Company law question

Sparks

Here's a query regarding company law for you; what is the position with regard to a company placing itself in a situation where its actions may be vetoed by a third party, where that third party is a private club not made up of the company's directors or shareholders? Are the directors not required to avoid such a situation as a result of their common law fiduciary duties to the company and/or its shareholders?

dermot_sheehan

It depends what you mean by "company", does it mean the company in general meeting or the directors. The directors have a duty not to fetter their discretion, so for example a director can't be bound to a contract to vote a certain way at a directors meeting as that would be fettering his discretion and interfering in his duty to act bona fides in the best interests of the company.

Sparks

No, I'm not thinking of a private contract between directors and third parties gabhain (you're right, they'd be in breach of common law duties and the companies act by doing that kind of thing), I was more thinking of situation where the board of ABC ltd. which has (say) a hundred shareholders, makes a legitimate decisions to enter the company into a private club (whose members would not include the hundred shareholders, or at least not a majority of them) which would be given powers of veto over board decisions, and which would be entitled to speak on behalf of ABC ltd.

I mean, it yells "illegal" to me, but I can't nail down the specific articles it breaks.