Comparative Law Review

Comparative Law Review

A Comparative Study of Business Directors' Obligation in Contrast with ‎Corporate Opportunities and Situations in the Legal Systems of the ‎United States, England, and Iran

Document Type : Research Paper

Authors
Reza Gholinya 1
Esmaeil Shahsavandi 2
َAmir Abbas Bozorgmehr 1
Alireza Mashhadizadeh 3
1 Department of Private Law, North Tehran Branch, Islamic Azad University, Tehran, Iran‎
2 Department of International Trade Law, North Tehran Branch, Islamic Azad University, Tehran, ‎Iran‎
3 Department of Private Law, Central Tehran Branch, Islamic Azad University, Tehran, Iran‎
10.22059/jcl.2024.363133.634534
Abstract
The company's relationships with its directors are always susceptible to abuse, especially in the exploitation of assets, information or opportunities due to the power of delegation. Recognizing the obligations of interested director in dealing with business opportunities is one of the important concerns of corporate governance. In the meantime, the English and American legal systems have analyzed this issue for years. The authors of this article state with a descriptive-analytical method and with a comparative view that whenever a director is faced with a business opportunity, their main duty is to disclose it officially and in detail; In a way that it is possible for the company to properly investigate it. Courts in the American legal system have tried to identify the real owner of the business opportunity while applying variant tests and the English legal system recognizes the existence of a broader duty to disclose opportunities, according to which all business opportunities must be made available to the company. The sanctions and legal solutions considered to deal with the delinquent directors , including of cancellation of the transaction, creating responsibility in the field of compensation and even the return of the earned profits. In Iran's legal system, despite the lack of explicit reference to the issue of corporate opportunities, this concept and its main axis can be proved.
Keywords
Disclosure
conflict of ‎interest
disgorgement of ‎profit
corporate ‎opportunity
loyalty.‎
Subjects

  1. English

    1. A) Books
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    1. C) Cases
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    1. E) Thesis
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    1. F) Acts
    2. ALI Principle of Corporate Governance 2022. (USA)
    3. Companies Act 2006. (United Kingdom)
    4. Delaware General Corporation Law Retrieved 2018. (USA)
    5. The Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2015. (United Kingdom)
    6. The United States Corporate Governance Code 2021. (USA)
    7. Uniform Limited Liability Company Act 2006. (USA)
Comparative Law Review
Volume 15, Issue 1
Espring & Summer
July 2024
Pages 155-184