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Checklist Directors’ Duties Notes

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Directors' Duties: Checklist

Duties:

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?
b. Consent?
c. Consequences

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

11.

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?
Remedies

* 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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