Directors Fiduciary Duties

NG
Marchesi v Barnes, (1970) VR 434.
[To] act honestly refers to acting bona fide in the interests of the
company in the performance of the functions attaching to the office of
director. A breach of the obligation to act bona fide in the interests of the
company involves a consciousness that what is being done is not in the
interests of the company, and deliberate conduct in disregard of that
knowledge. This constitutes the element of mens rea in the criminal
offence created by the statute.

The court must be satisfied beyond reasonable doubt that there was
conscious and deliberate conduct in disregard of those
interests.......sufficient to satisfy the charge of not acting honestly.
UK Companies Act, 2006. Section 172 (1).
A director of a company must act in the way he considers, in good faith, would be
most likely to promote the success of the company for the benefit of its members as
a whole, and in doing so have regard (amongst other matters) to
a) the likely consequences of any decision in the long term;
b) the interests of the company's employees;
c) the need to foster the company's business relationships with suppliers,
customers and others;
d) the impact of the company's operations on the community and the environment;
e) the desirability of the company maintaining a reputation for high standards of
business conduct, and;
f) the need to act fairly as between members of the company.
Crowther v Carpets International, (1990) BCLC 460.
Ultraframe (UK) Ltd. vs. Fielding, (2005)
EWHC 1638.

[The] object of the no conflict rule is to prevent the fiduciary from

being swayed by considerations of his personal interests. Swayed in
what? The answer must be: swayed in the exercise of those powers
which are his to exercise in a fiduciary capacity. If he has no powers
to exercise, then the foundation for the rule has been undermined and
the rule will not apply.
Ultraframe (UK) Ltd. vs. Fielding, (2005)
EWHC 1638.

[A] director resigns his office, and thus ceases to have powers to
exercise. Once a director resigns his office, the no conflict rule
ceases to apply to his future activities.

Resignation will not preclude a director from being in breach of the

no profit rule if, after his resignation, he uses for his own benefit
property of the company or information which he has acquired while a
director.
Foster Bryant Surveying Ltd vs. Bryant, Savernake
Property Consultants Ltd, (2007) EWCA Civ. 200.

All that Mr Bryant did was to agree to be retained by Alliance after his
resignation became effective. He did nothing more. His resignation
was not planned with an ulterior motive. He did not seek
employment, or a retainer, or any business from Alliance. It was offered
to him, it might be said pressed upon him.......his acceptance of Mrs
Wattss proposal was no different from (at worst) setting in train
preparations for potential competition after his resignation had
become fully effective and he had ceased any relationship or
employment with the company.
Viking Airtech Pte. Ltd. vs. Foo Teow Keng,
[2008] 1 SLR 225.
Bhullar vs. Bhullar, (2003) EWCA 424.
The phrase possibly may conflict requires consideration. In my view
it means that the reasonable man looking at the relevant facts and
circumstances of the particular case would think that there was a real
sensible possibility of conflict; not that you could imagine some
situation arising which might, in some conceivable possibility in events
not contemplated as real sensible possibilities by any reasonable person,
result in conflict.
(quoting Lord Cranworth).
Bhullar vs. Bhullar, (2003) EWCA 424.
[The] appellants in the instant case had, at the material time, one capacity
and one capacity only in which they were carrying on business, namely as
directors of the Company. In that capacity, they were in a fiduciary
relationship with the Company. At the material time, the Company was still
trading, albeit that negotiations (ultimately unsuccessful) for a division of its
assets and business were on foot. As Inderjit accepted in cross-examination, it
would have been worthwhile for the company to have acquired the
Property. Although the reasons why it would have been worthwhile were
not explored in evidence ... Whether the Company could or would have
taken that opportunity, had it been made aware of it, is not to the point:
the existence of the opportunity was information which it was relevant
for the Company to know, and it follows that the appellants were under a
duty to communicate it to the Company.
No Profit Rule
Strict Rule
Not criminal, civil?
Does not depend on intentions (exception to the general fiduciary
rules)
Regal Hastings vs. Gulliver, (1967) 2 AC 134
Criticism no conflict vs. no profit?
Regal Hastings vs. Gulliver, (1967) 2 AC 134.