business 代写: Duty to Avoid Conflicts of Interest

2016-11-30 20:00

business 代写: Duty to Avoid Conflicts of Interest

Moreover, this directors are put into practice with this duty in order to dodge in a circumstances where a director can obtain either a direct or an indirect benefits from the conflict with the company’s interests. In conjunction of this, the Section 175 of Companies Act 2006 has clearly mentioned that this duty is not violated if:

    the situation cannot reasonably be regarded as likely to give rise to a conflict of interest; or
    the matter has been authorised by the directors.

Based on the Institute of Chartered Secretaries and Administrators (2015), the breach of this duty is applied when the directors take advantages from the third party in terms of property, unofficial information and opportunities. At the same time, it is not a breach of duty in a circumstance that it is arise unreasonably or it has been approved by the directors. Unfortunately, the directors always face the conflict of interest with the competitor, major shareholder, or a supplier and it has been increasing from years to years. This is because the Act does not explained clearly on what is “interest” or the “conflict of interest” means. This issue has showed clearly in the case of Boardman v Phipps[5] where Mr Broadman and Tom Phipps buy the company shares with the acknowledgement of Mr Fox as they believe that they could turn the company around. Nevertheless, Mr Broadman and Tom Phipps did not entirely acquired to all beneficiaries and they have made a great profit with Mr Fox. As a result Johnn Phipps has sued them for breaching the duty to avoid conflicts of interest (Webstroke Law, 2014). In Australia, the directors are also charge for breaching this duty, which is stated in the case of Chan v Zacharia [6]where the High Court of Australia was held that Dr Chan has breached the duty. This is because Dr Chan acted in his personal interest instead of legitimate the interest of the partnership as a whole (Oxbridge Notes, 2014).