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Issues: Whether the directors breach the duties of director?
Whether the fixed charge is valuable?
Whether the floating charge is effectual?
At the beginning of the case, Tim, Jim and Sam are owned and run the food oil business for a long time, and then they decided to promote a company called TJS, and they hold 20% of shares and become the directors of the Company. But, they are the promoters at the beginning of the time. As a promoter, they cannot attend the board meeting of the company. But they need to do a report about the profit. On the other hand, the shareholders had voted them to be the directors of the company, on that time Tim, Jim and Sam can attend the board meeting. But they still did not disclose the profit that they had earned from the transaction on the selling company. According to the duties of director, they need to disclose it to the shareholders. Therefore, they had breached the duties of director, the fiduciary duty.
According to the Platt v Platt (1999), where there are three brothers owns a company which had a BMW dealership. The defendant held all the ordinary shares and alone running the business. Then the defendant persuaded the two plaintiffs to sell their entire preference shareholdings to him for $1, and representing them that this was necessary to be sold, at the insistence of BMW. The defendant had breached a fiduciary duty to the two plaintiffs by not giving them a candid and full account of his negotiations with BMW. In this case, Tim, Jim and Sam did not report when they were the promoters. But they must disclose the profit to the shareholders when they become the directors of the company. So, breach of fiduciary duty owed by them.
Furthermore, refer to Coleman v Myers (1977), where the defendants were directors of a family company. The first defendant made a take-over offer to all the other shareholders and ultimately succeeded in acquiring total control of the...