Supplementary Order Paper No 249

Clause 4

In clause 4, heading to new section 138A, replace breaches of certain duties (line 9 on page 6) with breach of director's duty to act in good faith and in best interests of company.

In clause 4, replace new section 138A(1) (lines 10 to 14 on page 6) with:

  • (1) A director of a company commits an offence if the director exercises powers or performs duties as a director of the company, or omits to exercise powers or perform duties as a director of the company,—

    • (a) in bad faith towards the company; and

    • (b) believing the conduct is not in the best interests of the company; and

    • (c) knowing, or being reckless as to whether, the conduct will cause—

      • (i) serious loss to the company; or

      • (ii) benefit or advantage to a person who is not the company (including, for example, to the director).

In clause 4, delete new section 138A(2), (lines 15 to 19 on page 6).

In clause 4, after new section 138A (after line 21 on page 6), insert:

138B Defence to director charged with offence under section 138A
  • (1) It is a defence to a director charged with an offence under section 138A if the director proves, in relation to the company concerned, that—

    • (a) the company is a subsidiary; and

    • (b) the constitution of the company expressly permits a director's conduct to be in the best interests of that company's holding company even though it may not be in the best interests of the company; and

    • (c) the company's shareholders have given prior agreement to the director's relevant conduct; and

    • (d) the director believed that his or her relevant conduct was in the best interests of the company's holding company.

    (2) It is a defence to a director charged with an offence under section 138A if the director proves, in relation to the company concerned, that—

    • (a) the company is carrying out a joint venture between its shareholders; and

    • (b) the constitution of the company expressly permits a director's conduct to be in the best interests of a shareholder or shareholders of the company even though it may not be in the best interests of the company; and

    • (c) the director believed that his or her relevant conduct was in the best interests of the shareholder or shareholders, even though it was not in the best interests of the company.