Downing Ltd specializes in IT installations for retailers. Sam, a director of Do

Question

Downing Ltd specializes in IT installations for retailers.  Sam, a director of Downing Ltd, was approached in a private capacity as a well?known expert in the field and invited to join the board of Twilight Ltd, whose business mirrors to a certain extent of Downing Ltd’s business. Sam accepted the invitation to be their director while remaining on the board of Downing Ltd.  Having developed a rival system to Downing Ltd, Twilight Ltd organized a public launch of the new product.  For the launch, Sam contacted a number of Downing Ltd’s clients. The launch led to the signing up of a number of major clients, including some clients of Downing Ltd.

Questions: (Answer the question by using the Common Law System)

(1) Advise the board of Downing Ltd whether Sam has breached any legal duty to the company.

(2) Would your answer be different if Sam resigned from Downing Ltd before he joined the board of Twilight Ltd? State your reasons. ____________________________________________________________

Explanation / Answer

1.

Taking Common Law System into consideration – Sam has breached the duties as laid down in Sec 166 of the 2013 Act where Sam should not be involved in any direct/indirect conflict of interest of the company.

2.

Is Sam would have joined Twilight after resigning from Downing Ltd the situation would be different since any conflict of interest would not arise in such a situation.

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