Does Section 191 of the Corporations Act Include Conflicting Duties?
Company and Securities Law Journal, Vol. 36, No. 7, pp. 587-592, 2019
8 Pages Posted: 3 Apr 2019 Last revised: 30 Apr 2019
Date Written: October 31, 2018
An important issue is whether s 191 of the Australian Corporations Act 2001 (Cth) – which requires directors to disclose material personal interests – includes conflicting duties. In other words, where a director faces a conflict between duties to different entities or persons (rather than a conflict of interest) is the director obliged to disclose this in accordance with s 191? This issue has not been the subject of detailed research and has not been resolved. In this research note the authors argue that conflicting duties do need to be disclosed under s 191. This is for three reasons. First, a close review of the Parliamentary materials surrounding s 191 indicates no intention to exclude conflicting duties from the disclosure requirements. Second, there is evidence that those involved in reform of the statutory disclosure provisions were of the view that conflicts of interest include conflicting duties and therefore there was no need to explicitly mention conflicting duties in the statutory provisions dealing with disclosure of interests. Third, in policy terms, conflicting duties have the potential to inhibit a director’s exercise of their duties and powers in good faith in the interests of the company and therefore should be disclosed under s 191.
Keywords: directors' conflicts; conflicting duties; disclosure of interests
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