Conflicted Directors: What is Required to Avoid a Breach of Duty?

Journal of Equity, Vol. 8, No. 2, pp. 108-127, 2014

20 Pages Posted: 17 Nov 2014

See all articles by Rosemary Teele Langford

Rosemary Teele Langford

University of Melbourne - Law School

Ian Ramsay

Melbourne Law School - University of Melbourne

Date Written: November 16, 2014

Abstract

Directors with a conflict of interest or conflict of duties may be subject to different requirements. These include disclosure of the conflict, disclosure of further information relevant to the particular transaction and taking positive action to protect the company’s interests, which may include the director preventing the transaction from proceeding. The authors analyse the relevant case law to identify the factors that lead to courts imposing these requirements. They show that the cases are best analysed as a continuum of required action, with increased action by the director being required where the company needs protection and the director is in the best position to take protective action. The authors also demonstrate that the relevant duty under which these requirements are imposed varies, with duties such as the duty to act in good faith in the interests of the company and the duty of care applying in addition to the duty to avoid conflicts.

Keywords: directors' duties, conflict of interest

Suggested Citation

Langford, Rosemary Teele and Ramsay, Ian, Conflicted Directors: What is Required to Avoid a Breach of Duty? (November 16, 2014). Journal of Equity, Vol. 8, No. 2, pp. 108-127, 2014, Available at SSRN: https://ssrn.com/abstract=2525690

Rosemary Teele Langford

University of Melbourne - Law School ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia

Ian Ramsay (Contact Author)

Melbourne Law School - University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 5332 (Phone)

HOME PAGE: http://law.unimelb.edu.au/about/staff/ian-ramsay

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
423
Abstract Views
1,441
rank
74,864
PlumX Metrics