Page 235 - Microsoft Word - 00 Prelims.docx

Directors

Illustration 4 – Duties

Duty to declare any interest in a proposed transaction or arrangement

IDC v COOLEY (1972)

Facts:

Cooley, the managing director of IDC, had been negotiating a contract on behalf
of the company, but the third party wished to award the contract to him
personally and not to the company. Without disclosing his reason to the
company (or its board) he resigned in order to take the contract personally.

Held:

He was in breach of fiduciary duty as he had profited personally by use of an
opportunity which came to him through his directorship: it made no difference
that the company itself would not have obtained the contract. He was therefore
accountable to the company for the benefits gained from the contract.

The IDC case illustrates that an individual may still be subject to the duties even
after he ceases to be a director.

231