ExpertMedium2 marksMultiple Choice
Syllabus F: Management, administration and the regulation of companiesSection ACorporate and Business Law
ACCA · Question 18 · Syllabus F: Management, administration and the regulation of companies
A director of a cross-border multinational company discovers a lucrative investment opportunity during the course of their duties. The director decides to exploit this opportunity personally without disclosing it to the board. Which statutory duty has the director primarily breached?
A director of a cross-border multinational company discovers a lucrative investment opportunity during the course of their duties. The director decides to exploit this opportunity personally without disclosing it to the board. Which statutory duty has the director primarily breached?
Answer options:
A.
Duty to act within powers (s.171).
B.
Duty to exercise independent judgment (s.173).
C.
Duty to avoid conflicts of interest (s.175).
D.
Duty not to accept benefits from third parties (s.176).
How to approach this question
Identify the specific statutory duty that prevents directors from taking corporate opportunities for themselves.
Full Answer
C.Duty to avoid conflicts of interest (s.175).✓ Correct
Section 175 of the Companies Act 2006 requires a director to avoid a situation in which they have, or can have, a direct or indirect interest that conflicts with the interests of the company. This specifically applies to the exploitation of any property, information, or opportunity (the 'corporate opportunity' doctrine).
Common mistakes
Selecting s.176 (benefits from third parties) instead of s.175.
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