Fenwick Goods Ltd (Fenwick Goods) is a small pharmaceutical company. It is perhaps best known for its product Fenwick Air Fresh, as commonly used in many household bathrooms across the nation. Fenwick Goods has 3 directors, Jack, Jill and Jimmy, who are also significant shareholders as each of them hold around 25% of shares in the company. The remaining shares in Fenwick Goods are held by several other individuals and small companies. Jack, Jill and Jimmy founded Fenwick Goods back in 1988 after meeting in chemistry class and deciding to go into business together. However, in recent times, the relationship between Jack, Jill and Jimmy has broken down. Jimmy feels that Jack and Jill want to remove him from the company as the two have grown very close to one another. Jack and Jill have been excluding Jimmy from their discussions about Fenwick Goods - Jimmy has no idea what is going on in the company. Jimmy decides to take a look at the company's books, and discovers by chance that Jack and Jill recently transferred the company Ferrari (worth around $300K) into Jack's name. Jimmy also discovers that Jack and Jill approved large marketing fees to an unknown company which, upon further investigation, appears to be owned by Jill. When Jimmy asks Jack and Jill for their clarification on these transactions, Jack and Jill tell Jimmy that he has "misinterpreted the books" and that Jimmy "has not been paying attention to his job for ages". Question - Use I.R.A.C. structure and refer to the relevant law to answer the below: Have Jack, Jill and Jimmy breached their directors duties? If Jack, Jill and Jimmy have breached their directors duties, what consequences are likely to follow?
Answer:
If we look at the different facts of the case,Jack and Jill breached their fiduciary duty when they transferred the property of the organization in their account and hired a marketing firm which was one by Jill. Similarly Jimmy did not fulfill his responsibility to be active in the management of the firm. So all three individuals are breaching the duty as a director of the firm. All three individuals are to face legal action particularly,Jack and Jill as they misused their position and breached the fiduciary duty of the director.
Fenwick Goods Ltd (Fenwick Goods) is a small pharmaceutical company. It is perhaps best known for...
Fenwick Goods Ltd (Fenwick Goods) is a small pharmaceutical company. It is perhaps best known for its product Fenwick Air Fresh, as commonly used in many household bathrooms across the nation. Fenwick Goods has 3 directors, Jack, Jill and Jimmy, who are also significant shareholders as each of them hold around 25% of shares in the company. The remaining shares in Fenwick Goods are held by several other individuals and small companies. Jack, Jill and Jimmy founded Fenwick Goods back...
HUB Utilities Ltd (HUB) is a construction management company that is listed on the ASX. HUB has 3 directors; Mr Short, Mrs Lee and Dr Wittless (who holds a PhD in “construction management policy”). At a directors’ meeting in March 2020, a proposal to purchase a small construction management company is discussed. The proposal is accompanied by a report detailing the financial status of a company called Tricky Business Pty Ltd. Only 2 of 3 directors attend this meeting. Mr...
HUB Utilities Ltd (HUB) is a construction management company that is listed on the ASX. HUB has 3 directors; Mr Short, Mrs Lee and Dr Wittless (who holds a PhD in “construction management policy”). At a directors’ meeting in March 2020, a proposal to purchase a small construction management company is discussed. The proposal is accompanied by a report detailing the financial status of a company called Tricky Business Pty Ltd. Only 2 of 3 directors attend this meeting. Mr...