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The ability of shareholders to cast their votes in their own selfish interests does make ratification of directors wrongs a complex issue, as directors are often shareholders.
Member rating: No Rating | Words: | Submitted: Tue Mar 16 2004
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The ability of shareholders to cast their votes in their own selfish interests does make ratification of directors wrongs a complex issue, as directors are often shareholders. Directors have a common law duty (fiduciary duty) and statutory duty in that they must act bona fide in the interest of the company. Whilst the company is solvent the best interests of the company will be to the interests of the company's shareholders as a whole. A director finding himself in a position of conflict does not automatically breach his duty, but he must resolve the conflict by exercising his discretion in the best interest of the company. There is a common list of possible breaches of fiduciary duties: misappropriation of the company's property; improper use of power for an improper purpose; abuse of discretion; allowing an interest and a duty to conflict. Shareholders have two separate rights. The first is the value...
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