Question Hong Kong Law

(Company Law)

Lawrence, Michael and Nigel are shareholders and directors of Prosperity Ltd which is a retailer of hi-tech products. Each of them holds sixty-five, twenty, and fifteen per cent of the company's shares respectively. Being often away on an overseas holiday, Lawrence rarely attends the board of directors' meetings. During the year 2019, Lawrence sold the company's product to his friend at a price which is substantially lower than the market price and he secretly obtained from his friend commission of $25,000. Prosperity Ltd has been negotiating a business deal with Wealthy Ltd for sourcing a piece of automated equipment at an attractive price, but the deal went off because the company did not have sufficient funds. Lawrence then set up his own company which managed to enter into a contract with Wealthy Ltd to purchase the same equipment. Michael and Nigel later found out about this by themselves. They were unhappy with what Lawrence has done and they want to bring an action against him. Lawrence is planning to ratify his conduct at the next general meeting.

Required: Advise Michael and Nigel as regards Lawrence's breach of duty as a director of Prosperity Ltd.

Please support your discussion by reference to relevant statutes and legal cases.

A detailed solution is appreciable!