Mr Chao is also a director and shareholder in a company called Black Knight Limited (BKL) with his two older brothers, Fan and Xu, as directors (and shareholders) and other family members as shareholders. BKL is now considering moving into bigger and more spacious premises because its business is expanding. Fans wife Sarah owns commercial premises and Fan wants the board to agree to buy Sarah's building at a price that seems quite high to Mr Chao.

Mr Chao is concerned that this could be a very good deal for Fan and Sarah but not a good deal for BKL. Mr Chao is also concerned that Fan does not want the other shareholders to know any details about the sale such as price.

Question :

Explain Fan's obligation to disclose his interest in the transaction with Sarah under the Companies Act 1993 and any rights the shareholders of BKL may have if disclosure is correctly made. Also explain the possible consequences for Fan if disclosure is not correctly made.