where the fourth defendant denies the alleged contraventions
whether the fourth defendant thereby obtained an advantage for those other directors, the insurer or caused a detriment to the ACBF Entities
whether the conduct materially prejudiced the financial interests of the ACBF Entities and their members
Quick Take
1A chief executive officer who makes or participates in making decisions affecting the whole or a substantial part of a corporation's business is an 'officer' under s 9(1) and is subject to ss 180–182 even before formal appointment as a director. That remains so even if he ultimately reports to and acts on the instructions of a controlling director.
2Section 180(1) requires a director or officer to familiarise themselves with the fundamentals of the business, including major recurring expenses, and to investigate ways of avoiding or mitigating a known threat to the company. Proof of a causal link between the failure and the company's eventual collapse is unnecessary; exposure to a risk of harm suffices. That duty does not, without actual knowledge, extend to investigating the affairs of a parallel company in the same group.
3Sections 181 and 182 can be contravened by a director or officer consciously refraining from action within their power. Merely negligent failure to inform oneself does not engage them, though it may contravene s 180. On the facts, a director who knowingly failed even to initiate board discussion of fellow directors' conflicts of interest arising from their interest in the company's insurer, apparently to avoid acting against a controlling shareholder, breached s 181(1). That inaction was not a 'use' of position under s 182(1).
