af Anh Luong Thi Minh 6 år siden
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s.201B(1)
A person under 18 cannot be appointed
Appointment of Directors
Ensure important matters are given full attention, and Workload distributed
eg: audit committee
Delegated power from the board
proceedings and resolutions recorded in minute books
public co.: director is prohibited from being present and voting at board meetings where a matter in which the director has a material interest is considered.
2 directors (quorum)
reasonable notice given for directors’ meetings
resolution must be passed by a majority of the votes cast by directors entitled to vote
passing all solutions
Min: 3
Min: 1
s.201A(1), Saloman
shadow director
not appointed but give directions or instructions to director to act upon
how that person's role is perceived by outsider
top level management
de facto director
not formally appointed but carries all the duties as a director
De facto director works directly, while the shadow director works indirectly
The director is aware that such grounds exist or a reasonable person in a like position in a company those circumstances would have been so aware
a company incurs a debt at a particular time; and at that time
There are reasonable grounds for suspecting the company is insolvent or would so become insolvent at that time
The company is insolvent at that time, or becomes insolvent by incurring that debt or debts including that debts
"Insolvency"
A person who is not solvent; or if and only if the person is able to pay all the person's debts as and when they become due and payable s.95
The person is a director of the company when it incurs a debt
s.180(1) does NOT give rise to criminal liability – unlike other duties. “negligence” is not dishonest.
s1317 :disqualification for a period; (this is not avail under general law) pay the Commonwealth (the government) a pecuniary penalty of up to 2000 penalty units. the court may order compensation to co. if there is loss suffer. (similar to damages/eq compensation)
Reliance s 189: – reliance on Reliable and competent employee; Professional advisor or expert Another director A committee of directors Must act in good faith, reliance on reasonable grounds.
S.180(3) – definition of “business judgment’ : any decision to take or not take action in respect to a matter relevant to the business operations.
Business judgment rule S. 180(2) : not liable if Judgment is made in good faith for a proper purpose No material personal interest Directors were informed Rationally believed that the judgement is in the best interests of the corporation.
Objective elements
Standard of care of non-excutive directors
not as high as exclusive directors
Standard of care of executive directors
should take reasonable steps to place themselves in a position to guide and monitor the management of co. (Daniels v Anderson [1995])
Subjective Elements:
“ In the corporation’s circumstances” Urgency and magnitude of problem faced by the co, financial affairs, size and business, constitution, composition of board.
Responsibilities
To some extent, the subjective skills/ability/background come into consideration. Eg if director was appointed BECAUSE of his special skills and expertise.
Take account of special background, qualification, management responsibility of officer. (ASIC v Rich, ASIC v MacDonald)
Misuse of confidential information (Thomas Marshall v Guinle - competed with the co, soliciting business from the co’s customer)
Taking up a corporate opportunity (Mordecai v Mordecai)
Misuse of company funds (Paul A Davies Pty Ltd)
The constitution often allows the board of director to approve at general meeting
Company's fully informed consent has been obtained (Disclosure). Full disclosure to general meeting, general meeting vote to ratify, OR
whether there is a "real sensible possibility of conflict" Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 103 per Maison J
the director is responsible for the company for profits that the director gain from using company's information or his position
Not putting themselves in situation where they will be tempted to prefer their own interest, or someone else's interests, over those company
The director can be in breach if he or she acts honestly and does not make a profit
General law: means that this comes from common law
Interest of the employees come after shareholder's interest Park v Daily News 1962 Ch 927
Company interest is the same as collective interest of the members/shareholders (Park v Daily News 1962 Ch 927)
The director must act in a way a reasonable director would consider to be in the best interest of the company. Park v Daily News 1962 Ch 927
Directors need to consider the interests of employees in certain situations Part 5.8A
The director must proritize the benefit of the shareholders
As long as directors do not disregard interest of shareholders entirely, they are allowed to consider other interests beyond those of shareholders (such as employee)
“Good faith”: Directors genuinely believe that they are acting in the best interests of the company.