Company law (hong kong) Essay Example | Topics and Well Written Essays - 3000 words

Company law (hong kong) - Essay Example They are the mainspring of the company. Speaking about the importance of directors, Neville J. observed in Bath v. Standard Land Co. (1910) 2 chapter 408 that "Board of directors are the brain and the only brain of the company which is the body, and the company can and does act only through them". It is only "When the brain functions that the corporation is said to function2". They (Directors) must account for all the company's money and property over which they exercise control. They have to refund to the company any of its money or property which they have improperly paid away or transferred. However, directors are not trustees in the real sense of the word because they are not vested with the ownership of the company's property. It is only as regards some of their obligations to the company and certain powers that they are regarded as trustees of the company. Alexander v. Automatic Telephone Co. (1900). The directors of a company paid up nothing on their own shares. They however, made all the other shareholders pay 39.6d on each share. They did a breach of trust, and the directors were bound to pay to the company 35.6d on each of their shares. In Pi In Piercy v .S Mills & Co. Ltd (1920). The directors of the company had the power to issue the uninsured shares of the company. The company was in no need of further capital but the directors made a fresh issue to themselves and their supporters with a view to maintain control of the company. Held the allotment was invalid and void. In Peraval V. Wright, (1902). The directors of a company bought shares from a shareholder, while they were negotiating for the sale of the company to another of a very high price and they did not disclose this fact to the shareholder. The shareholder sued to have the sale set a side. Held the sale was binding as the directors were under no obligation to disclose negotiations to the shareholder. The law imposes these directors' duties upon them so that they are not allowed to "capitalise their strategic position in the company to serve their own interest 3". The Australian Uniform companies act has incorporated statutory provisions containing an explicit reference to the judiciary obligation of directors towards their companies. Section 24 of the Australian Companies Act states: i. A director shall at all times act honestly and use reasonable