Corporate Law and

Governance

Muhammad Usman Piracha

OpenAI: Case Study and Discussion

 https://
www.youtube.com/watch?feature=shared&v=MW
GT5Il6aWw

 https://www.youtube.com/watch?v=aCJb9voVSw0

 https://www.youtube.com/watch?v=9ZOb8jpyzUI

-) Company Culture and Structure

Duties of Directors
 Fiduciary Obligation (Duty of care and to act
in good faith)

 Business opportunities not to be diverted for

personal gain

◦ When can a director make personal use of a

company’s opportunity
◦
 Corporation is defunct
 An opportunity the company decides not to avail
Contd.
 Misuse of Corporate information
(unpublished and confidential information)

◦ E.g insider trading.

 Attend board meetings

 Disclose any conflict of interest / substantial

interest
Contd.

 Duty of Care and Skill

 Justice Cardozo “The diligent director is the

one who exhibits in the performance of trust
the same degree of care and prudence that
men prompted by self-interest generally
exercise on their own affairs”
Contd.
 Duty to attend board meetings

 However a director is not bound to attend all the

meetings of the board although he/she is under
obligation to attend whenever in the
circumstances he/she is reasonably able to do so.

 His/her office will be notified if he/she absents

him/herself from three consecutive board
meetings or from all meetings of the board for a
consecutive period of time.
Contd.
 Duty not to delegate
◦ Directors must be able to entrust management to
subordinates.
◦ A degree of delegation and division of responsibility
by the Board is permissible but not a total delegation
of responsibility.

 Disclose any conflict of interest

◦ Promote the best interests of the business entity
◦ Not allowed to engage in or enter agreements where
a personal interest is conflicting or which possibly
may conflict with personal interests
What constitutes interest
 The interest that needs to be disclosed is one
that is could be regarded as influencing
judgment. Any kind of personal interest
which is material in the sense of not being
insignificant must be revealed.
Meetings of directors
 Notice of every board meetings has to be
given in writing to every director.

 Failure to give notice to any director of a

board meetings would render the meeting
invalid.

 Agenda may be specified by directors do not

have to be confined by an agenda of a
meeting.
Contd.
 Misuse of Corporate information
(unpublished and confidential information)

◦ E.g insider trading.

 Attend board meetings

 Disclose any conflict of interest

Meetings of directors
 Notice of every board meetings has to be
given in writing to every director.

 Failure to give notice to any director of a

board meetings would render the meeting
invalid.

 Agenda may be specified by directors do not

have to be confined by an agenda of a
meeting.
Contd.
Quorum

One third of its total strength or two directors,

whichever is higher.

Proceedings

The manner of conducting the business of the

board stated in the articles

Majority voting (binds all) and chairman’s vote

Remuneration of Directors
 Determined by articles of the company or by
a resolution of the company’s general
meeting.
Other Managerial Personnel

 Manager

 Company Secretary (Administrative Officer)

 Officer

 Sole Selling Agent