A company director owed a fiduciary duty to his company, but that could not, of itself, prevent him making arrangements to set up in competition once his employment by the company came to an end, save only for acts during the period of his employment. While the question whether a director has acted honestly is to be tested subjectively; the question whether he has acted reasonably is an objective one. That he was to set up the business did not prevent him claiming relief under the section. If he had behaved reasonably and honestly and within his duties, he could be entitled to relief whether the company claimed against him for breach of duty, or for an account of profit, or for damages. In this case he had gone behind the company’s back to negotiate to take over leases to the company, and was, to that extent, in breach. No damages would however be awarded for the period after the termination of his employment, but whilst he remained technically a director. Section 727 might apply so as to relieve a director of a duty to account which would otherwise have arisen because of a failure to disclose an interest.
Judges:
Reid QC J
Citations:
Times 03-Sep-2001, Gazette 13-Sep-2001, [2001] 2 BCLC 749
Statutes:
Jurisdiction:
England and Wales
Citing:
Applied – Scottish Co-operative Wholesale Society Ltd v Meyer HL 1959
Valuation of Shares on Order for Purchase
The Co-operative Society had formed a 51 per cent-owned subsidiary to manufacture rayon at a time of strict post-war controls. The other shares were owned by two outside directors with skill and experience in the trade. When these directors declined . .
Cited by:
Cited – Ultraframe (UK) Ltd v Fielding and others ChD 27-Jul-2005
The parties had engaged in a bitter 95 day trial in which allegations of forgery, theft, false accounting, blackmail and arson. A company owning patents and other rights had become insolvent, and the real concern was the destination and ownership of . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 04 June 2022; Ref: scu.162932