Were there any abuses of power by the management and breach of fiduciary on the part of the director?
Yes, there abuses of power by the management and breach of fiduciary on the part of the director.
Abuse of power is the act of using ones position of power in an abusive way, this can take many form such taking advantage of someone, gaining access to information that should not be accessible to the public or just manipulating someone with the ability to punish them if they do not comply.
Breach of fiduciary duty is people in position on the trust or fiduciary relationship such as director, high level of employees of business owe certain duties of their principles.
According to this case, ...view middle of the document...
As the director of the company, En Zayed shall act honestly in doing job.
2. En Zayed planned to terminate the auditor’s appointment
Under section 172 (4), (5), (6) Company Act 1965 state that, only the shareholder can remove the auditor before the expiration of his terms, where the special noties of ordinary resolution to remove auditor has been issued to the auditor. Under the statutory duties, the director should act honestly using reasonable diligence.
Therefore En Zayed could not simply terminate auditor, if the auditor refuse to give cooperation to not qualify the financial statement. The auditor should perform the duty to qualify the financial statement. En zayed should be more honest and act good faith as a director.
3. En.Zayed appoint new “friendly party” Auditor
En. Zayed could not appoint friendly party because this could affect the independent and objectivity of the auditor to report regarding the financial statement and giving an opinion without any influence to his professional judgment, which need to be true and fair view.
Although friendly party does not considered as a person shall not be appointed as auditor of the company under section 9(1) CA 1965, it can be seen in this case that the removal of auditor is to appoint new auditor that will cooperate with En.Zayed not to qualify the financial statement of the company
4. Personal vehicle expenses charged to the company
Company Act 1965, separate legal entity state that, a business exists as a separate entity from the owner. The personal expenses should not be charge to the company, it should be treated separately. According to the accounting concept for the entity, the accounting records reflect the financial activities of specific business not of its owners activities. Therefore En Zayed cannot charge...