5/11/2011 Promoters and fiduciary duties Duty not to profit from position "Eg:transactions selling assets to company Duty not breached if there is disclosure to (or consent from): independent directors [cf Erlanger v New Sombrero Phosphate Co(1878)3 App Cas 1218 (House of Lords)];or initial shareholders. 11 Promoters and fiduciary duties If funds raised from public investors,then disclosure to potential investors also required The function of disclosure in this context The requirements imposed on the disclosure The disclosure requirement also imposed on directors Duty to the liquidator [i.e.,Re Darby,ex p Brougham [1911]KB 95(King's Bench Division)] 12 65/11/2011 6 11 Promoters and fiduciary duties • Duty not to profit from position  Eg: transactions selling assets to company • Duty not breached if there is disclosure to (or consent from):  independent directors [cf Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 (House of Lords)]; or  initial shareholders. 12 Promoters and fiduciary duties • If funds raised from public investors, then disclosure to potential investors also required • The function of disclosure in this context • The requirements imposed on the disclosure • The disclosure requirement also imposed on directors • Duty to the liquidator [i.e., Re Darby, ex p Brougham *1911+ KB 95 (King’s Bench Division)]