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Directors' Duties: Checklist
1. Duty of Care, Diligence and Skill a. Breach of statute? S 180(1): b. Breach under general law? Ordinary prudent person in co circumstances and director's position (ASIC v Adler) c. Exception for business judgment rule?
2. Duty to prevent insolvent trading: s 588G
3. Duty to act in good faith
4. Duty to individual members
5. Duty to avoid conflict
6. Duty not to derive a secret profit
7. Related party transactions (for a public company) Where there is a possible conflict of interest or a financial transaction with a related party - consider the following possible breaches: Is D liable because of an interest D had in a transaction with their Co?
1. Breach of statutory disclosure obligations in ss 191, 195? Director of a co who has a MPI in a matter that relates to affairs of co must give the other directors notice of the interest unless s 191(2) applies. Consider implications for Criminal liability under s 195 (McGellin; Camelot; Adler)?
2. Breach of fiduciary duty to avoid conflicts? (Perhaps changed by company's constitution)? (Chan; Phipps) Is D liable because he/she profited or harmed company from fiduciary position?
3. Statutory duty of disclosure in ss 182 (regarding use of position), s 183 (use of information), and s 184?
4. Breach of equitable duty to avoid conflicts?
a. Duty applied?
5. Breach of any requirements from co's constitution?
D breach other no conflict duties
6. Breach of related party transactions law (public co) ( ss 207230)
7. Breach by not fettering board discretions rule: Thorby v Goldberg
8. Breach by competing with company: Mashonaland Other issues to consider:
9. Breach of duty to take reasonable care, skill and diligence: s 180; GL
10. Breach of duty to prevent insolvent trading: s 588G
Checklist of all the duties General law Daniels v Anderson; Wheeler; Adler; McDonald; Healey (Centro decision) - business judgment exception in s 180(2)
Statute S 180, 189, 190, 198D
Good faith in best interests, for proper purposes
(Re Smith and Fawcett; Harlowe's Nominees; hogg v Cramphorn; Teck; Howard Smith v Ampol; Whitehouse v Carlton; Equiticorp ; Adler; Bell Group)
1. When in corporate group: (Charterbridge; equiticorp; Bell)
Duty to act in good faith in best interests of co and for proper purposes: s 181, 184 Criminal - s 185
2. When in corporate group: (Charterbridge; equiticorp; Bell)
Duty to avoid conflicts
Imperial Mercantile creditor; Transvaal; Thorby v Holdberg; Mashonaland; Zacharia; Adler; Hospital Products;)
Duty not to improperly use position or information for advantage or detriment of company: Ss 182, 183
Duty of Care, Diligence and Skill
Disclosure obligations Duty not to fetter discretion Duty not to Duty to prevent insolvent trading: s 588G For public cos, related party transactions
Ss 191, 195 (Mcgellin v mount king; Camelot)
* Breach of duty of care, diligence and skill: (Both CL and statutory duties are owed by individual directors and officers personally liable for breach) o If breach of statute: compensation proceedings can be founded upon contravention of s 180(1) under s 1317H (Words 'resulted form' in s
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