When is director liable?
· 2 principles clear:
1) For application of no-conflict rule, no need for company to have‘proprietary interest’ in opportunity diverted
2) However after director leaves office, may be liable under:
i) No profit rule
ii) If business opportunity is treated as ‘property’ of the company
· Even if competing directorships give rise to potential conflict of interest, can be remedied by consent of boards of both companies
Where profit from breach goes to company
· CMS Dolphin is WRONG.
· No such thing as joint liability for breach of trust.
1) Where director himself receives profit from breach of duty and puts it into a company, director is liable for knowing receipt.
Ø Plus company potentially liable for knowing receipt.
2) Where profits from a director’s breach of duty are paid directly to a company:
i) If company is alter ego of director
– Court will pierce corporate veil
– Thus third party company liable to director’s original company
ii) If director owns large number of shares in company but it is not a mere alter ego
– Directoris not personally liable to account for profits made
– Companymay be liable for knowing receipt