Company Law Directors Of Blackboots Ltd

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Company Law Directors Of Blackboots Ltd

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Company Law Directors Of Blackboots Ltd

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Discuss about the Company Law Directors of Blackboots Ltd.

Advise for George
The issue in this question is if the directors of Blackboots Ltd. have breached their duties and if they have been involved in oppressive conduct as a result of which, the remedies provided by the Corporations Act, 2001 may be available to George. Certain rights have been provided to the shareholders by the Corporations Act. For this purpose, a distinction needs to be made between the majority and minority shareholders. Certain additional rights and remedies have been provided to the minority shareholders as a result of their perceived vulnerability. The minority shareholders who have to face oppressive conduct have been provided a remedy under s 232, Corporations Act (Dine, 2001).
The remedy for oppressive conduct has been provided to the minority shareholders so that an enforceable remedy can be provided to them against the conduct of the company that can be described as prejudicial for the interests of the minority. In this context, section 232 of the Act provides different types of remedies to a litigant, including injunctions, modifying the Constitution of the company and wind up orders (Dine, 2001).
In the present case, all the three directors of Blackboots Ltd. have breached their fiduciary and statutory duties. Generally oppressive conduct and the breach of duties by the director goes hand-in-hand, especially the breach of duties that have been prescribed by sections 181 to 183. For this purpose, section 181 provides for the duty of the directors to act in the best interests of the company, not to derive an advantage for themselves (s181) and not to misuse the information received by them due to their position in the company (s183) (Wild, 2001).
In this case, Amy had received the opportunity given to her position as the director of Blackboots Ltd. However, Amy decided to attain a personal advantage from this information. When she informed the board of Blackboots Ltd., she knew that being the daughter of Fred, Condace usually took advice from him regarding the matters that were to be discussed during the board meeting (Ciro and Symes, 2013). In this case, Fred had told Condace that she should favor Amy’s proposal. This amounts to a breach of duty by Condace. Similarly, a breach of duty has also been committed by Brian. As a director of the company, it was his duty to make informed decisions regarding the matters that were being discussed at the board meeting. However Brian did not understand what was being discussed but still he voted in favor of Amy’s proposal. A breach of duty has also been committed by Amy.
Under these circumstances, George can pursue derivative action against the director of the company in the name of Blackboots Ltd. as provided by section 236 and 237 of the Corporations Act or may decide to take member’s personal action. The effects of this question indicate that most likely there has been a breach of fiduciary as well as the statutory duties mentioned in section 180, 181 and 182 of the Act has been committed by the directors of Blackboots Ltd.
Dine, J. (2001). Company Law Fourth Edition. New York City: Palgrave.
Wild, S. W. (2001). Smith and Keenan’s Company Law. Essex: Pearson Education Limited.

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