would you please add some legal cases for this question and analysis the directo
ID: 370019 • Letter: W
Question
would you please add some legal cases for this question and analysis the director's duties from corporation law.
Barry badler is the CEO of Health Co Pty Ltd , a major supplier of medical equipment in Queensland. Barry also has a broad range of personal investments in a number of companies. These investments are managed by his superannuation trustee (his wife) and he has no direct control over the trust. Lately, his wife has been investing the trust funds into a number of medical supply companies including MediCall Ltd, in which she has built up a 10% stake. She has not told Barry about her investment strategy. In early August, HealthCo considers a tendering process for one of its major supply contracts. Medicall lodges a tender bid and Barry is on the tender committee. As a result of Barry's recommendation, MediCall wins the tender contract. In October Barry takes over control of his superannuation trust and builds up a further stake in MediCall so that his trust controls 19% of the company. Barry then pressures the company to appoint his wife onto the board of directors. Advise Barry of his obligations under the Corporations Act arising from his dealings with Medicall. Were his actions in August and October in breach of the no-conflict rule? (600words)
Explanation / Answer
When a person is appointed as a CEO , director or similar higher post the company in general asks for all the details for potential conflicts of interest and is in all authority allowed to know where the person's vested interest are.
In this scenraio the conflicts of interest was clear, Barry and his wife in the name of running trustee had several investment in medical companies, there is a chance that these investments are benign and there is no direct involvemnet in the management of those firms, but still the direct or indirect benefit need to be made public to the employer, Health Co, as there could be serious graft charges and lobbying in his name as for person profit the CEO might not take the correct or most effective decisions.
As in this case there is clarity that Barry was not aware of a lot of these investments, but he was still at gains in a huge way witht the dela going through, when his invested company is in the frey and he is in the decision maker role, he will for sure support to advance his own personal interest.
So, in August or prior, he should have informed his investments, should have pointed out the conflict of interest, and should not be part of the committee. With due deliberation if any other person takes the same call it is allowed but with the level of involvement of direct family and his own investment this is never allowed.
And after the bid was successfully won Barry took over of the trust, which would mean he did all of it deliberately even when he did not. And the biggest fault is not declaring the conflict of interest.
Hence there is serious conflict of interest and the bid if investigated by a third party could be annuled as there seems to be internal information passing and a insider involvement, which as er US corporate rule is strictly prohibiteed.
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