Does the decision in Island Export Finance Ltd v Umunna represent the law in Singapore?
To determine whether the decision in Island Export Finance Ltd (IEF Ltd) v Umunna represent the law in Singapore, the application of the common and statutory law will be used. Upon applying the right principles, the decision will represent Singapore law.
Resignation to take up a corporate opportunity
Singapore law states that the court held a director breached of his duty by taking up the opportunity if he resigns from a company to take up a corporate opportunity without the company’s permission where (i) the resignation was prompted or influenced by a desire to acquire the opportunity ...view middle of the document...
This does not represent Singapore law because since IEF is hopeful for further orders shows that it is interested and hence, falls under the definition of corporate opportunity. Furthermore, it is through his directorship that led him to know of such opportunity. Thus, U may be held in breach of his duty under Singapore Law based on the definition of corporate opportunity and his directorship that led him to acquire the opportunity.
Improper use of information
Under Companies Act, Section 157(2) prohibits officers or agents of the company from making use of improper information that by virtue of their position to gain, either directly or indirectly a benefit for themselves or other person. Generally, the definition of ‘improper use of information’ refers to the use of trade secrets or confidential information without company’s approval.
In Umunna case, he was not held liable for the information which he acquired as managing director. This decision does not represent Singapore law because Umunna’s knowledge of the potential market is confidential information and he had used it without the company’s permission to gain the contracts which could belong to IEF Ltd. Thus, following Singapore Law, Umunna would have been held liable for the improper use of information.
In contrast, in Umunna case, Hutchinson J held that the knowledge of potential market forms part of his general fund of knowledge and expertise, thus Umunna was not held liable. I agree with Hutchinson that if the information forms part of his general knowledge, it would be unreasonable to hold the directors accountable for the exploitation of the knowledge. However, a potential market discovered by the company itself should be classified as confidential information otherwise it is easy for an employee to gain benefits from insider information anytime.
In my opinion, the decision in Umunna case does not represent the Singapore law to a large extent. It shows a more flexible approach as compared to PMA which represented the law in Singapore. In conclusion, Singapore law is very strict and makes it difficult for a director to escape from breach of fiduciary duties.
Discuss when (if ever) a director can or should be able to appropriate to himself a business opportunity under the statutory and common law regime for the directors’ duties in Singapore.
In the following, we will discuss the common law regime followed by statutory when a director can or should be able to appropriate to himself a business opportunity in Singapore.
1) General Law – Conflict of duty and interest
The general rule in Singapore is that a director must not place himself in a position where there is possibility of a conflict between duty and interest of the company without company’s permission. Upon approval granted through a resolution of the shareholders in general meeting, a director can usurp the business opportunity.
2) Usurp business opportunity