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Directors, remedies, liability for 3rd parties, Defence, assessory to…

- - - - courtney - notes decision criticised as harsh. company would have suffered if actions not done.
      - approved in AIB v Diamond profit having been made creates liability no matter if honesty or well intentioned
      - boardmann v phipps - nothing to do with njust enrichment - if make profit without proper disclsoure - profit can be made honesly but without disclosure improper - return profit to company (obtained info to buy shares when acting as agents of trustees)
      - duty to not make secret profit - should have informed shareholders and obtained consent
  - - - 219 - credit transaction
- - - - liable to account - for cause by breach (235 / 232)
        
        codified CMS Dolphin v Simonet account for profits made from setting up rival business (poached employees and clients)
  - - - company delegates power to directors to run the company
      - shareholders can remove directors or pass special resolutions
    - - constiution - e.g. directors pay
      - provisions of companies - some transactions require shareholder approval e.g. 238
      - special resolution
      - no director capable of acting
        
        mahon v east holyford
      - directors exceding delegated authority Burke Clancy
      - directors act in breach of duties bamford
- - - - McKenchie principles -
        
        communication and reliance be repetiive, customary
        
        communication be direct have obligatory / imposing force
        
        professional advice excluded
        
        instruction type directors normally exercise
        
        look at all factors and facts of case
      - held not de facto - never signed cheques, hands on role due to being property owner
  - - - authorised signatory
      - person sought to be called director with or without the label
      - appointment invalid on grounds didn't comply with act or constitution
      - attended board meetings, took managerial decisions
      - person held substantial shareholding with with of the of circumstances existing
- - - - shareholders
        
        allen v hyatt if hold themselves as acting for shareholder as agent
        
        crindle investments in particular circumstances owe fiduciary duty to individual shareholders
        
        coleman v myers heavily dependent on director for advice, family business, relationship
        
        peskin v anderson no duty to shareholders unless fiduciary duty due to establsihed special factual relationship
        
        courtney in private situation more likely agents of shareholders and consquently owe duties
      - employees
        
        no duty at common law
        
        s 224 - have regard - oweded to company
        
        weak provision
        
        park v daily news ex gratia payments to employments was ultra vires - insolvent - no duty
    - - walker v wimborne take account of interests of shareholders and creditors.
      - kinsella v russell kinsella where company insolvent interests of creditors intrude
      - winkworth v edward baron company owes duty to creditors present and future. don't have to pay every debt as soon as incrred but owe duty to creditors for repayment of debts. duty to ensure property not dissipated or exploited for benefit of directors to prejudice of creditors
      - frederick inns directors made payments to revenue which were ultra vires - court breach of duties - directors of company like trustees. funds in their hands and under their control but if misapply breaching trust.
      - jones v gunn
      - shannonside holdings costello duty to wind up once insolvent
      - jones v gunn director of insolvent companies can't make payments beneficial to themselves or connected companies
      - CLRG recommendation for it to be codified
  - - - act honestly and responsibly, adhere to constitution, avoid secret profits, independence of judgment, avoid conflicts of interest, skill, care and diligenc - have regard to certain matters where company likely to be unable to pay debt
      - duty to act in good faith
        
        bloxham v Irish stock exchange test - whether presence or absence of reasonable grounds enable what said subjectively to be honest decision in best interests of company as a whole - J Charleton - no evidence breach of duties - not purely subjective nor objective
        
        regentcress v cohen - subjective test (directors state of mind)didn't act bona fide in waiving contract provision entitling company to 1.5 mil. subjective test but can't be incosnistent with reasonable standards
        
        parkes closing down, shareholders disliked windfall to employees, as company not benefiting - held - gift and outside of powers of the company
        
        doherty is it subjectively honest decision in best interests of company as a whole
      - act honestly and responsibly
        
        Re USIT World obiter dicta - dishonesty goes to core of person's integrity. disctinction between hoensty and responsibility. dishonesty akin to improper dealing or form of fraud. dishonest always irresponsible. irresponsiblibity not always dishonest
        
        objective test - extent of compliance with CA 2014, extent incompetence, extent of responsibility for insolvency, for net deficiency of assets, lack of commercial probity, compliance with record and book keeping, regard for interests of creditors when insovlent
        
        La Moselle if director acted responsbly
        
        twinsectra v yardley liabiility for knowing receip is receipt based
      - company consitution
        
        smith (Howard) ltd v Ampol look at substantial purpose and if it was proper or not. (takeover from one faction throught share allotment)
        
        nash v lancegaye - allotment which gave shareholder majority shareholding. abuse of directors fiduciary powers. sole object
      - avoid secret profits
        
        regal (hastings) v Gulliver account for profit made
        
        peso silver mines v cropper directors of company reject business opportunity first, not applicable
        
        gencor v dalby can escape if obtain prior approval of company's shareholders and give full disclosure of facts and circumstances
        
        o'donnell v shanahan not for director to make deicision if company interest or nor
        
        spring grove v o'callaghan duty to not use confidential information obtained as such director otheerwise than for benefit of the company
      - duty to not restrict directors power to exercise independent judgment
        
        clark v workman directors approved transfer of shares to non-member, chairman had promised would try obtain board approval, issue - if removal boards disrection was breach - court opportunity for deliberation require - his promise to outsider meant not acting bona fide in interests of the company
      - codification
        
        courtney - major inovation
        
        eaton simplified law more accessible
  - - - director doesn't need to exhibit greater degree than may reasonably be expected from person of his knowledge and experience
      - director not bound to give continuous attention to affairs. duties intermitten nature at board meeting and committee meetings. attend most meetings
      - can trust unless grounds to be suspicious official perform duties hoenstly
- - - - EU directive 2019 - regulation in 2022 giving it effect