their position

Regal Hasting v Gulliver

Directors must exercise their discretion in what they consider is the best interest of the company and not what the court may consider. It is a subjective test

Re Smith & Fawcett

Directors have the duty to direct the management of the business and affairs of the company

Section 60 Companies Act

The section that requires the appointment of a Company Secretary

Section 61 Companies Act

A corporate secretary is not a mere clerk. The secretary makes representations on behalf of the company and is entitled to sign contracts

Panorama Developments v Fedelis Furnishings Fabrics

What are the safeguards to discharging directors duties

1. Be informed

2. Ask questions and Request Information

3. Obtain the benefit of an expert

A director who fraudulently takes or uses for his own benefit any property of the company is liable to imprisonment for seven years

Larceny Act section 21

The director with a conflict is prohibited from being present at, forming part of a quorum or voting on any resolution in relation to the conflicting interest

Section 93 Companies Act

Where the conflicting interest of a director is not disclosed the court may set aside the contract on application of the company or shareholder

Section 96 Companies Act

What section of the Integrity in Public Life Act requires the director to disclose his interest if a conflict were to arise

Section 29 Integrity in Public Life Act

A director shall not use information gained in the execution of his office and which is not available to the public to further his private interest

Section 25 Integrity in Public Life Act

A shareholder may file an Oppression Action in respect of breaches of directors’ duties where the directors actions have been oppressive, unfairly prejudicial or unfairly disregards his interest

Section 242 Companies Act

What order may the court make under section 242

• An order appointing directors in the place of directors

• An order varying or setting aside a transaction or contract

• An order compensating an aggrieved person

A company properly incorporated is a separate legal entity distinct from the individual members

Salomon v Salomon

The veil of incorporation may be pierced where the company was a mere cloak or sham

Gilford Motor v Horne

In this case the plaintiff established a network of companies and trust to dispose of assets. The court may pierce the veil in order to achieve justice

Re a Company

Where a company is formed to deliberately evade or frustrate the enforcement of a legal obligation or liability the veil may be pierced

Prest v Petrodel