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Breach of Duty

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Director A is the managing director of Company A. Director A has been assisting overseeing the operation of the company and helping the company to increase profits. Under the company's guidelines, directors are not authorized to reveal the access code to anyone and should always keep the code secure.

Director A writes the code in a book and forgets to lock the drawer. One of the employees saw it and used the code in the book to transfer a huge sum to his personal account.

The employee was caught; however, he has subsequently spent the money and it cannot be recovered. Has this director breached any of his director's duty as a result?

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Solution Summary

This solution explains if the director breached any of his duty as a result of the actions as described. A detailed, thorough explanation is provided with references.

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Yes, the director is guilty of a breach of duty. The director is also guilty under the business judgment rule, which is a rule stating that employees are protected from their actions as long as they are acting in the best interest of the business, and ...

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