Question 2

The business of Whirlwind Limited is that of a travel agency. The companys articles are based on the Model Articles. The managing director of the company is Liam and the company has three other directors.

Recently Liam was approached by Boris, a director of Star Limited, a customer of Whirlwind Limited, with a view to Whirlwind Limited providing an online travel service. A week later, Liam informed Boris, that Whirlwind Limited was interested only in developing high street agencies. However, Liam was able to inform Boris that another company, Nelly Limited was interested in providing online travel service.

Shortly after the meeting between Liam and Boris, Nelly Limited obtained a contract from Star Limited to develop the online travel service, and subsequently made HK$45 million profit from the contract. Liam is a majority shareholder and sole director of Nelly Limited, which had no business prior to obtaining the Star Limited contract.

These activities have come to light and Whirlwind Limited seeks your advice on the following:

(a)What action is available to the company in respect of any breach of the duty imposed on directors to avoid a conflict of interest? (17 marks)

(b)The procedure relating to removal of Liam as a director of Whirlwind Limited. (8 marks) (Total: 25 marks)

Refer to relevant case laws and statutory ordinance to support your answer.