Shareholders Conflict of Interest

[ANOTHER REBEL]

I have been asked the following question, and quite frankly I haven't a clue.

"Do the shareholders in a company, when the proposal has gone to a shareholders meeting have to declare an interest, or can they vote on a proposal that will benefit them either directly or indirectly, but would be to the detriment of other shareholders, who would be in a minority?"

 

[akirk]

shareholders can do as they like unless there is any contractual / legislative reason they can't (think FSA regulations in listed companies etc. / shareholder agreements) - shareholders are very likely to vote in their own favour

Alasdair

 

[ANOTHER REBEL]

Seems perverse that a director can call a shareholders meeting, and using the votes of connected parties, pass something that he could not as a director, even if this was not in the Company's long term interests.

 

[mahutchinson]

It would certainly be perverse for a shareholder to vote for something not in the company's long term interest as he would be damaging his own investment. Although directors have a duty not to act in conflict with the company's success there is no such duty on shareholders. Whether the director is breaking the law depends on whether he is acting as director or shareholder and what type of conflict it is.