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Whose Business?
A recent court case was a reminder that directors are supposed to look to their company's interests first, not their own. A property development company relied on its managing director to find opportunities, but he decided to put one plum job that came up into a separate company which belonged to him. He argued that the company would not have been able to take on the job because it didn't have the finance, and he could not understand that there was anything wrong in what he had done.
The court held that he should at least have told his fellow directors about the opportunity, because he had been approached in his capacity as managing director of that company. He had therefore used his position to make a private profit at the expense of the company, and he would have to pay it back.
It's a reminder that ignorance of your duties is no defence, and you need to have a good understanding of what those duties are. If you can't attend a law course in your spare evenings, you need at least to be able to spot when someone might argue about what you are proposing to do, and take advice when that happens.
| The case was Crown Dilmun, Dilmun Investments Ltd v Nicholas Sutton and Fulham River Projects Ltd (2004). |
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