Dimitri is a director and shareholder of Equitable Corporation and of Four Square Products, Inc. A...

Dimitri is a director and shareholder of Equitable Corporation and of Four Square Products, Inc. A resolution comes before the Equitable board that calls for Equitable to compete with Four Square. What is Dimitri’s responsibility?

Expert Solution

Dimitri is in a position of conflict of interest as being a director of 2 companies that are into competition with each other may hamper Dimitri's judgment in making independent decisions for both the companies.
As a director, Dimitri will be required to make decision in order to enhance the company's value without considering the confidential information of the other company which Damitri will likely fail at.

So the steps that Dimitri can take in this condition are:
- resign from directorship of a company but need not give up being a shareholder.
- in case Dimitri doesn't want to resign from the post then Dimitri should refrain from taking a part in the voting process to avoid conflict of interest. Or, Dimitri needs to take consent from the shareholders before voting.
- Dimitri should make enough effort to ensure that he is successfully able to avoid passing or sharing confidential information of the companies and this can be done by understanding the way both the companies manage their information and also, document all the related notes and documents carefully.
- Finally, considering help and check by a lawyer would be a healthy step to take. The service agreement with each company can be checked to avoid any kind of conflict of interest while ensuring optimum corporate approvals are in place.

jeff jeffy answered 1 year ago

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