Jack is a director of Metallica, a construction corporation. During the course of his work as director of the corporation, Jack learns that the government is about to ask for tenders for the construction of a highway. If Jack resigns from his position as director, sets up a new corporation that successfully bids for the government contract, he will not be in breach of his duty as a director.

Question

Quizplus · Accepted Answer

Jack would be in breach of his duty as a director if he uses information obtained through his position to unfairly benefit himself or a related party. This is known as insider trading and is illegal. Jack would also be creating a conflict of interest by bidding for the government contract while still serving as a director of Metallica.

Jack Is a Director of Metallica, a Construction Corporation