ABUSE OF

CORPORATE
OPPORTUNITY
BY AKSHIT TALWAR
ANUJ MAHAJAN
APOORAV MAHAJAN
JATIN ARYA
TANIKA GUPTA
ABUSE OF CORPORATE
OPPORTUNITY
 Directors, officers and controlling shareholders

 Must not use business opportunity that could

benefit business opportunity

 Penalizes personal appropriation of the

corporate opportunity
DAMAGES CAN BE RECOVERED IF
THE FOLLOWING CAN BE
ESTABLISHED :-

 Opportunity came in course of duties

 He made personal profit from it

 TESTS TO DETERMINE WHETHER
A TRANSACTION FALLS IN AMBIT
OF CORPORATE OPPORTUNITY

1. Interest or expectation test

2. Line of business test

3. Fairness test
EXCEPTIONS TO THE DOCTRINE OF CORPORATE OPPORTUNITY –

1. business Judgment rule

2. company is forbidden by law to take the
opportunity
3. company is nearly defunct
4. an opportunity has been rejected after full
and informed discussion by the Board
5. ultra vires to take the opportunity
THE PROVISIONS TO PREVENT
UNSURPATION OF CORPORATE
OPPORTUNITIES
 Requires the sanction of board

 Section 299 - the director to disclose to the

board his interest in the contract

 Section 300 - forbids the interested director

from participating in the discussion

 Particulars of contracts, in which directors

are interested are entered in the register
CASES:-
 Phillips vs Boardman

 Prudential Assurance Co Ltd v Newman

Industries Ltd