Informality may be a good thing but it may be very dangerous

Article Abstract:

The anticipated Second Corporate Law Reform Bill promises to sanction more informal business practices, but two Australian courts found in 1996 that there are limits on the informality that boards of directors may engage in. In Mulcon Pty. v. MYT Engineering Pty., the New South Wales Supreme Court found that a phone call between directors was not sufficient to formalize a decision because they did not agree on a resolution. In R. v. Byrnes, the South Australian Court of Criminal Appeals found that the majority of directors could not decide, outside a formal meeting, to disregard a provision of the company's articles.

Cases, Business communication, Formalities (Law)

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Full disclosure and abstention from voting may be the only solution for interested directors

Article Abstract:

Decisions by the UK Queen's Bench and High Court of Australia emphasize the significance of disclosure by corporate directors when voting on transactions that appear to involve conflicts of interest. In R. v. Byrnes, the Australian High Court found that two directors breached fiduciary duties by using the corporation's credit to guarantee notes to be issued by another corporation that they were involved with. In Neptune (Vehicle Washing Equipment) Ltd. v. Fitzgerald, the Queen's Bench found that a sole director had to declare interest in a transaction and record it in the minutes.

United Kingdom, Corporate governance, Fiduciary duties

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Liability of company directors

Article Abstract:

Two 1995 cases determined that company directors can be held liable for contributory negligence in a counterclaim by auditors even when the auditors are found negligent as well. The first case was Daniels v. Anderson, tried by the New South Wales Court of Appeal, while the second was Dairy Containers Ltd v. NZI Bank, tried by the New Zealand High Court. These decisions increase the pressure company directors are under because these issues are being litigated more frequently and suits cost more time and money than before.

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