Question

Discuss ANY TWO of the following Only write maximum 1 page total to answer this question...

Discuss ANY TWO of the following

Only write maximum 1 page total to answer this question

  1. Nominee directors and the duty to act in the best interests of the company
  2. The principle (not the facts) from the case of Automatic Self Cleansing Filter Syndicate
  3. Removal of directors: public versus proprietary
  4. Casting vote of directors
  5. Chairing meetings of directors

Homework Answers

Answer #1

A :- Nominee directors and the duty to act in the best interests of the company

Nominee Director

Nominee Director refers to a person who acts as a director on the board of directors of a corporation, on behalf of another person or firm which could be a bank, investor, or lender. These banks and financial institutions, appoint such individual on the board of companies where such institutions have some ‘interest’. This ‘interest’ can either be in form of financial assistance such as investment into shares or in the form of loan adavnced to such corporations.

Nominee director's duty to act in the best interests of the company

A nominee director acts as a supervisor required by law to oversee the corporation's business and affairs. Many a times its becomes important to know on whose interest the nominee should regard.
They are expected, like all directors, to act in the best interests of the company to which they are appointed at heart and they also owe the same responsibilities to the company as all other directors have.
Nominee directors are rationally expected to provide information on the performance of the company to their respective appointors as they are the ones that appointed them. It is commonly accepted view that all directors including nominee directors are entitled to all information of the company that will enable them to perform their duties, except in case where it is clear that the director will misuse the information he/she has.
In case, a conflict of interest arises between the appointer of nominee director and the corporation. In such a case, the nominee director has a statutory duty to disclose his or her interest when he/she first becomes interested which can be done in writing or at a board meeting. The nominee director in case becomes aware of any sensitive information of the company then he/she should take into all the safeguards before disclosing such information to the appointer so that they can misuse it for their gains.

D :- Casting vote of directors

Casting vote means the right to cast a second vote in case of equality of votes i.e. the votes cast in favour and the votes cast against the resolution are equal. It is applied in the situations of deadlock i.e. no decision can be made as the votes on either side of the resolution were same. So, Casting Vote resolves the deadlock.

Sometimes, the Chairman of the meeting has a casting vote in case of equality of votes and it is done as provided in the articles of association of the company. This right of casting vote can be exercised through voting by show of hands or electronic voting or voting on a poll.

Casting vote applies only in case where deliberate votes of all the directors has been taken into consideration. The casting vote does not apply in a situation where the directors have not yet exercised their deliberative vote.

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