Corporate Governance

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AC208 COMPANY LAW

Written Assignment

Prepared by

Chew Woon Ee

Tutorial Group 10

Submitted to

Ms Joyce Lee

02 October 2007

To determine whether the outcome of the decision is fair, we will have to look into the following issues. Did Mrs Seow…

1) break any director’s duties when she divulged information to Chien?

2) letter cause the termination of distributorship for TPL?

3) rely on any confidential information to attain the distributorship?

4) break any duties when she accepted the distributorship?

We will also need to ascertain the level of involvement of Seow in this case and discuss whether Ng and Dr Chang is also responsible for breaking their directors’ duties

Mrs. Seow

Directors of a company could only disclose information which he has in his capacity as a director under Sec 158(1) of the Companies Act which states that he could disclose such information that would not otherwise be available to him, to the person in subsection (2) if the conditions specified in subsection (3) are met. Sec 158(2) goes on to state the information may be disclosed to either a person whose interests the director represent or a person in accordance with whose directions or instructions the director may be required or is accustomed to act in relation to the director’s powers and duties.

In this case, Mrs. Seow’s letter to Chien divulged information about the internal dispute that she is aware of in the capacity as a director, and Chien does not fulfil the conditions specified in Sec 158(2). He is only an agent of China Merchants, with the rights to appoint distributorship. Neither Mrs. Seow nor the other directors represented him in the board and all of them also do not require his instructions to act and fulfill their director’s duties. Thus, Mrs. Seow could be said to have breach Sec 158. However, the court has ruled that there is no breach as there is implied consent since the other two directors spoke...