The Law on Corporate Opportunity Transactions by Directors: A Comparative Analysis of Delaware Law and Australian Law

Abstract

Abstract—  The  separation  of  ownership  and  control  that  is  a typical feature of listed companies  gives rise to agency problems. This problem is acutely reflected in the conflicting interests of stockholders   and  directors.  An  area  in  which  this  problem  is played out relates to doctrinal approaches towards corporate opportunities,  which  has  attracted  a  debate  involving  a comparison of the approach of English law and most states in the United  States.  This  paper  seeks  to  contribute   to  the  current debate  on corporate  opportunities  by comparing  the Australian and    Delaware    approaches    to    corporate    opportunities    by directors. In particular, it explores self-dealing  by a director who pursues corporate opportunities potentially at the expense of his corporation.  This type of self-dealing is worth examining because of its potential effect of depriving the corporation of profits or opportunities  which  may  be essential  to its operation,  harming the corporation, or putting the director in competition with the corporation of which he is meant to be a fiduciary.