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Directors' Duties 1 Cases

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Compnay Law Supervision V - Notes DIRECTORS' DUTIES To Whom Are Directors' Duties Owed?
Coleman v Myers [1977] (New Zealand Case) D was director of family company. D made offer to buy shares of other members of company, and invoked statutory power of compulsory purchase. C, other shareholders, brought action alleging breach of fiduciary duty owed by D to shareholders, in that D had not disclosed information relevant to true price of shares. Held:

i) ii)

1. Fact that directors' duties are owed to company does not stop them coming to owe fiduciary duties to shareholders.

2. This may happen where: There is agency relationship There is special factual relationship giving rise to fiduciary duty Facts

1. On facts

1. Company was small family company

2. Shareholders heavily depended on D for information and advice

3. Transaction was significant

4. Information relevant to true price of shares had been withheld from shareholders

2. Thus special facts gave rise to fiduciary duty on part of D to make full disclosure

1. And D had breached this duty Section 171 Regentcrest plc v Cohen [2001]

1. Test of improper purposes is objective.

1. And not subjective

2. Thus test is not one of good faith

1. i.e. is possible for director to be acting in good faith, but for improper purposes Bennetts v Board of Fire Commissioners of News South Wales [1967] (Australian Case)

1. Nominee/special interest director has overriding duty to serve interests of board on which he sits

2. Thus cannot act as representative of his nominator.

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