Gluckstein v Barnes
1900 · [1900] AC 240
Posted By lanbuk.com
- Facts
- bought a property and resold it to their company at a profit they disclosed. They hid a further profit made by buying charges on the property at a discount and having them paid off at face value.
- Issue
- Were the promoters liable to account for the hidden profit?
- Held
- Yes. Disclosure to themselves as directors was not disclosure to the company. Gluckstein had to account for his share of the secret profit.
- Principle
- A promoter must account for any secret profit not properly disclosed to the company.
- Why it matters
- It shows that partial disclosure is no disclosure.
Words and Latin in this note
- Promoter
- A person who undertakes to form a company for a project and takes the steps to set it going. Under section 50 of the Companies Act 2009 a promoter is a fiduciary and must not make an undisclosed profit. Open the note.
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