Item Software (UK) Ltd v Fassihi

Facts

A director secretly planned to take for himself a contract the company was negotiating, and encouraged the company to take a hard line in negotiations so that they failed.

Issue

Did he breach his duty by not disclosing his own misconduct?

Held

Yes. His fundamental duty of loyalty required him to disclose his wrongdoing to the company.

Principle

A director's duty of loyalty may require him to disclose his own breaches of duty.

Why it matters

It is persuasive on the content of the good faith duty.

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