- 10 Marks
Question
Joe, a Pharmacist, is a director in Wuzup Pharmaceutical Company Limited. Last month, an investigation by police detectives revealed that Joe had been stealing drugs from the company’s store and selling them in his own private pharmacy. The board of Wuzup Pharmaceutical Company Limited was unaware that Joe owned and operated a private pharmacy.
It was also discovered that Joe had been accepting bribes from suppliers of chemicals to Wuzup Pharmaceutical Company Limited.
In view of these findings, the company has invited you to advise it on the duties of a company director.
i. State any FOUR duties of a company director. (4 Marks)
ii. Comment briefly on the legal implications of Joe’s actions in relation to his duties as a director in Wuzup Pharmaceutical Company Limited. (6 Marks)
Answer
i. Four duties of a company director are:
- Duty to act in good faith: Directors must act in the best interest of the company.
- Duty to avoid conflicts of interest: Directors must not engage in activities that conflict with the interests of the company.
- Duty of care and skill: Directors must exercise reasonable care, skill, and diligence in their duties.
- Duty to disclose interests: Directors must disclose any personal interest in contracts or transactions involving the company.
ii. Legal implications of Joe’s actions:
Joe has breached several fiduciary duties as a director. By stealing drugs from the company and selling them in his private pharmacy, he has acted in bad faith and created a conflict of interest, violating the duty to avoid conflicts. Accepting bribes from suppliers is also a breach of the duty to act in the best interest of the company. Legally, Joe may be removed as a director, and the company can sue him for the return of any profits gained through his misconduct. He may also face criminal charges for theft and bribery.
- Tags: Directors, Fiduciary Duties, Legal Implications
- Level: Level 1
- Topic: Company Law
- Series: MAY 2015
- Uploader: Joseph