The corporate opportunity doctrine and directors’ duties: A critique of the law in Australia

The law in Australia on the circumstances in which a fiduciary will be held
to have breached their duties by taking a corporate business opportunity
does not strike an adequate balance between the interests of corporations
and of fiduciaries. This article examines the statutory and common law
rules on directors’ duties with specific reference to corporate opportunities.
It argues that in interpreting the Corporations Act 2001 (Cth), and in
developing the common law, the courts should extend fiduciary duties so as
to require a fiduciary to advise a corporation of opportunities falling within
the corporation’s area of business, even when the opportunities were
discovered in circumstances unconnected with the fiduciary’s role in the
corporation. The article also argues that the current ambiguity in the case
law over whether a fiduciary who is a shareholder in a corporation may vote
his or her shares when seeking permission from shareholders to take a
corporate opportunity ought to be resolved in the negative. Finally,
although the fiduciary duties extend to employees, the article argues that
since not all employees are fiduciaries, the word ‘employee’ both in the Act
and under the common law should be given a qualified meaning, and that
whether an employee is bound by fiduciary duties should depend on the
circumstances of the relationship, and in particular on the scope of
authority given to the employee and their level within the corporation.