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Hello please advise on solution of case F4ENG

Forums › ACCA Forums › ACCA LW Corporate and Business Law Forums › Hello please advise on solution of case F4ENG

  • This topic has 1 reply, 2 voices, and was last updated 12 years ago by Accountaholic.
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  • May 26, 2013 at 6:31 am #127195
    Kaymakov
    Member
    • Topics: 24
    • Replies: 30
    • ☆☆

    Hello please advise on solution of case F4ENG

    Raymond is a director of Atkinson Ltd, a soft drink company. In January, Raymond paid a visit to Charles who is the chief executive of ‘Carbon Cans Ltd’, a company that manufactures drinks cans and bottles aimed at the beer market. During their meeting, Charles informs Raymond that he has patented an ingenious design for a beer can which can keep beer at the correct temperature. Charles asks Raymond whether his company would be interested in licensing the product. In March, the board of directors of Atkinson decides that the company will enter into the beer market. In April, Raymond resigns as director and assumes the position of director of a rival company, and one of his first actions as director is to adopt the Carbon Cans licence as proposed by Charles. Raymond’s new company is making a roaring trade selling quality beer which remains fresh and cooler far longer than its competitors. Required: Explain the nature of the duties that a director owes to his company and whether Raymond is liable to account to Atkinson for the profit made

    May 28, 2013 at 10:41 pm #127562
    Accountaholic
    Member
    • Topics: 98
    • Replies: 67
    • ☆☆

    I would summarise this case as below:
    Area of law involved:
    Breach of duty of directors
    Remedies

    Analysis:
    Raymond is in breach of these duties:
    1. Duty to promote success of company
    2. Duty to avoid any conflict of interest (Case: IDC v Cooley)

    Application:
    Facts of this case more or less mirror those of case IDC v Cooley where the director resigned from his company in order to take advantage of the contract from one of the suppliers of the company.
    It does not matter whether company would have actually gone for the contract with Carbon Cans Ltd. Atkinson Ltd can still sue Raymond for breach of the duty as director.

    Conclusion:
    Raymond furthered his own interests.
    Company can recover any profits earned and / or damages caused.
    Company may also pass ordinary resolution to expel Raymond for the breach of his fiduciary and legal duty as the director of the company.

    Hope this helps.

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