...the essay given, it identifies fiduciary duties of directors as the main issue. There are a few consequences of breaching fiduciary duties. Under general law, a failure to disclose a conflict of interest rendered the transaction voidable at the option of the company. Aside from rescinding the contract, the company can seek to obtain a range of remedies such as an injunction to stop the breach of duty continuing, a constructive trust over assets acquired arising from the breach of duty, an account of profits to strip away gains made by the breach of the duty or equitable compensation. For contraventions of the statutory duties, both ss182 and 183 are civil penalty provisions under s1317E. Therefore, breach of these provisions may result in a declaration of contravention being made by the court and thereafter ASIC may apply for a pecuniary penalty order (s1317G) and/or a disqualification order (s206C) and/or compensation for the company (s1317H). A serious contravention of ss182 or 183 which is dishonest or reckless may result in a criminal liability under s184 (2). This action may be taken by ASIC and/or the Commonwealth Director of Public Prosecutions. The word ‘fiduciary’ has its roots in the Latin word fiducia, which means trust or confidence. A fiduciary duty is a legal duty to act solely in another party’s interest. Parties owing this duty are called fiduciaries. The individuals to whom they owe a duty to are called principals. Fiduciaries may not profit from their relationship...
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...Title: Fiduciary obligations may spring up by reason of relationships of trust and confidence or confidential relations. Introduction Fiduciary is an important issue arises in business relationships, in partnerships, it helps create a fair business environment for all the parties when working together, in agency, it protects the principles' benefits, in corporations, it may lead the business operates properly and legally. Therefore, fiduciary obligations are closely related to co-operations Trust and confidence are the most important elements in these fiduciary relations, in this essay, the relationship of a fiduciary obligation and above relations will be demonstrated and explained. Table of Content Introduction P.1 Table of Content P.2 The Basic Concept of Fiduciary P.3 Fiduciary Concepts and Obligation vs Partnership Relations P.6 Fiduciary Concepts and Obligation vs Corporate Relations 1. Directors P.8 2. Promoters P.11 Conclusions P.13 Bibliography P.14 The Basic Concept of Fiduciary Fiduciary, under oxford’s dictionaries’ definition, is trustee who is given control or powers of administration of property in trust with a legal obligation to administer the beneficiary’s interest, and the Cambridge dictionary defines “relating to the responsibility to look after someone else's money in a correct way”. It is obvious that the fiduciary concept involves the element of mutual...
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...McGill Law Journal ~ Revue de droit de McGill JUSTIFYING FIDUCIARY DUTIES Paul B. Miller* Fiduciary duties are critical to the integrity of a remarkable variety of relationships, including those between trustee and beneficiary, director and corporation, agent and principal, lawyer and client, doctor and patient, parent and child, and guardian and ward. Notwithstanding their variety, all fiduciary relationships are presumed to enjoy common characteristics and to attract a core set of demanding legal duties, most notably a duty of loyalty. Surprisingly, however, the justification for fiduciary duties is an enigma in private law theory. It is unclear what makes a relationship fiduciary and why fiduciary relationships attract fiduciary duties. This article takes up the enigma. It assesses leading reductivist and instrumentalist analyses of the justification for fiduciary duties. Finding them wanting, it offers an alternative account of the juridical justification for fiduciary duties. The author contends that the fiduciary relationship is a distinctive kind of legal relationship in which one person (the fiduciary) exercises power over practical interests of another (the beneficiary). Fiduciary power is a form of authority derived from the legal capacity of the beneficiary or a benefactor. The duty of loyalty is justified on the basis that it secures the exclusivity of the beneficiary’s claim over fiduciary power so understood. Les obligations fiduciaires sont essentielles pour...
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...Former Los Angeles Clippers Owner’s Breach of Fiduciary Duty Claims A tort is a violation of a duty imposed by the civil law (Beatty, Samuelson, & Bredeson 2013). A business tort, also called an economic tort, usually involves unfair practices that result in improper interference with a business contract (Beatty et al., 2013). Purpose of article This article is about the court case between former Los Angeles Clippers owner Donald Sterling and the National Basketball Association (NBA). Mr. Sterling filed a civil suit against the NBA and the commissioner for breach of fiduciary duty claims after the commissioner banned him from the NBA and fined him $2.5 million dollars (Unger, 2014). Mr. Sterling is seeking damages of more than $1 billion. The author is writing the article to discuss in detail, the complaints brought forth by Mr. Sterling. Did the NBA and Mr. Silver in fact owe Mr. Sterling the fiduciary duties listed on the complaint because of a breach of contract (Unger, 2014)? Thesis of the article The thesis of the above article is that Mr. Sterling must prove there was an existence of a fiduciary relationship with the defendant, misconduct, and damages that were caused by the NBA fiduciary’s breach (Unger, 2013). Key Points/facts The key point evident in the article is the private conversation between Mr. Sterling and his then girlfriend Vivian Stiviano. Vivian Stiviano recorded the conversation between her and Mr. Sterling without his knowledge. Mr. Sterling...
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...Principal Fiduciary Duties of Boards of Directors Presentation at Third Asian Roundtable on Corporate Governance Singapore, 4 April 2001 Professor Bernard S. Black Stanford Law School bblack@stanford.edu 1-650-725-9845 Introduction I want to offer an overview of the principal fiduciary duties of boards of directors. I will speak mostly from a common law perspective. Fiduciary duties of directors were first elaborated by common law judges, operating without any guidance from the formal written law. Indeed, the company laws of the United States, and many other common law jurisdictions, contain no statement at all of the core fiduciary duties of care and loyalty. The fiduciary duties of directors are continuing to evolve, again without formal written law. The classic statement, still found in many American law school textbooks, is that directors owe to shareholders, or perhaps to the corporation, two basic fiduciary duties: the duty of loyalty and the duty of care. I believe that this is too simple a picture. There are at least two additional core duties that directors have today: a duty of disclosure, and a duty that has no precise name, that I will call the duty of extra care when your company is a takeover target. I want to offer, for each of these duties, a brief statement of the duty, why it exists; and how the duty is enforced or, sometimes, not enforced. I will speak about duties of directors, but these duties apply to officers also. 1 Duty ...
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...1. Were there any abuses of power by the management and breach of fiduciary on the part of the directors? Yes, there are breached of fiduciary duties by the management or directors of Delima Enterprise Sdn Bhd. In general, directors take up a fiduciary position or relationship with the company. A fiduciary relationship is the relationship between a person in a position of trust in which the fiduciary and the person for whose benefit the fiduciary acts. In other words, a fiduciary’s powers are exercised on behalf of others who are being in a position of dependence. In this case, directors of Delima Enterprise Sdn Bhd have fiduciary duties to the shareholders and stakeholders of the company. In addition, they also control property in which others have an interest. According to Section 132(1) of Companies Act 1965, a director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office. The directors have the following duties as being in fiduciary position: a. Duty to exercise power in good faith and in the interest of the company. b. Duty to avoid conflict of interest. c. Duty to exercise power for the proper purpose. a. Duty to exercise power in good faith and in the interest of company The directors of a company must exercise their powers in good faith and in the best interest of the company as a whole. It means that, directors of the company must act in the interest of the shareholders as a collective group of...
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...Introduction: Section 2(13) of company’s act defines a director may be defined as a person having control over the direction, conduct, management, or superintendence of affairs of a company. Any person in accordance with whose direction or instructions, the board of directors of a company is custom to act is deemed to be a director of a company. Section 2 (6) of the company’s act states that the directors are collectively referred to as board of directors are simply the borad. Directors being pillars of corporate governance (Cowan, 2004) should at all times act honestly and use reasonable diligence in the discharge of their duties. This is more so in light of recent major corporate issues like ENRON & Worldcomm in the United States and the Transmile case in Malaysia. In essence directors are agents of the company and as agents, they owe a duty of trust to the company and shall do their utmost to put the interest of the company first before personal ones. Directors of a company are responsible in managing the affairs and business of the company. Some or each and every one of the shareholders will normally be involved in the company’s management for those company that are smaller in size, particularly small family companies. On the other hand, bigger company will have managers that specialized only in the conduction to the company’s business. These managers may only own a small proportion of the company’ shares. According to s142 of the Companies Act 1965, a company must...
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...TN: “How to Restore the Fiduciary Relationship, a conversation with Eliot Spitzer” 1/What does the term “fiduciary duty” mean? RELATIONSHIP TRUST INTERESTS A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. —Bristol & West Builg Society v Mothew [1998] Ch 1 at 18 per , Lord Millett The term fiduciary duty in economics it’s referred to the written or unwritten duty that the fiduciary have towards their clients or shareholder. This relationship it’s based on the trust that clients/shareholder have in the Management or in the financial institution; besides these are delegated to satisfy the interests and the needs of client/shareholder, without taking advantage from their position ( potential conflict of interests). Cite; and explain The fiduciary duty it’s the relationship that exist between shareholders and top management, and between clients and financial institution (i.e. Mutual funds). The relationship it’s based on the confidence/trust that the clients or the shareholder have in the top management or the financial institutions; besides, these are delegated to satisfy the interest of the shareholder/client and not to take advantages of the their powerful position. 2/Who is Eliot Spitzer and what is he best known for? Eliot Spritzer was the general attorney of the New York State. He became famous attachments ...
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...breach of fiduciary on the part of the director? Yes, there abuses of power by the management and breach of fiduciary on the part of the director. Abuse of power is the act of using ones position of power in an abusive way, this can take many form such taking advantage of someone, gaining access to information that should not be accessible to the public or just manipulating someone with the ability to punish them if they do not comply. Breach of fiduciary duty is people in position on the trust or fiduciary relationship such as director, high level of employees of business owe certain duties of their principles. According to this case, there some issue that show the abuses of power by the management and breach of fiduciary on the part of the director. The issue are: 1. En.Zayed and Pn.Hashimah tried to negotiate with the Auditor to not qualify the Financial Statement. Base on this issue, under the statutory duty of company act, section 181(1), Duty to Act in Good Faith. ‘A director of the corporation must exercise their powers and discharge their duties. Section 181(1)(a) In the good faith in the best interests of corporation and Section 181(1)(b) for a proper purpose. Section 132(1), a director shall at all-time acts honestly. Section 169 and ninth schedule of the companies Act 1965, financial information that companies are required to disclose are mainly though the director report and financial report. According to section 174(2) company act 1965, it auditor duty and responsibility...
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...Issues Based on the case scenario, Doris, Betty, and Charlie formed a company called Bechdo Pty Ltd. The three members are the directors and Betty who is major shareholder holds 40% followed by Charlie and Doris who hold 20% each while the 20% is held by the rest. Based on the company constitution, a managing director has capacity to enter into a contract o behalf of the company up to a maximum of $100,000. Moreover, he/she can enter into contracts to the value of $900,000 upon getting consent for the board of directors. In this case, Bechdo Pty Ltd operates without a managing director since none was elected. The major issue is that Betty being the majority shareholder went ahead and entered into contract with BB Ltd, Jillo Pty Ltd, and Con Development Ltd. All the contracts made were over USD 100, 000, and the last two were over USD 900,000. Upon realization of the contracts, a meeting was convened and a resolution was made that stated that Betty acted improperly and failed to discuss the contracts with board members. As a result, the three contracts have been labeled as void and ultra vires and Bechdo Pty does not recognize them. The paper seeks to advise, Bechdo Pty Ltd, BB Ltd, Jillo Pty Ltd, and Con Development Ltd in regard to their liabilities and legal rights to the contract. Moreover, advice is given on legal grounds that may be taken by Bechdo Pty Ltd against Betty, Charlie, and Doris. Rules First, a corporation or a limited company is an artificial entity which...
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...QUESTION 1 From the legal perspective would there any abuse of power by management and breach of fiduciary on part of director? Yes, there is abuse of power by the management and breach of fiduciary duty of director. A fiduciary is define as someone who is in control of property in which others have an interest, or is given a power which is exercised on behalf of those who are in a position of dependence. As stated in Section 132 (1) of Companies Act 1965; a director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office. Fiduciary duties comprise of act bona fide in the interest of the company and exercise power for the proper purpose. In discharged of his duty, director shall at all times act honestly and use reasonable diligence. In this case, En.Zayed and Puan Hashimah were the directors of company who owes a duty of loyalty and good faith. Duties of directors are as follow: * Duty to exercise power in good faith and in the interest of the company. The director occupied a fiduciary position and must therefore exercise their power in good faith and in the interest of the company as a whole. As in the case of En.Zayed and Puan Hashimah tries to negotiate with the auditor as the auditor expressed their intention to qualify the audit report. En.Zayed and Puan Hashimah plan to terminate the auditor’s appointment and appoint a new “friendly party” auditor since the auditor disagree to unqualified the report. As a director...
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...Article Summary ENLARGING AN EMPLOYER'S FIDUCIARY HAT: VARITY CORP. V. HOWE INCREASES EMPLOYERS'; EXPOSURE TO LIABILITY WHEN THEY ACT AS ERISA FIDUCIARIES -Shelly Ward - Ward’s article discusses the circumstances surrounding the 1996 Supreme Court case: Variety corp. V. Howe - The court ruled that an individual may recover damages stemming from the a breach of fiduciary duty by a plan’s administrator - Ward explains that ERISA’s principles were based on the common law governing trusts; trust laws were also used in interpreting cases involving ERISA - Variety V. Howe was unique because trust law was utilized to a large extent rather than ERISA itself - Ward says ERISA was intended to be a “pension Bill of Rights” and that it required a person to act in a “fiduciary capacity” to manage the plan - Terms are ambiguous in ERISA in regards to whom is able to be granted relief when there is a breach of the fiduciary duty. (502) - In Mass. Mutual Life Insurance V. Russel, the Supreme Court ruled that a person cannot sue for extra-contractual damages; ERISA does not imply this right - In Mertens V. Hewitt associates the Supreme Court ruled that an individual is not entitled to relief from a nonfiduciary who participates in a breach of a fiduciary duty - Many circuits have adopted similar rulings in that an individual cannot be granted relief concerning a breach of the fiduciary duty states in ERISA. Some other circuits interpret the Supreme Court rulings differently. Essentially...
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...B, includes three tasks in total. In Part A it will discuss the feature of a fiduciary relationship and disclosure some duties owned by company directors, such as the duty to act in good faith in the best interests of the company, the duty to avoid conflicts of the interest, the consequences of breaching a duty by directors and some defences for the company’s director. After that, in Part B the article will talk about some issues arise from the duties owned by partners in a partnership. In the following parts this essay will discuss and analyse all the issues above in details. Part A: task 1: According to the fact situation, Simone is a managing director of the Youth Unlimited Pty. Ltd which is a profitable company carry on selling anti-aging products for business. The company is a proprietary company limited by shares and the managing director is also known as a chief executive officer (CEO) of the company. Also, it can be seen in this way, Youth Unlimited gives Simone a particular opportunity to in charge of the day-to-day management of the company, to exercise the power or discretion to the damage of that person, who is accordingly vulnerable to abuse by Simone of her position — the fiduciary relationship. However, CEO of the company will also be in a fiduciary relationship. As a result, Simone can be regarded as fiduciary. The critical feature of a fiduciary relationship is that the fiduciary on behalf of another person in the exercise of a power which will influence...
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...Factual Scenario 1 Jeremy Jip is not considered Lulu’s employee. Based on the criteria used by the courts to decide whether a worker is categorized as an employee or independent contractor, Jeremy wouldn’t be considered Lulu’s employee. He would be considered an independent contractor because Lulu has no control over the details of Jeremy’s work performance. She does not exercise considerable control of his work, his occupation is distinctly different from that of Lulu’s, his work is usually done without supervision, Lulu does not supply his tools for his occupation, and the job that he’s hired for requires a high degree of skill. Also, his term of employment is only until the house is sold and his one-time fee is paid at the completion of the sale. According to the text, an independent contractor is “a person who contracts with another to do something for him or her but who is not controlled by the other nor subject to the others right to control with respect to his or her physical conduct in the performance of the undertaking. He or she may not be an agent” (Clarkson, Miller, Cross, 2012, p. 625). Lulu is not liable for Mary and Ollie’s injuries because, even though Jeremy Jip is an agent representing LuLu Lowlife, his day to day activities are still those of an independent contractor, not an employee. According to the text “To determine whether the relationship of the parties is that of employer and servant or that of employer and independent contractor, the primary test...
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