Company Law

Running head: COMPANY LAW
Company Law
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1COMPANY LAW
Part B
Question 1
Under section 157A of the Companies Act(CA), the fiduciaries duties of the directors
have been discussed. The directors make the decisions of the business that are in accordance
with their duties under law. Every director has fiduciary duties to their company. When a
director is said to have personal interest that has chances of conflicting with his existing
fiduciary duties, he should be able to make sufficient disclosure to the company. Such duties
have been highlighted in the case of Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134.
Therefore, according to the Companies Act, following are the fiduciary duties of a Director:
 Duty to disclose interests in transactions – As per section 156 of the Companies Act,
a director of a company needs to disclose in the meeting if he or she is interested in a
proposed transaction within the company. Therefore, this particular disclosure is not
needed when the interest of the director includes only being a member of an
undertaking that is interested in a transaction. There are exceptions as well when the
directors will seem to be interested. The duty of the director is also to disclose the
kind, extent and character of any sort of conflicts with other directors. Such duties
arise because of holding any office or any property (Lyman 2016). If the director fails
to disclose such information then he will be liable for a fine not exceeding $5000 or it
will result in imprisonment for a term not exceeding twelve months.
 Duty to act being honest and use reasonable carefulness - As per section 157 of the
Companies Act, the directors are bound to act with honesty and use reasonable
diligence while discharging the duties during his office. Therefore, a director should
not make inappropriate or indecent use of information that are obtained by the virtue
of his position as an officer (Wai 2016). However, if he fails and is found to be guilty

2COMPANY LAW
of breaching the provisions, the director will be held liable for any kind of profits
made by him to the company.
 Duty to execute power in good faith for the interests of the company – Every director
has to exercise and execute this fiduciary duty towards their company and therefore
they should act as per the interests of the company (Mark 2017).
 Avoiding conflicts of interest – A director of a company has no power to seize the
opportunity of a business that he had come across because his designation as the
director without the existing consents of the company.
 Duty to take care – Directors of a company will be held liable under the tort of
negligence if he fails to carry out his fiduciary duties (Brenda 2015). Directors also
have negative duties that he cannot exercise while carrying out his duties. This has
been discussed under the Companies Act. As per section 162 of the Companies Act,
directors can deal with loans as well. In case of any default and subject to exceptions,
a company cannot form a loan to a director of the company.
Question 1(b)
In Singapore, the companies are governed under the principles of the Companies Act.
As per this Act, there are relevant provisions and sections relating to loans and borrowings. In
this given scenario, the director of S Ltd wanted to purchase a truck that belonged to Cynthia,
Shawn and Ming. However, there are specific sections relating to such a situation. According
to Section 186(1) of the Corporation Act, a company is restricted from making certain
purchases or investments through more than one layers of the investment companies. The
directors of the company while borrowing loans should follow the specific restrictions or
purchasing objects from other people (Boyer, Martin and Tennyson 2015). Under the
Corporation Act, loans or purchases made or security provided must be given related to the
director of the company. Therefore, certain parties are required to take approval from the