Directors' Duties under an Enterprise Approach

Abstract

Economic analysis of directors' fiduciary and statutory duties to act in good faith and for the proper purposes of their appointed company is to resolve conflicts of interest between directors and their appointed company in favour of the company. However, positive law fails to address director's conflicts of duties arising from directors owing duties to various companies comprising the corporate group. Any conflicts of interest suffered by directors of solvent wholly-owned subsidiaries may be determined by relying upon s187 Corporations Act (if satisfied) and advancing the interests of the holding company. A gap exists where the corporate group members are neither wholly owned nor solvent. This article explores whether the recognition of an enterprise entity would fill this gap, and provide an efficient means of regulating for agency conflicts within the corporate group.