Company Law Coursework Example | Topics and Well Written Essays - 2000 words

Company Law - Coursework Example Sale of DVD players can be impacted due to recycling old DVD players and hence investing in both the companies results in conflicts of interest. According to section 175, it is the duty of a director to avoid a situation in which his direct or indirect interest conflicts with the interest of the company in which he is already a director. It is not an infringement if the situation is not likely to give rise to conflict of interest or if the investment is already authorised by the board. In the new Act, shareholders’ approval of the conflict of interest is required either by resolution or by Articles. 2,3. In Boardman v Phipps4. the defendant had acquired special knowledge by virtue of being his solicitor and abused it for his personal benefit along with another. Held that as a fiduciary, he should have avoided conflict of interest. In Peso Silver Mines Ltd. v. Cropper,5 a leading Canadian case law involved conflict of interest arising out of fiduciary duty, the defendant took a dvantage of a rejected business opportunity by the plaintiff and utilised it for his personal benefit along with others. ... he resigned from the plaintiff company and secured the contract meant for plaintiff company in the name of his newly formed company.8 Another relevant case is Bhullar v Bhullar 9 wherein the principle of directors avoiding conflict of interest has been upheld. It was held that failure to pass information to the company about a business opportunity and utilising it for personal benefit amounted to breach of duty against conflict of interest. This put to rest the decision in London and Mashonaland Exploration Co v New Mashonaland Exploration Co10 that â€Å"directors did not have a duty not to place themselves in a position of conflict†11. In Plus Group Ltd v Pyke12, it was held that it was not a breach of fiduciary duty to work for a competing company as he had been effectively excluded from the company of which he continued to be a director. 13 A codification of common law, section 175 can apply to multiple directorships apart from exploitation of property, information or busi ness opportunity a director is able to access by virtue of his position. The director’s duty to inform conflict of interest cases even if the company or the directors are not interested in them. This statutory duty is not breached if already authorized by the company in the prescribed manner. Originally shareholder could only authorize such a conflict of interest. Now under the statute, in the case of a private limited company, it can be authorized by other directors who have no conflict of interest in the particular matter, provided the company’s articles also permit. In the case of a public limited company the non-conflicted directors can authorise provided the articles specifically permit it. If all the directors are conflicted, then shareholders’ approval will be required. This duty came