The Supreme Court of New South Wales has recently decided a case involving the breakdown of family relationships in a large business structure, during which time some directors diverted business opportunities and profits to related companies.
When business relationships break down, directors need to remain acutely aware of their fiduciary obligations to each other, and their duties to the company under the Corporations Act. They must continue to conduct the business consistent with their duty to act in the best interests of the company, and avoid profiting from a conflict of that duty.
Commencing a similar business in an alternate company, and driving benefits for that alternate company, is likely a breach which could see a director and the alternate company paying damages and compensation.
Further, given the breakdown in family relationships, the Court ordered that the company be wound up, which ordinarily has disastrous flow on effects to all concerned.
When your business relationship breaks down, seek early and expert advice from Access Law Group to best manage the conflicting interests that arise.